In In re Duplan Corp., 229 B.R. 609 (Bankr. S.D.N.Y. 1999), the court was confronted with a novel twist on the issue of whether certain distributees in a former chapter X debtor's assets would have the benefit of the permanent injunction that had been entered in the prior chapter X case, so as to protect them from third-party claims by various oil companies seeking contributions arising under CERCLA. CERCLA was not enacted until after the entry of the permanent injunction and discharge provisions of the final decree in the chapter X case. In affirming the bankruptcy court, the district court concluded that since a right to payment is necessary to any bankruptcy claim, and since no right to payment existed under CERCLA until CERCLA was passed into law, the prior injunction and discharge provisions of the final decree in the chapter X case would not provide protection to the distributees of the assets from the third-party claims for contributions brought under the provisions of CERCLA.

Preferential Payment Avoidance

In In re Burlington Motor Holdings Inc., 229 B.R. 611 (Bankr. D. Del. 1999), the debtor had established a pattern in practice of accumulating invoices and paying them in batches by one check. Upon the debtor's bankruptcy filing, the debtor brought an adversary proceeding to avoid a single disputed payment of $17,960 that the debtor had made during the preference period on accumulated invoices. The creditor argued that the payment was made "in the ordinary course of business," and thus protected from avoidance. Based upon the evidence in the case, the court found that under the circumstances, payments clearing the bank 61 days or longer after the invoice date would be avoided as preferential payments.

Lease Rejection Claims

In In re Best Products Co. Inc., 229 B.R. 573 (Bankr. E.D. Va. 1998), the debtor objected to a lease rejection claim that included, as its largest element, a claim for deferred maintenance damages and separate elements for pre-petition real estate taxes and lease rejection damages. The parties stipulated as to the amounts for the pre-petition real estate taxes and lease rejection damages, but the debtor continued to object to the claim for deferred maintenance damages, arguing that the statutory cap provided by 11 U.S.C. §502(b)(6)(A) applies to all claims for damages that a lessor may have for any breach of a lease or a covenant of a lease, including claims for building repair and maintenance, citing In re McSheridan, 184 B.R. 91 (9th Cir. BAP 1995); In re Mr. Gatti's Inc., 162 B.R. 1004 (Bankr. W.D. Tex. 1994); Schwartz v. C.M.C. Inc. (In re Communicall Central Inc.), 106 B.R. 540 (Bankr. N.D. Ill. 1989); and In re Storage Technology, 77 B.R. 824, 825 (Bankr. D. Colo. 1986). The court concluded that "most of the cases found by this court do not follow the restrictive rationale of Mr. Gatti's and McSheridan..." Citing, with approval, the analysis contained in In re Atlantic Container Corp., 133 B.R. 980, 991-92 (Bankr. N.D. Ill. 1991), the court concluded that the damages for failure to maintain the premises would be allowed separately and apart from the "lease rejection damages" element of the claim and would not be limited or precluded by the "rent reserved" cap of §502(b)(6)(A).

Alimony, Child Support Priority Payments

In In re Crosby, 229 B.R. 629 (Bankr. E.D. Va. 1998), the court held that if a debt is non-dischargeable, such as debt for alimony, maintenance or support to a spouse, former spouse or child of the debtor, then any corresponding claim for payment will be entitled to priority and must be paid in full under a chapter 13 plan pursuant to 11 U.S.C. §§507(a)(7), 523(a)(5) and 1322 (a)(2). Finding that the payments in question (agreed payments to be made for reimbursement of the debtor's children's post-secondary education) were in the nature of additional "support," the court sustained the chapter 13 debtor's former wife's objection to confirmation on the grounds that the plan did not provide for payment in full of a priority claim.

Burglarized Debt Non-dischargeable

In In re Morris, 229 B.R. 683 (Bankr. E.D. Ky. 1999), the debtor's former employer's insurance company, as subrogee of the debtor's former employer, objected to the dischargeability of the debt arising from damages sustained during a burglary committed by the chapter 7 debtor. The subrogee insurance company insured the premises with business liability insurance covering loss caused by theft and/or vandalism. The debtor burglarized a former employer's place of business, and thereafter a civil suit commenced against the debtor seeking reimbursement for the damages caused by his criminal activities. A default judgment was entered against the debtor in the civil action, following which the debtor filed his chapter 7 case. The court found the debt to be non-dischargeable under 11 U.S.C. §§523(a)(4) and (6). Giving preclusive effect to the default judgment in the civil case, the court further found that both liability and the amount of the debt had been fixed by that default judgment.

Collective Bargaining Agreements

In In re Typocraft Company, 229 B.R. 685 (Bankr. E.D. Mich. 1999), the debtor filed a chapter 11 case and then ceased doing business approximately 15 months later, a week or two prior to converting the case to a chapter 7. During the chapter 11 case, the debtor operated its business but never sought to reject its existing collective bargaining agreement (CBA) or take any of the steps incident to such a rejection as contemplated by 11 U.S.C. §1113. Further, the debtor took none of the formal steps necessary to assume the CBA under Rule 6006(a). In his final report, the chapter 7 trustee classified the claim of the objecting parties under the CBA as pre-petition claims. The union representing the debtor's employees objected to this classification asserting that the claims should be classified as chapter 11 administrative expenses relating to obligations of the debtor under the CBA arising prior to the filing of the chapter 11 case. Concluding that it is bound by In re Unimet Corp., 842 F.2d 879 (6th Cir. 1988), and observing that the language of that decision did not distinguish between claims arising before or after the filing of a chapter 11 petition, the court concluded that qualification as an administrative expense is not necessary for the union to prevail in its argument that the claim should be treated as a chapter 11 administrative expense claim in the chapter 7 case.

Preponderance of Evidence Standard for Revocation of Chapter 13 Plan

Pursuant to an adversary brought by the trustee for secured bondholders, the court in Tenn-Fla Partners v. First Union Nat. Bank of Fla., 229 B.R. 720 (Bankr. W.D. Tenn. 1999), entered an order revoking its prior confirmation order pursuant to 11 U.S.C. §1144 upon its finding that the debtor failed to disclose the true value of its sole asset and that this failure constituted fraud on the court. The bankruptcy court refused to award the bondholders compensatory or punitive damages and both parties appealed. Relying on the rationale of Grogan v. Garner, 111 S. Ct. 654 (1991) and on other cases applying a "preponderance of the evidence" standard for revocation of confirmation of a chapter 13 plan [See Nikoloutsos v. Nikoloutsos, 222 B.R. 297, 303 (Bankr. E.D. Tex. 1998) (approving the use of preponderance of the evidence standard for revoking a chapter 13 plan confirmation for fraud under 11 U.S.C. §1330(a)], and applying the preponderance of the evidence standard to the revocation of discharge due to fraud under §727(d) [Citibank N.A. v. Emery (In re Emery), 201 B.R. 37, 40 (Bankr. S.D.N.Y. 1996), aff'd, 132 F.3d 892 (2nd Cir. 1998), Bowman v. Belt Valley Bank (In re Bowman), 173 B.R. 922, 925 (9th Cir. BAP 1994) and others], the court concluded that the proper standard for determining fraud sufficient to revoke confirmation under 11 U.S.C. §1144 is the preponderance of the evidence standard. The opinion goes on to analyze the elements of fraud required under §1144 concluding that "the test for fraud under §1144 can be restated to account for a party's non-disclosures as follows: (1) an intentional omission, (2) by a party with a duty to disclose, (3) of facts that would be material to finding the party complied with §1129, (4) that were withheld so that the court would find the party complied with §1129, (5) and that as a consequence of such non-disclosure, the court entered the confirmation order."

Miscellaneous

• In re Blaemire, 229 B.R. 665 (Bankr. D. Md. 1999) (pre-petition judgment debt for fees to the attorney appointed to represent the minor children of debtor and her former spouse held to be in the nature of child support and excepted from discharge under 11 U.S.C. §523(a)(5)).