Debtor sought discharge of educational loan debt on grounds of undue hardship. Court denied the Department of Education's motion to dismiss under F.R.C.P. 12(b)(1) asserting the debtor's failure to exhaust available administrative remedies. Given the absence of a statutory provision requiring the debtor to exhaust administrative rememdies before seeking discharge and the specific inclusion in the Code of a provision allowing for bankruptcy discharge in limited circumstances, Court had jurisdiction to determine whether payment of student loan debt would constitute an undue hardship on the debtor under section 523(a)(8) even when the debtor has not exhausted all possible administrative options for the deferral or discharge of the obligation.  Any such failure to pursue administrative remedies must be considered in the context of applying the Brunner test.

The court dismissed the Debtor's case because she failed to obtain credit counseling in the 180 days prior to filing and failed to file required schedules.

This adversary proceeding involved the attempt by the trustee to recover from the defendant certain payments made by the debtor to the defendant within 90 days preceding the bankruptcy filing on the ground that such payments constituted avoidable preferential transfers under section 547.  The payments were made in furtherance of an arrangement put in place by the president and sole owner of the debtor in which the defendant used its credit standing to acquire fuel oil product for the debtor and for which the debtor was to pay the defendant before the payments for the fuel product and accompanying Virginia taxes were due to be paid.  The debtor paid the obligations incurred but in certain instances not until after the defendant was obliged to use its own funds to satisfy the obligations.  Parties filed stipulations and agreed upon the proper application of the "new value" defense under section 547(c)(4).  The question turned on whether the defendant or the debtor was the party legally responsible to pay such obligations.  Court held that the debtor was the entity legally liable, and the debtor's payment of such taxes could not be grounds for recovery by the trustee as a preferential transfer under section 547(b).  The parties did not intend the use of the defendant's credit standing to obtain fuel for the debtor to be a contemporaneous exchange of new value because it was clearly intended to be a credit arrangement whereby the defendant extended credit to the debtor on a short term basis.  Court also held that the debt was not incurred in the ordinary course of business of the defendant under section 547(c)(2).  Court awarded judgment in favor of the trustee, but declined to award pre-judgment interest.

Trustee's motion to establish bidding procedures for sale of certain patents and other assets of the debtor approved generally.  A modification of a contract entered into by the trustee on behalf of the creditors of the bankruptcy estate after obtaining approval of the Court after a hearing upon notice to the creditors which substantially and adversely affects the rights of those creditors under that contract required approval of the Court obtained after notice to the creditors and an opportunity to be heard.  Extension of the deadlines in the settlement agreement after the two critical deadlines had already expired was the type of modification which required notice to the creditors and court approval to be effective.