The matter before the Court is the Chapter 7 Trustee's objection to the Debtor's claim of exemption. The Debtor transferred real property before filing her bankruptcy petition, and on Schedule C, the Debtor claimed the transfer of property as exempt. The Court held that the Debtor may not claim exempt a pre-petition transfer of an interest in property. Only property that is property of the estate may be claimed as exempt. The transfer is not property of the estate; therefore, the transfer may not be claimed as exempt.
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The summaries on this website are summaries of the opinions issued by the judges of the Bankruptcy Court for the Western District of Virginia from October 2004 to date. The opinions may be searched by year, judge, category and chapter. For a more detailed search, enter a keyword in the search box above. This opinion bank, however, is not an exhaustive list of opinions issued by the judges of the Western District. These summaries are not intended to replace other research methods, but may be used as a starting point for your research. These summaries do not contain information as to whether an opinion has been published, appealed or the disposition of any such appeal, or otherwise overruled or affected by subsequent case law or statute. These summaries have been prepared for the convenience of the researcher and in no way constitute an interpretation by the Court of the opinion summarized. Please rely on the opinion not the summary. Please contact Judge Connelly's chambers or Judge Black's chambers regarding any questions or errors.
Four debtors filed voluntary bankruptcies under Chapter 11, and the cases are being jointly administered by the Court. The matter before the Court is the Joint Motion of two of the debtors to approve a subcontract agreement between such corporations. Each debtor was represented by separate counsel in the negotiation of such proposed subcontract. A creditor objected to the Motion. The Court found that the creditor's only real objection is that the subcontract should provide a higher royalty payment to one of the debtors. The Court held that the creditor's objection is merely a collateral attack on the Court's order approving such royalty arrangement. All other parties in interest vigorously support the approval of the subcontract and evidence discloses that such a subcontract is an appropriate exercise of the business judgment and management of both companies. Accordingly, the Court approved the subcontract agreement.
Upon the Trustee's Objection to the Debtors' Exemptions, the Court held that the male Debtor was entitled to a $5,000 homestead exemption plus an additional $1,500 exemption for the Debtors' three dependent children under Virginia Code § 34-4, but held that the female Debtor may only claim $5,000 as she does not provide the primary financial support for the dependents. Virginia Code § 34-4 provides that "in no case shall an individual be the dependent of more than one householder." Therefore, only one Debtor may claim the three children as "dependents" under § 34-4, and accordingly, only one debtor may claim the additional $1,500 exemption under § 34-4.
The Debtors and BB&T were engaged in state court litigation involving breach of contract and enforcement of a guaranty under business loans to the Debtors' LLC. The Debtors sought to litigate in the bankruptcy court the exact same issues presented in the stayed state court action. BB&T moved to dismiss the Debtors' adversary proceeding under Federal Rule of Civil Procedure 12(b) and (h). The Court ruled in BB&T's favor and dismissed the adversary proceeding finding that the issues raised were non-core issues, and, in the best interest of justice and in the interest of comity with state courts and out of respect for state law, this Court will abstain from hearing this proceeding. The Court also modified the stay to allow the litigation to proceed in state court.
The Defendant seeks an enlargement of time to file its Notice of Removal under Bankruptcy Rule 9006(b), and contemporaneously filed a Notice of Removal. There was a pending state court action, initiated by the Plaintiff/Debtors at the time the Debtors filed their bankruptcy petition. Since the Defendant was not a creditor of the Debtors, it did not receive notice of the bankruptcy filing. The Defendant learned of the bankruptcy petition through its own investigations, past the filing deadlines of Rule 9027(a). Accordingly, the Defendant filed its Motion to Extend Time contemporaneously with its Notice of Removal. The Court analyzed the four factors enumerated by Pioneeer Inv. Servs., Co. v. Brunswick Assocs. Ltd., 507 U.S. 380 (1993), in determining whether to grant the motion to extend time on account of "excusable neglect." The Court denied the Defendant’s Motion to Extend Time, finding that it would be more prejudicial to the Debtors to allow the state court action to be removed because of the delay it would create in the resolution of that litigation.
Secured creditor sought allowance of administrative expense against the bankruptcy estate pursuant to 11 U.S.C. section 503. The Court denied the creditor's motion because: 1) it was a prepetition creditor, 2) it never offered proof that Debtor disposed of the collateral in its capacity as debtor-in-possession, 3) it did not prove the value of the collateral, and 4) it did not demand adequate protection.