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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.

Callahan v. Petro Stopping Ctr. (In re Lambert Oil) (Case No. 03-01183; A.P. No. 05-07043) 12/28/2005

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.

In re Antaeus Technical Services (Case No. 99-02114) 12/6/2005

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.

In re Downs (Case No. 05-70414) 11/18/2005

The United States Trustee filed a Motion to Dismiss pursuant to 11 U.S.C. § 707(b).  The United States Trustee alleged that the Debtor understated his income on Schedule I.  The Fourth Circuit has adopted a "totality of the circumstances" test in determining whether substantial abuse has occurred.  See Green v. Staples (In re Green), 934 F.2d 568, 570 (4th Cir. 1991).  In considering the factors outlined in Green, the Court concluded that it would not be a substantial abuse to permit the Debtor to continue under Chapter 7.  Accordingly, the United States Trustee's Motion to Dismiss is denied.

In re Dotson (Case No. 05-71314) 11/10/2005

The matter before the Court is the Debtor's Motion to Sell pursuant to 11 U.S.C. § 363(f), in which the Debtor seeks permission to sell certain tracts of real estate free and clear of liens and use the proceeds to pay down the balance on her second deed of trust.  The lienholder on the first deed of trust filed an objection.  The first lienholder maintains that the effect of the sale would be to deprive it of adequate protection of its interest and to limit its right to avoid confirmation of a plan that impairs its interest secured by the residence of the Debtor.  The Debtor asserts that because the first lienholder is oversecured, it has no grounds to object to the sale.

Section 363(f) permits the sale of property free and clear of all liens against it in only five situations, none of which are applicable here.  Therefore, the sale of the property free and clear of liens under Section 363(f) is impermissible in this case.  Further, the Court held that the Debtor could not modify the first lienholder's rights by releasing part of its collateral over its objection and paying the sale proceeds to a junior lien creditor.