The Court granted the debtor’s request for use of cash collateral on an emergency basis, pending a final hearing on use of cash collateral. Before the bankruptcy filing, the debtor filed a lawsuit in state court against Surv-Tek, Inc., the business entity from which the debtor purchased its business.  Surv-Tek, Inc. filed a counter-claim and obtained a judgment from the state court ordering the debtor and its principals to cease and desist competing with Surv-Tek, Inc. The Court determined that the Rooker-Feldman doctrine, which prevents a state court loser from seeking federal court review and rejection of the state court judgment, did not preclude the debtor from seeking an order for use of cash collateral in a subsequent bankruptcy case. In addition, the automatic stay precluded enforcement of the state court order. Surv-Tek, Inc. was granted adequate protection in the form of a replacement lien in property of the same time it had a lien on the petition date that the debtor acquired post-petition to the extent the combined value of the debtor’s accounts receivable, cash on hand, and other cash equivalents, was less at the end of the interim, emergency period, than the value of those assets on the petition date. 

The chapter 7 trustee objected to Debtor’s claim of a homestead exemption in her residence on the ground that, having given a warranty deed, absolute in form, to the property to her daughter’s trust, Debtor no longer owns the property and the property is not part of the estate. Debtor asserted that, the warranty deed notwithstanding, she has an interest in the property that she may exempt from the bankruptcy estate under New Mexico law. The chapter 7 trustee did not dispute that Debtor and her daughter, as trustee of the Trust, had an oral agreement that Debtor could live in the property until her death. The Court concluded that the terms of the oral agreement did not merge into the warranty deed, that the oral agreement is enforceable despite the statute of frauds under the circumstances, and that, under the oral agreement, Debtor had a life estate interest that became part of the estate and is exemptible under New Mexico law.

Creditors failed to satisfy their burden of establishing Debtor’s lack of equity   in property, but were entitled to relief from the automatic stay for “cause” based on the totality of the surrounding facts and circumstances. Debtor filed three prior   bankruptcy cases, had not made any payments to the creditors in four years, and appealed a state court foreclosure judgment without posting a supersedeas bond. Creditor’s lien   and right of first refusal contained in an agreement executed by the Debtor to obtain the property under the City of Santa Fe’s affordable housing opportunity program constituted an encumbrance against the property which survived the Debtor’s prior discharge, and,  assuming the agreement was an executory contract, rejection of the agreement did not terminate the contract. 

Chapter 7 trustee sought order compelling debtor to turn over three pieces of irrigation equipment that trustee claimed was part of the bankruptcy estate.  The Court held a trial on the merits and concluded that the trustee’s motion for turnover must be denied. Under Section 348(f)(1)(A) equipment acquired by debtor during chapter 13 case prior to conversion to chapter 7 was not property of chapter 7 estate, and therefore not subject to turnover. Equipment that debtor acquired and disposed of prepetition was not property of the chapter 13 or chapter 7 estate, and therefore was not subject to turnover. Equipment that debtor sold prepetition, retained possession of after the conversion date, and delivered to the buyer during chapter 7 case was property of chapter 7 estate subject to turnover, but because evidence of the property’s value was insufficient and the whereabouts of the equipment is unknown, neither the equipment nor its value could be turned over to trustee.