Trial held to determine whether a contracted-for conveyance of real property title for cash was in improper post-petition transfer based on bankruptcy and state law; whether the contract transferred water rights as additional consideration for the title; whether state court proceedings curtailed this Court’s jurisdiction; and whether this Court should revisit an earlier judgment that was affirmed on appeal.  The Court concludes that the state court actions do not limit this Court’s ability to rule; that the exchange of cash for title was improper but that no water rights changed hands; and that the Court will not alter the earlier judgment.

Debtor  signed an Endorsement Agreement guaranteeing a $1.8 million loan that her father used mostly to finance the rehabilitation of a ski mountain and resort.  She was to get ten percent of the profits from the ski area—either from operating profits or from sale of parcels.  Debtor was motivated to help her father, but also motivated by profit.  When the father defaulted on the loan, the Debtor attempted to repay it, but ultimately filed for bankruptcy.  Debtor sought to reconvert Chapter 13 bankruptcy to Chapter 7, and Bank argued that under 11 USC Section 707(b), Debtor’s case must be dismissed for abuse because the debt was a consumer debt.  The main issue is whether the debt is consumer or non-consumer debt, and this opinion synthesizes the case law and sets forth several considerations that factor into a court’s resolution of the issue of whether debt is “consumer” or “non-consumer.”  Court held that debt is a non-consumer debt, and therefore allowed conversion to chapter 7, and denied Bank’s motion to dismiss.

Pursuant to 11 U.S.C. Section 544(c) only property that is properly scheduled on schedules A and B can be deemed abandoned.  The debtor in this case mentioned an accident from which he suffered personal injury on his Schedule I only.  He settled his personal injury claim for $1.6 million.  In a subsequent bankruptcy case, the debtor attempted to claim exemptions under 11 U.S.C. Section 522(d) in property purchased with the proceeds of the personal injury settlement.  The Court held that: (1)  the trustee did not abandon the personal injury claim to the Debtor; (2) the exemptions are not allowable because they were purchased with the ill gotten gains of an innocent misrepresentation, at best, or a bankruptcy crime, at worst; and (3) in the alternative, the exemptions were not allowable on their merits.

Former chapter 11 DIP counsel sought approval of fee application and debtor’s owner objected on the grounds that attorneys fees greatly overran estimates, that counsel did not protect debtor’s interest regarding critical vendors, that counsel misled owner, and that counsel’s work on real estate closing was unnecessary. After considering the factors in Johnson and section 330, the Court grants the application less the amount billed toward plan confirmation and the disclosure statement.