Marvel Concrete, Inc. v. Helmke, Adv. Pro. No. 06-1264 ABC; 11 U.S.C. § 523(a)(4), C.R.S. § 38-22-127(5); C.R.S. §§ 18-4-401, 18-4-405.
The Court denied the debtors' motion for reconsideration of its order awarding treble damages to a creditor upon proof of the debtors' violation of the Colorado Mechanics' Lien Trust Fund Statute. The Court's finding that the debtors had the subjective hope and intent to keep their business open so that all creditors would eventually be paid did not negate its finding that they knowingly used the specific funds held in trust in a manner which was practically certain to deprive the creditor of the use and benefit of those trust funds, thereby satisfying the elements of the Colorado theft statute, C.R.S. § 18-4-401.
  Posted 12/09/2008

In re Karen and John McCauley, Case No. 08-11644 ABC; 11 U.S.C. § 1325(a) hanging paragraph.
The Court denied confirmation of the debtors' Chapter 13 plan based on their failure to treat the purchase-money portion of creditor's security interest in vehicle purchased within 910 days of bankruptcy filing as a secured claim subject to the hanging paragraph of 11 U.S.C. § 1325(a). The Court rejected the debtors' argument that including financing of the negative equity in their trade-in vehicle in the purchase transaction "transformed" the entire claim into a non-purchase money debt to which the hanging paragraph was inapplicable. The Court also rejected the creditor's argument that the entire balance of its loan, including the negative equity financing, was secured by a purchase money security interest and subject to the hanging paragraph. The Court adopted a "dual status" rule, finding that the creditor had a purchase-money security interest to the extent of the purchase price of the new vehicle and incidental transaction costs.
  Posted 12/05/2008

In re Jerold and Monica Brown, Case No. 07-22718 ABC; 11 U.S.C. §§ 1325(b)(1)(B), 1325(b)(4)(October 10, 2008).
In a case involving debtors with income above the applicable median income, the Court sustained the Chapter 13 Trustee's objection to confirmation of a plan of a duration which was less than the 5 year "applicable commitment period." Under the agreed facts, debtors' "projected disposable income" was zero. Nevertheless, the Court denied confirmation of debtors' plan because it would not pay "allowed unsecured claims" in full during the 42 month period proposed in violation of 11 U.S.C. § 1325(b)(4)(B). The applicable commitment period is a fixed period of time which a plan must span even if the debtor has no "projected disposable income."
  Posted 11/14/2008

In re Christopher and Mindi Barajas, Case No. 08-13684 ABC; 11 U.S.C. §§ 1325(a)(3), 1325(b)(Transcript of Oral Ruling, August 11, 2008, Docket #57).
The Court denied confirmation of the Debtors' Chapter 13 plan based on failure of the Debtors to pay all of their "projected disposable income" into the plan. It was improper for the Debtors to deduct from their "current monthly income" the payment for a secured debt on a vehicle which the debtors surrendered to the secured creditor beyond the "reasonable time" for disposition of the collateral allowed the secured creditor under applicable state law; after that, there is nothing "contractually due" to a secured creditor on the loan. See, § 707(b)(2)(B)(iii)(I).

The Court also ruled that where the debtors had proposed payment of more than what was required by the "disposable income" definition in § 1325(b)(2), a § 1325(a)(3) good faith objection to confirmation, based only on the amount proposed to be paid under the plan, could not be sustained.
  Posted 11/14/2008

Simon E. Rodriguez v. Scott Whatcott, Adversary No. 07-1500 ABC (In re Christopher S. Walker, Chapter 7 Case No. 07-17102 ABC). §§ 547(b)(5) and 551.
Voidable preference. Where liens senior to a judgment lien sought to be avoided by a trustee under § 547(b) aggregate more than the value of the encumbered property, but one of the senior liens has previously been avoided by the trustee and preserved for the benefit of the bankruptcy estate pursuant to section 551, the previously avoided lien is excluded from the calculation in determining whether a transferee of an alleged preference thereby received more than he would receive in a Chapter 7 for § 547(b)(5) purposes.
  Posted 06/20/2008

In re Cheryl L. Perez, Chapter 7 Case No. 05-25535 ABC; 11 U.S.C. §§ 327-330; Bankruptcy Rules 2014 & 2016.
The Court denied special counsel to Chapter 11 debtor-in-possession's application for professional fees and costs for failure to comply with the Bankruptcy Code and Rules' disclosure requirements.
  Posted 06/20/2008