Under Colo. Rev. Stat. § 13-54-102(1)(o), Debtor was entitled to claim an exemption of the full amount of his federal refund, as it was attributed to a refundable child tax credit.
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The Chapter 7 Trustee contacted the Clerk to advise the required credit counseling was obtained after Debtor’s voluntary petition under Chapter 7 was filed and inquired whether the case would be dismissed. After accounting for the time zone in which the certificate was issued, the counseling requirement had been met less than one hour after Debtor’s voluntary bankruptcy petition was filed.
The Court issued an Order sua sponte, deciding 11 U.S.C. § 109(h)(1) as amended in 2010 is unambiguous. Under the plain language of the statute, credit counseling may be obtained on the date of the bankruptcy filing at any time; a debtor is not required to receive the counseling prior to filing the petition.
Note there is a split among bankruptcy courts on this issue. In addition, Official Form 101, Voluntary Petition (Part V) and Bankruptcy Rule 1007 are consistent with the former version of Section 109(h)(1), prior to its amendment in 2010.
Debtors Badlands Prod. Co. and Badlands Energy, Inc. (together, “Badlands”), a consolidated natural gas and petroleum exploration, development and production company, owned oil and gas assets in the Uintah Basin, Utah (the “Riverbend Assets”). In the Chapter 11 cases, the Court authorized the sale of the Riverbend Assets to Wapiti Utah, LLC, f/k/a Wapiti Newco, LLC (“Wapiti”). The sale was free and clear of all liens, claims, encumbrances and interests pursuant to Section 363(f) of the Bankruptcy Code, but as stated in the Sale Order, the sale was subject to the outcome of certain claims brought by Monarch Midstream, LLC (“Monarch”) in the adversary proceeding.
Monarch is a midstream provider of gas gathering, processing, and saltwater disposal services. Monarch sued Badlands and Wapiti seeking a determination its midstream agreements with Badlands were covenants running with the land under Utah law. Monarch also sought to hold Wapiti liable for Badlands’ prepetition default under those agreements, in the amount of approximately $1.2 million.
Applying Utah law, the Court held Monarch’s midstream agreements with Badlands constituted covenants running with the land. Accordingly, Wapiti took the Riverbend Assets subject to those agreements notwithstanding Section 363(f). The Court held all of the requirements for a covenant to run with the land under Utah law were met: the covenants “touched and concerned” the land; the parties intended for the covenants to run with the land; and privity was satisfied. Although the respective interests of the parties did not fall within the traditional paradigm for mutual privity, to the extent Utah law requires mutual privity, the Court found it was satisfied by the mutual property interests of the parties within the “area of mutual interest” (AMI), including the dedicated oil reserves dedicated by Badlands to Monarch for processing pursuant to the agreements. In reaching its decision, the Court distinguished the contracts from those at issue in In re Sabine Oil & Gas Corp., 547 B.R. 66 (Bankr. S.D.N.Y. 2016), aff’d, 567 B.R. 869 (S.D.N.Y. 2017), aff’d, 734 Fed. Appx. 64 (2nd Cir. 2018), which involved dedications of produced gas and application of Texas law.
The Court further held Wapiti was not liable for Badlands’ prepetition defaults under the agreements, however. Once the covenants were breached, they became causes of action. Under Section 363(f), the Riverbend Assets were sold free and clear of such claims.