Alaska Bankruptcy Court

1998 Update of Alaska Bankruptcy Court Decisions Presented By: Spencer C. Sneed Bogle & Gates P.L.L.C. 1031 West 4th Avenue, Suite 600 Anchorage, Alaska 99501 (907) 257-7819 Michael R. Mills Bankston & McCollum, P.C. 550 West 7th Avenue, Suite 1800 Anchorage, Alaska 99501 (907) 276-1711 TABLE OF CONTENTS Page I. Jurisdiction........................................................................................................................................1 II. Employment/Compensation Issues.................................................................................................4 A. Attorneys...............................................................................................................................4 B. Other Professionals ..............................................................................................................6 C. Trustees (Including Powers and Duties) .............................................................................7 D. U.S. Trustees. .......................................................................................................................7 III. Automatic Stay/Injunctions...........................................................................................................7 IV. Property of the Estate...................................................................................................................10 V. Exemptions.....................................................................................................................................11 VI. Abandonment ...............................................................................................................................12 VII. Discharge/Dischargeability ........................................................................................................13 VIII. Avoidance Powers ......................................................................................................................18 A. Preferences .........................................................................................................................18 B. Fraudulent Transfers.........................................................................................................19 C. Strong Arm Powers ............................................................................................................19 D. Post Petition Transfers.......................................................................................................19 E. In General...........................................................................................................................20 IX. Claim Issues..................................................................................................................................20 A. Secured Claims...................................................................................................................20 B. Priority Claims....................................................................................................................22 C. Tax Claims..........................................................................................................................23 D. Allowance/Disallowance of Claims (Including Bar Date Issues) ....................................26 X. Chapter 11......................................................................................................................................27 XI. Chapter 13 ....................................................................................................................................29 XII. Dismissal/Conversion .................................................................................................................31 XIII. Miscellaneous.............................................................................................................................31 Alaska Bankruptcy Court Decisions 1997-1998 Page i ALASKA BANKRUPTCY COURT DECISIONS1 I. Jurisdiction. District Court adopts Bankruptcy Court recommendation to abstain and remand wrongful death action to State Court. As a first issue, the District Court accepts withdrawal of the reference as mandatory under 28 U.S.C. § 157(b)(5) dealing with wrongful death claims. District Court finds that permissive abstention under 28 U.S.C. § 1334(c)(1) is appropriate since the “savings to suitors” clause found at 28 U.S.C. § 1333(1) assures the plaintiff his or her choice of either State Court or Federal Court in initiating a maritime personal injury claim. Moreover, if plaintiff’ claims are construed as State law s tort claims, then removal was improper and the Court must abstain and remand to State Court in any event. Santos and Ehrenfried v. Durheim and Alaska Aquatics of Anchorage (In re Durheim), 5 ABR 78 (Bankr. D. AK 1997) (Singleton, J.). Bankruptcy Court, in a report and recommendation to the District Court, recommends that a wrongful death case that was pending pre-petition in State Court and that had been removed to the Bankruptcy Court be accepted by the District Court through withdrawal of the bankruptcy reference and also recommends that the District Court abstain and remand the case back to State Court. Court finds withdrawal of the references appropriate for a number of reasons. Court finds that permissive abstention under 11 U.S.C. § 1334(c)(1) is appropriate under the standards set forth in In re Tucson Estates, Inc., 912 F.2d 1162 (9th Cir. 1990). Santos and Ehrenfried v. Durheim and Alaska Aquatics of Anchorage (In re Durheim), 5 ABR 70 (Bankr. D. AK 1997) (MacDonald, J.). Waiver of sovereign immunity is governed by 11 USC § 106. Section 106(b) is triggered by the filing of a proof of claim and makes the governmental unit vulnerable to a claim by the estate against the governmental unit that arose out of the same transactions or occurrence on which the government’ proof of claim arose. In re Richard E. Wagner, 5 s ABR 44 (Bankr. D. AK 1997) (Ross, J.). Abstention mandatory in dispute over existence of partnership in which debtor claimed an interest. Studnek v. Muhlhauser, 4 ABR 474 (Bankr. D. Alaska 1996) (MacDonald, J.). The dispute was a "related matter" under 28 U.S.C. § l57(c)(l) since a decision would increase the claim of one of the parties and, therefore, affect the administration of the bankruptcy This outline summarizes cases reported in Alaska Bankruptcy Reports from 1 ABR 445 to 5 ABR 161. For a summary of prior Alaska Bankruptcy Reports cases, see Bankruptcy Law, A Professional Update (Alaska Bar Association 1991). 1 Alaska Bankruptcy Court Decisions 1997-1998 Page 1 estate. Citing In re Fietz, 852 F.2d 455 (9th Cir. l988). National Bank of Alaska v. Barstow, et al. (In re Quigley Enterprises, Inc.), 4 ABR 335 (Bankr. D. Alaska l996) (Ross, J.). The Court has subject matter jurisdiction since a resolution of the dispute (whether mining claims are property of the estate or not) will affect administration of the estate. Determination of whether dispute is core matter is more difficult. Determining title to mining rights is the center piece of the Chapter 11 estate and involves several Bankruptcy Code determinations including §§ l08, 362, and 544; however, there is case law holding that a quiet title action, essentially the character of the instant dispute, constitutes a "related to" matter, not a core matter. Rather than ruling, the Court suggested a solution. The Court suggested that the parties "bump" the Bankruptcy Appellate Panel on any appeal so that Judge Holland of the District Court can hear the appeal. Holland could then either hear the matter as an appeal (assuming he concludes that the matter is "core ") or as a "recommendation" from the matter) or as a "recommendation" from the Bankruptcy court (assuming that he concludes the matter is "related to" and not core). Coincidentally, Judge Holland is dealing with mining claims somehow related to the ones at issue in this case. Bennie Leonard v. Eric E. Wieler, et al., (In re Gold King Mines, Inc.), 4 ABR 372 (Bankr. D. Alaska l996) (Ross, J.). The Bankruptcy court does not have jurisdiction to rule on a secured creditor's motion for relief from stay while the issue of treatment of the secured creditor's claim under a confirmed plan was on appeal to the Ninth Circuit Court of Appeals. In re Dunlap, 4 ABR 254 (Bankr. D. Alaska 1996) (Ross, J.). A threshold issue in determining a motion to withdraw the reference is "timeliness" of the motion. The motion must be filed "as soon as possible after the moving party is aware of grounds for withdrawal of reference." A motion to withdraw reference filed on the eve of confirmation when the creditor had reason to know of the facts that would justify withdrawal for four months is not timely. In re Martech, 4 ABR 51 (Bankr. D. Alaska 1994) (MacDonald, J.). Bankruptcy court has jurisdiction to enter ruling regarding dischargeability of monies converted by debtor, notwithstanding the debtor's request for a jury trial. Elder v. Jourdan (In re Jourdan), 3 ABR 317, 327 (Bankr. D. Alaska 1994) (Ross, J.). A debtor may not seek to relitigate issues previously decided by the Bankruptcy court when the issues are on appeal to the Ninth Circuit. Olsen v. Zerbetz, 3 ABR 329 (D. Alaska 1994) (Singleton, J.). See also Olsen v. Zerbetz (In re Olsen), 4 ABR 29 (9th Cir. 1994) (although the decision to reopen a case for "newly discovered evidence" normally rests within the discretion of the Bankruptcy court, the Bankruptcy court lacked jurisdiction to consider the matter once a notice of appeal had been filed.). Withdrawal of reference recommended since weight of authority is that Bankruptcy court lacks authority to conduct a jury trial and currently is not set up or trained to conduct jury trials. Battley v. Kemp (In re Kemp-Paulucci Seafoods, Inc.), 3 ABR 96 (Bankr. D. Alaska 1993) (Ross, J.). Alaska Bankruptcy Court Decisions 1997-1998 Page 2 Addendum: Creditor had not filed proof of claim; if he had, reference should not be withdrawn because right to a jury trial would have been waived. Battley v. Kemp (In re Kemp-Paulucci Seafoods, Inc.), 3 ABR 99 (Bankr. D. Alaska 1993) (Ross, J.). Bankruptcy court has subject matter jurisdiction over, and declines to abstain from hearing, debtor's fee dispute with its special counsel notwithstanding Alaska Bar Rule 34(b) (mandatory fee arbitration). In re Martinson Gravel and Crane, Inc., 2 ABR 369 (Bankr. D. Alaska 1992) (Ross, J.). State court has concurrent jurisdiction to determine dischargeability issues. Bankruptcy court declines to reopen case based upon comity and judicial economy. In re McDonald, 2 ABR 362 (Bankr. D. Alaska 1992) (Ross, J.); see also, In re Parks, 4 ABR 58 (Bankr. D. Alaska 1994) (Ross, J.) (Case will not be reopened because the debtor could raise dischargeability issues in state court). Bankruptcy court lacks subject matter jurisdiction in dispute over postconfirmation taxes. In re Callan, 2 ABR 355 (Bankr. D. Alaska 1992) (Ross, J.). Bankruptcy court has subject matter jurisdiction to determine effect of discharge and abandonment on federal tax lien on debtors' interest in 401(k) plan. Miranda v. United States of America (In re Miranda), 2 ABR 122 (Bankr. D. Alaska 1991) (MacDonald, J.); see also Connor v. United States (In re Connor), 2 ABR 138 (Bankr. D. Alaska 1991) (MacDonald, J.) (subject matter jurisdiction to determine effect of discharge on federal tax lien). Bankruptcy court recommends that all court proceedings in which jury trial requested be withdrawn to the District Court. Battley v. Mickelsen (In re Vockner), 2 ABR 294 (Bankr. D. Alaska 1992) (Ross, J.). Bankruptcy court can make binding ruling on discretionary abstention; abstention declined in adversary proceeding regarding over-collected adequate protection payments even though creditor insurance company was in New Jersey receivership. Sadco Enterprises v. Mutual Benefit Life Ins. Co. (In re Sadco Enterprises), 2 ABR 62 (Bankr. D. Alaska 1991) (Ross, J.). Abstention recommended in child support and maintenance dispute. Avezac v. Palmier (In re Hinchey), 1 ABR 447 (Bankr. D. Alaska 1991) (MacDonald, J.). Alaska Bankruptcy Court Decisions 1997-1998 Page 3 II. A. Employment/Compensation Issues. Attorneys. Court denied motion for reconsideration by law firm of earlier denial of attorneys’ fees for preparation of a motion to approve expenditures as administrative expenses. Court concluded that the motion was unnecessary since there was adequate disclosure in the record of the Trustee’ administrative expenditures and, under normal s procedures, the Trustee does not seek Court authorization for administrative expenses until the final report to the Court. Moreover, time spent by law firm was unreasonable under the circumstances. In re MarkAir, Inc., 5 ABR 155 (1998) (Ross, J.). Court has discretion to deny fees requested in lumped sum fashion. $4,800 in attorney fees for debtor representation in simple, fill in the form Chapter 13 excessive ($2,500 allowed). In re Carey, 4 ABR 443 (Bankr. D. Alaska 1996) (Ross, J.). An adversary proceeding to enforce a post-petition settlement is an action related to bankruptcy matters, not state law. As such, attorneys fees could not be awarded to the prevailing party under Alaska Rule of Civil Procedure 82. Barstow v. Barnes, 4 ABR 61 (Bankr. D. Alaska 1995) (Ross, J.). Consequential damages generally not recoverable for breach of payment obligations under promissory note, but attorney fees may be awarded, under § 105 of the Bankruptcy Code, on an equitable basis (if estate fully solvent). Barstow v. Van Arnem Financial Services, Inc. (In re Wagner), 3 ABR 89 (Bankr. D. Alaska 1993) (Ross, J.). Facsimile and photocopy charges are compensable only at actual cost. Messenger costs compensable only if specific justification shown. F/V Pacific Star v. Barstow (In re Eagle Fisheries), 3 ABR 114 (Bankr. D. Alaska 1993) (Sedwick, J.) (note that the U.S. Trustee's office has recently taken the position that it would not challenge facsimile charges of .35¢ for outgoing faxes). Payments from any form of bankruptcy retainer, whether "classic", "security" or "earned", are all subject to Bankruptcy court review and approval. Jackson v. Federal Home Loan Mortgage Corp. (In re L & C Development), 3 ABR 139 (Bankr. D. Alaska 1993) (Holland, J.) Where Alaska law provides the rule of decision, Alaska Civil Rule 82 governs award of attorney fees, but award of costs is governed by 28 U.S.C. § 1920, which does not allow an award for attorney travel expenses. Edenso v. Haida Corp. (In re Haida Corp.), 3 ABR 232 (9th Cir. 1993) (Browning, Tang and Norris, J.). Compensation denied for duplicative legal services and for research on basic principles of bankruptcy law. Clerical and secretarial functions performed by paralegals are not reimbursable as Alaska Bankruptcy Court Decisions 1997-1998 Page 4 professional fees. Reasonable rate for photocopy costs in large cases set at 10¢ per copy. Messenger and courier costs, Westlaw, Lexis and secretarial overtime are all overhead expenses and not allowable as costs. In re Chugach Alaska Corporation, 3 ABR 49 (Bankr. D. Alaska 1992) (MacDonald, J.). Creditor who prevailed in dischargeability litigation denied attorneys fees. Notwithstanding contractual provision for attorneys fees, where issues do not involve basic contract enforcement questions, but rather issues peculiar to federal bankruptcy law, attorneys fees will not be awarded. Key Bank of Puget Sound v. Martin (In re Martin), 2 ABR 398 (Bankr. D. Alaska 1992) (MacDonald, J.) affirmed, Key Bank of Washington v. Martin (In re Martin), 3 ABR 459 (Bankr. 9th Cir. 1994) (Poole, Trott, King, JJ.). Bankruptcy court has subject matter jurisdiction over, and declines to abstain from hearing, debtor's fee dispute with its special counsel notwithstanding Alaska Bar Rule 34(b) (mandatory fee arbitration). In re Martinson Gravel and Crane, Inc., 2 ABR 369 (Bankr. D. Alaska 1992) (Ross, J.). Chapter 7 debtor's application for employment of attorney denied as unnecessary. In re Alaska Intercity Lines, Inc., 2 ABR 360 (Bankr. D. Alaska 1992) (Ross, J.). Debtor's Chapter 7 attorney fees should not be borne by estate where benefit to estate not apparent. In re Preblich, 2 ABR 56 (Bankr. D. Alaska 1991) (Ross, J.). Attorney fees application: (i) fees should be grouped by project, (ii) paralegal fees separately allowed as costs so long as not for secretarial work, and (iii) telephonic motion practice encouraged to avoid travel expenses. In re J. R. Moneymaker Const., Inc., 2 ABR 68 (Bankr. D. Alaska 1991) (Ross, J.). Estate funds not to be used to pay debtor's attorney fees for services regarding dischargeability of IRS claim. In re Grove, 2 ABR 153 (Bankr. D. Alaska 1991) (Ross, J.). Representation of creditor in unrelated matter does not disqualify attorney from representing debtor-in-possession if no actual conflict presented, but payment of bankruptcy retainer by creditor presents divided loyalty problem precluding representation of debtor. In re Alaska Towboat Corp., 2 ABR 166 (Bankr. D. Alaska 1991) (Ross, J.). Bankruptcy representation retainer, paid and purportedly earned prepetition, is subject to Bankruptcy court review and, possibly, disgorgement. In re Bradley Const. Co., Inc., 2 ABR 259 (Bankr. D. Alaska 1992) (Ross, J.). Alaska Bankruptcy Court Decisions 1997-1998 Page 5 Prepetition retainer is property of the estate and subject to review; lodestar approach is first step in analyzing attorney fees, but is not mandated in all cases; attorney has the burden of showing that fees are both reasonable and reasonably necessary for the benefit of the estate. In re Williamson, 2 ABR 262 (Bankr. D. Alaska 1992) (Ross, J.). Award of attorney fees and costs to stakeholder out of funds interpleaded may be justified, but motion must allocate attorney fees and costs attributable to interpleader. First Bank v. Olsen (In re Olsen), 1 ABR 510 (Bankr. D. Alaska 1991) (Ross, J.). Retroactive effect will not be given to order approving employment of attorneys for debtor where delay in applying for the order results from inexcusable or unexplained neglect. In re Martinson Gravel & Crane, Inc., 1 ABR 517 (Bankr. D. Alaska 1991) (Ross, J.). B. Other Professionals. Accountant’ fee application tentatively denied to the extent that ostensibly s clerical work (data input) was billed at professional’ rate without showing that work was s not of a clerical nature or otherwise justifying performance by highly paid accounting professional. In re Markair, Inc., 4 ABR 525 (Bankr. D. Alaska 1997) (Ross, J.). Chapter 13 debtor operating a business need not obtain prior court approval for appointment of professionals. However, such professionals must file fee applications. In re Nesbitt, 4 ABR 246 (Bankr. D. Alaska 1996) (Ross, J.). Chapter 11 debtor is authorized to employ an accountant who is not a "certified public accountant" so long as such accountant is qualified to practice public accounting under AS 08.04. In re Nesbitt, 4 ABR 252 (Bankr. D. Alaska 1996). A realtor who failed to disclose that he was a broker for the debtor prepetition was entitled to his brokerage fees in light of the fact that the omissions were innocuous. It is appropriate to foster confidence in professionals who are employed by a trustee after Court authorization that their fees will be paid upon substantial completion of their commitments. In re OPS, Inc., 4 ABR 76 (Bankr. D. Alaska 1995) (Ross, J.). The reasonableness of fees for services rendered to the estate falls within the discretion of the Bankruptcy court. The Bankruptcy court's determination will be set aside only when the Bankruptcy court abused its discretion or erroneously applied the law. Preblich v. Battley (In re Preblich), 3 ABR 288, 291 (Bankr. 9th Cir. 1993) (Russell, Volinn and Baum, J.). Alaska Bankruptcy Court Decisions 1997-1998 Page 6 Bankruptcy court did not abuse its discretion in awarding fees to an environmental clean up company where the Chapter 7 trustee, in good faith, obtained professional opinion regarding clean up costs and the fees were reasonable based on the cost estimate. Preblich v. Battley (In re Preblich), 3 ABR 288, 291 (Bankr. 9th Cir. 1993) (Russell, Volinn and Baum, J.). C. Trustees (Including Powers and Duties). Section 321 establishes mandatory eligibility requirements for a Chapter 7 trustee. A person must have a residence or an office in Alaska in order to be qualified to serve as a trustee. An individual who sets up an office in Alaska a week before the first meeting of creditors and who lives and works in N.Y. is not qualified to serve as trustee. In re Martech, 4 ABR 72 (Bankr. D. Alaska 1995) (MacDonald, J.) affirmed, J.P. Morgan Investment Management, Inc. v. U.S. Trustee (In re Martech USA, Inc.), 4 ABR 200, 203 (Bankr. 9th Cir. 1995), affirmed in J.P. Morgan Investment Management, Inc. v. U.S. Trustee, 4 ABR 446 (9th Cir. 1995). An order resolving an election dispute and appointing an interim trustee should be considered final for purposes of determining appellate jurisdiction of the Bankruptcy Appellate Panel. J.P. Morgan Investment Management, Inc. v. U.S. Trustee (In re Martech USA, Inc.), 4 ABR 200, 203 (Bankr. 9th Cir. 1995) ), affirmed in J.P. Morgan Investment Management, Inc. v. U.S. Trustee, 4 ABR 446 (9th Cir. 1995). Trustee precluded from reclaiming abandoned asset, even if there is a subsequent increase in the value of the asset. An abandoned asset cannot be recovered unless the asset (i) was unscheduled, (ii) was concealed from the trustee, or (iii) there was a mistake and the order will not unfairly prejudice the parties. James v. Dick Fischer Development (In re Gaudiane), 2 ABR 431 (D. Alaska 1992) (Muecke, J.). Chapter 7 trustee personally liable for negligence or intentional wrongdoing in liquidation of estate and for failure to provide information. Kaufman v. Lauber (In re Kaufman), 2 ABR 10 (Bankr. D. Alaska 1991) (MacDonald, J.). Chapter 7 trustee's expenses for secretary/paralegal services denied because unjustifiable (large expense without reasonable likelihood of recovery). In re Greg's Plumbing & Heating, Inc., 1 ABR 465 (Bankr. D. Alaska 1991) (Ross, J.). D. U.S. Trustees. Power to appoint and remove members of equity security holders' committees resides exclusively with the U.S. Trustee. In re O'Malley Fund, 3 ABR 195 (Bankr. D. Alaska 1993) (Ross, J.) III. Automatic Stay/Injunctions. Alaska Bankruptcy Court Decisions 1997-1998 Page 7 Judgment lien creditor’ postpetition receipt of permanent fund dividend s and subsequent state court exemption litigation violated automatic stay. In re John Jousma, 4 ABR 510 (Bankr. D. Alaska 1997) (MacDonald, J.). Court grants sanctions against creditors for reasonable attorneys’ fees and costs incurred by debtor for bringing motion for sanctions when creditor refused to turnover possession of real property to debtor in violation of automatic stay. A levy on real property does not entitle the judgment creditor and his attorney to possess the property since they are not custodians under 11 U.S.C. § 543. In re Frank Rudolph Pluid, 5 ABR 137 (1997) (MacDonald, J.). The criteria for entering a preliminary injunction involving loss of income, established in Stanley v. University of Southern California, 13 F.3d 1313 (9th Cir. 1994), include a balancing of the hardships on the moving and non-moving parties. Since the balancing of the hardships is a close question, the court denied the request for a preliminary injunction, and instead ordered an early trial (to be heard within three months), under Federal Rule of Civil Procedure 65(a)(2), in order to reduce the harm suffered by the moving party. In re Boyko & Flansburg, P.C., 4 ABR 152 (Bankr. D. Alaska 1995) (Ross, J.). Relief from Stay is appropriate where debtor's interest in the lease was terminated prepetition, because under the provisions of 11 U.S.C. § 365(c), the trustee cannot assume an unexpired lease of "non-residential real property that has been terminated under applicable nonbankruptcy law prior to the order for relief." In re Lee, 4 ABR 173 (Bankr. D. Alaska 1995) (MacDonald, J.). A bank may properly freeze a bank account at the request of a Chapter 7 trustee and interplead the monies pending determination as to distribution of the funds. Olsen v. Zerbetz (In re Olsen), 4 ABR 16, 23 (9th Cir. 1994). A creditor who foreclosed its maritime lien on a vessel did not violate the automatic stay despite the fact that the debtor's property was on board the vessel. Chugach Timber Corp. v. Northern Stevedoring & Handling Corp. (In re Chugach Forest Products, Inc.), 3 ABR 389 (9th Cir. 1994) (Hug, Hall and Thompson, J.J.). In light of the fact that omitted creditors would be afforded an opportunity to challenge the dischargeability of their claims, the Bankruptcy court did not err in determining that their claims would be discharged under § 727. McCarty v. Shelver (In re Shelver), 3 ABR 402, 407 (Bankr. 9th Cir. 1994) (Ollason, Jones and Russell, J.J.). Prepetition waiver of the automatic stay is unenforceable. In re Aurora Towing, Inc., 3 ABR 184 (Bankr. D. Alaska 1993) (MacDonald, J.). Alaska Bankruptcy Court Decisions 1997-1998 Page 8 Lack of equity test under § 362(d)(2) is inapplicable in Chapter 13 cases. Relief from stay under § 362(d)(1) is discretionary. Alaska Housing Finance Corporation v. Ferguson, 3 ABR 1 (D. Alaska 1992) (Singleton, J.). Relief from stay under § 362(d)(1) discretionary; relief from stay under § 362(d)(2) mandatory where conditions satisfied, but nature of relief discretionary; § 362(d)(2) not applicable in Chapter 13 cases; interest in property to be adequately protected under § 362(d)(1) does not include mortgage insurance. Lomas Mortgage U.S.A. v. Fischer (In re Fischer), 2 ABR 323 (D. Alaska 1992) (Singleton, J.); Lomas Mortgage USA v. Wiese (In re Wiese), 3 ABR 68 (9th Cir. 1992) (where relief from stay discretionary, abuse of discretion standard on appeal). Safe harbor on appeal under Section 363(m) overrides ten day stay of execution under FRBP 7062 (since amended to make this explicit) Ames v. Battley (In re Ames), 2 ABR 496 (Bankr. 9th Cir. 1992). Mortgagee who has obtained judgment of judicial foreclosure against debtor but has not conducted a sale on execution violates automatic stay by exercising control over mortgaged property and personal property therein. In re Christensen, 2 ABR 474 (Bankr. D. Alaska 1992) (MacDonald, J.). Automatic stay not violated by contracts for sale of encumbered asset premised upon relief from stay. James v. Dick Fischer Development (In re Gaudiane), 2 ABR 431 (D. Alaska 1992) (Muecke, J.). Standards for discretionary stay on appeal: (i) appellant likely to succeed on the merits on appeal, (ii) appellant will suffer irreparable injury, (iii) no substantial harm to appellee, and (iv) stay will not harm the public interest. In re Eagle Fisheries, L.P., 2 ABR 350 (Bankr. D. Alaska 1992) (Ross, J.). Section 362 does not stay proceedings in which debtor is in offensive posture; stay should be annulled, nunc pro tunc, if violation is technical and unintentional and if failure to annul would result in needless repetition of proceedings. Torrey v. Bismark (In re Torrey), 2 ABR 45 (D. Alaska 1991) (Holland, J.). Judicial economy of completing litigation in state court constitutes cause to lift automatic stay. In re Bell, 1 ABR 485 (Alaska 1991) (Ross, J.). Temporary restraining order to prevent foreclosure of deed of trust denied (stay had previously been lifted per drop-dead agreement) where there had been successive Chapter 13 filings, previous stripdown, and sporadic payments. Lester v. Goldome Realty Credit Corp. (In re Lester), 2 Alaska Bankruptcy Court Decisions 1997-1998 Page 9 ABR 58 (Bankr. D. Alaska 1991) (Ross, J.) ("[A] stipulation made by parties voluntarily setting deadlines should not be so lightly turned aside"). Bankruptcy court lacks jurisdiction to enjoin post-confirmation actions of non-debtor (not involving violation of plan); to obtain injunction, moving party must show: (1) likelihood of success on the merits; (2) no adequate remedy at law; (3) a balance of equities favoring relief; and, possibly, (4) public interest favoring relief. Ryan Air Service, Inc. v. State of Alaska (In re Ryan Air Service, Inc.), 2 ABR 76 (Bankr. D. Alaska 1991) (Ross, J.). Bankruptcy Appellate Panel decisions not binding on Bankruptcy court. Haida Corp. v. Coleman Drilling, Inc. (In re Haida Corp.), 2 ABR 298 (Bankr. D. Alaska 1992) (Ross, J.). IV. Property of the Estate. The Trustee failed to prove adverse possession against co-tenants by clear and convincing evidence in case involving convoluted factual background related to remote mining claims. The Trustee must, in order to demonstrate "ouster" of a co-tenant, show that sufficiently clear notice of adverse possession was provided. In addition, Court found that individuals were judicially estopped from denying that the corporate bankruptcy estate owned various mining claims when the corporation was listed on annual labor affidavits for l978-l984, the final year being the year the corporate bankruptcy was filed. The individuals, shareholders of the corporation, listed that the corporation owned the mining claims on the schedules and statements filed in the bankruptcy matter. Subsequent to the Chapter 11 filing, the annual labor affidavits, which were produced by the individuals, listed the individuals and not the corporation as owner of the mining claims. Under these circumstances, the individuals were judicially estopped from denying corporate ownership of the mining claims. Bennie Leonard v. Eric E. Wieler, et al., (In re Gold King Mines, Inc.), 4 ABR 372 (Bankr. D. Alaska l996) (Ross, J.). Pursuant to § 156 of the Restatement (2nd) of Trusts, the bankruptcy trustee may reach assets in a self-settled trust where the trustee of the trust has discretion to distribute trust assets entirely to the settlor. Barstow v. Ferrara (In re Ferrara), 3 ABR 472 (Bankr. D. Alaska 1994). A constructive trust is an equitable remedy that cannot affect rights in the "res" until the constructive trust is imposed. Even if a constructive trust may be imposed under state law, the Bankruptcy court may refuse to enforce the constructive trust in light of overriding bankruptcy considerations. Airwork Corp. v. MarkAir Express, Inc. (In re MarkAir, Inc.), 4 ABR 1, 9 (Bankr. 9th Cir. 1994) (Jones, Russell and Ollason, JJ.). Inter vivos trust fails for want of a trustee and delivery of the trust res. Debtor forfeited exemption with respect to property that she voluntarily transferred postpetition. Safe harbor on appeal under § 363(m) overrides ten day stay of execution under FRBP 7062 (since amended to make this explicit). Ames v. Battley (In re Ames), 2 ABR 496 (Bankr. 9th Cir. 1992). Alaska Bankruptcy Court Decisions 1997-1998 Page 10 Child support owed to debtor is not property of the bankruptcy estate. Henderson, 1 ABR 528 (Bankr. D. Alaska 1991) (Ross, J.). V. Exemptions. In re Amended claim of exempt property, seeking to exempt personal injury proceeds, denied based upon clear and convincing evidence of prejudice to the estate when the delayed filing of the amendment prevented the trustee from protecting from dissipation nonexempt portion of the proceeds. In re Margarita Hall, 4 ABR 500 (Bankr. D. Alaska 1997) (MacDonald, J.). Failure to object to debtor’ claim of exempt property does not preclude s judicial lienholder from defending a lien avoidance action. In re John Jousma, 4 ABR 510 (Bankr. D. Alaska 1997) (MacDonald, J.). 11 U.S.C. § 522(f) may not be used by a debtor to avoid a judgment lien, established in a divorce decree, on a debtor's home. See Farrey v. Sanderfoot, 111 S. Ct. 1825 (1991), In re Brooner, 4 ABR 144 (Bankr. D. Alaska 1995) (MacDonald, J.). An IRS lien is a statutory lien, not a judicial lien. Accordingly, the IRS lien could not be avoided under § 522(f). In re Casagranda, 4 ABR 71 (Bankr. D. Alaska 1995). Proceeds of IRA account lost exempt status when the funds were distributed to creditors. In re Murphy, 3 ABR 345, 346 (Bankr. D. Alaska 1994). Individual partner cannot exempt partnership property. In re Brady, 3 ABR 101 (Bankr. D. Alaska 1993) (MacDonald, J.). Homestead exemption allowed for full duplex and adjoining lots where debtor's dependents (though perhaps not debtor) occupied one-half of duplex and made residential use of the adjoining lots. In re Rose, 3 ABR 190 (Bankr. D. Alaska 1993) (MacDonald, J.). Husband’ interest, as tenant by the entirety, in a car worth $5700 is nominal in light of s the fact that the car cannot be partitioned and the cost of partitioning would be substantial. Accordingly, the lien of a creditor who obtained a judgment solely against the husband would be avoided under § 522 as impairing the husband's exemption. Fincher v. Evans (In re Fincher), 3 ABR 526 (Bankr. D. Alaska 1994) (MacDonald, J.). Dissolution decree vesting title in debtor subject to equitable interest to secure payment of property settlement obligation creates "judicial lien" under bankruptcy code, but that judicial lien is Alaska Bankruptcy Court Decisions 1997-1998 Page 11 not avoidable under § 522(f)(1) since debtor's interest created simultaneously with attachment of the judicial lien. Yerrington v. Yerrington (In re Yerrington), 2 ABR 488 (Bankr. 9th Cir. 1992). No exemption of fishing vessel as homestead because debtor lacked intent to reside on the vessel; converting nonexempt assets to exempt assets is not basis for denying exemption. In re Dobson, 1 ABR 459 (Bankr. D. Alaska 1991) (Ross, J.). Adoption of federal common law definition of spendthrift trust in In re Kincaid, 917 F.2d 1162 (9th Cir. 1990), rejected as inconsistent with body of Ninth Circuit case law that §541(c)(2) refers to "state spendthrift trust law" and not federal "non-bankruptcy law" or some generic federal standard; discussion of factors for determining whether a pension fund is exempt under § 522(d)(10)(E). Jury v. Jury (In re Jury), 2 ABR 278 (Bankr. D. Alaska 1992) (Ross, J.). I.B.E.W. pension plan is valid spendthrift trust under Alaska law and is not self-settled; debtor's interest is not property of the estate, but it is, nevertheless, subject to federal tax lien. Anderson v. United States of America (In re Anderson), 2 ABR 82 (Bankr. D. Alaska 1991) (MacDonald, J.), aff'd, Anderson v. United States of America (In re Anderson), 3 ABR 59 (Bankr. 9th Cir. 1992). Debtor's interest in ex-spouse's Civil Service Retirement System benefits exempt and, given statutory anti-assignment provision, may be excluded from the bankruptcy estate as a spendthrift trust; Alaska Public Employee Retirement System benefits exempt under AS 09.38.055 and, alternatively, would likely be excluded from the estate as a spendthrift trust. In re Henderson, 1 ABR 528 (Bankr. D. Alaska 1991) (Ross, J.). VI. Abandonment. In determining propriety of abandonment, the court must consider the value of the asset to the estate rather than the consequences to the debtor. However, where the trustee's decision to abandon some property and not others is arbitrary and where the trustee has delayed in administering assets to the detriment of the debtors, the trustee will not be allowed to abandon an asset which would have left the debtors with significant tax liability. In Re Glaeser, 4 ABR 63 (Bankr. D. Alaska 1995) (MacDonald, J.). Unscheduled malpractice claim not abandoned under general order for abandonment; argument that malpractice claim "inextricably intertwined" with abandoned promissory note rejected since malpractice claim was an asset separate and apart from the note. Pace v. Battley (In re Pace), 2 ABR 516 (Bankr. 9th Cir. 1992). Abandonment order amended to correct clerical error: only scheduled property affected by abandonment order. In re Pace, 2 ABR 34 (Bankr. D. Alaska 1991) (MacDonald, J.). Alaska Bankruptcy Court Decisions 1997-1998 Page 12 Under § 522(f)(1), debtor may avoid lien of ex-spouse securing property settlement where title to lien property had been vested solely in debtor. In re Yerrington, 2 ABR 25 (Bankr. D. Alaska 1991) (MacDonald, J.). VII. Discharge/Dischargeability. Conversion of case from Chapter 7 to Chapter 13 after discharge entered in the Chapter 7 case permitted only on condition that Chapter 7 discharge be set aside. In re Clifford N. Buchta, 4 ABR 496 (Bankr. D. Alaska 1997) (Ross, J.). No collateral estoppel effect given state court default judgment (for NSF check) where judgment could have been obtained without proving that debtor engaged in predicate acts for nondischargeablility under section 523(a)(6). In re Ronald Alan Braman d/b/a GT Transportation and Lois Marie Braman, 5 ABR 38 (Bankr. D. Alaska 1997) (Ross, J.). Court denies motion for summary judgment seeking to establish the nondischargability of a debt under Section 523(a)(2)(A) on the basis that material questions of fact exist and the moving party has not adequately justified the legal basis for a recovery. There was insufficient evidence that debtor had misrepresented status of collateral granted to attorney to secure unpaid attorneys’ fees. Court denies motion even though debtor did not object to the motion. Key inquiry for Court in Section 523(a)(2)(A) action is intent of the debtor at the time of the alleged misrepresentation of fraud. Wickersham v. Smith (In re David K. Smith), 5 ABR 145 (1997) (Ross, J.). Court denies debtor’ discharge under § 523(a)(2) with respect to certain s damages. Court finds insufficient evidence to award emotional damages caused by debtor’ willful and malicious behavior. Court awards judgment in favor of plaintiff and s against defendant, plus interest at the federal judgment rate. Subramanian v. Talwar (In re Sanjay Talwar and Molina Talwar), 5 ABR 111 (Bankr. D. AK 1997) (Ross, J.). Court grants creditor’ motion for reconsideration of award of attorneys fees s granted under Section 523(d). Court finds that it had incorrectly assumed that the nondischargeability complaint contained a count under Section 523(a)(2). Since it did not, attorneys fees were improperly awarded. In addition, Court denies creditor’ motion for s reconsideration of its ruling that found it to be dischargeable. Norwest Financial v. Brommels (In re Kimberly May Brommels), 5 ABR 109 (Bankr. D. AK 1997) (Ross, J.). Court upholds dischargability of debt to creditor since creditor failed to demonstrate that debtor acted “willfully and maliciously” as required by Section 523(a)(6). Moreover, debtor showed reasonably good faith in attempting to resolve the issues surrounding the debt such that creditor’ prosecution was “substantially unjustified” based s Alaska Bankruptcy Court Decisions 1997-1998 Page 13 on the facts. Court awards $500 of attorneys fees to debtor, but this award was reversed in response to motion to reconsider by creditor. Norwest Financial v. Brommels (In re Kimberly May Brommels), 5 ABR 109 (Bankr. D. AK 1997) (Ross, J.). Pendency of reaffirmation agreement did not toll or otherwise extend bar date for filing dischargeability action, notwithstanding debtor’ rescission of reaffirmation agreement after passing of s bar date for filing dischargeability action. In re Marsh, 4 ABR 439 (Bankr. D. Alaska 1996) (Ross, J.). Creditor has initial burden of showing facts supporting its entitlement to nondischargeability. Airport Rentals, Inc. v. Bonham, 4 ABR 441 (Bankr. D. Alaska 1996) (Ross, J.). In determining whether a debt should be excluded from discharge under §523(a)(2)(B), a creditor must show that its reliance on a written financial statement was reasonable, rather than justifiable. First National Bank of Anchorage v. O'Neill (In re O'Neill), 4 ABR 256 (Bankr. D. Alaska 1996) (MacDonald, J.). In determining whether a debt incurred in a divorce decree or separation agreement is excepted from discharge under § 523(a)(15), the non-debtor spouse has the initial burden of proving that the marital debt is not in the nature of support. The burden of proof then shifts to the debtor to show (i) inability to pay under § 523(a)(15)(A) or (ii) benefit greater than the detrimental consequences to the former spouse under § 523(a)(15)(B). Goodrich v. Gallien (In re Gallien), 4 ABR 191 (Bankr. D. Alaska 1995) (MacDonald, J.). Debtors' tax liability is non-dischargeable under 11 U.S.C. § 523(a)(1)(C) where the debtors failed to file timely tax returns, failed to pay taxes due with the returns in a timely manner, and engaged in a scheme obviously aimed at concealing their income and assets through the use of phony corporations and foreign nationals (i.e., where debtors voluntarily, consciously and intentionally evaded and defeated their tax liabilities). In re Mungle, 4 ABR 176 (Bankr. D. Alaska 1995) (MacDonald, J.). A discharge shall be denied under § 727(a)(2)(A) if a creditor shows: (1) a transfer of property, (2) the property was property of the debtor, (3) the transfer was made within one year of the date of filing of the petition, and (4) the debtor had, at the time of the transfer, the intent to hinder, delay or defraud a creditor. Cummings v. Sea Lion Corp., 3 ABR 371 (D. Alaska 1994) (Holland, J.); aff’ In re Ronald E. Cummings, 5 ABR 42 (9th Cir. 1997). d, Failure to serve debtors with complaint objecting to discharge within 120 days of filing excused due to consolidation of contested matter, in which debtor had appeared through counsel, with discharge proceeding. Loveless/Tollefson Properties v. Harris (In re Harris), 3 ABR 270 (Bankr. D. Alaska 1993) (Ross, J.). Alaska Bankruptcy Court Decisions 1997-1998 Page 14 The Bankruptcy court improperly entered a default judgment based on a complaint that merely sets forth the statutory language of § 727(a). Kubick v. FDIC (In re Kubick), 4 ABR 33, 40 (Bankr. 9th Cir. 1994) (Prior to entry of a default, the court should consider the following factors: (i) the possibility of prejudice to the plaintiff, (ii) the merits of the plaintiff's substantive claim, (iii) the sufficiency of the complaint, (iv) the sum of money at stake in the action, (v) the possibility of a dispute concerning material facts, (vi) whether the default was due to excusable neglect, and (vii) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.) The issuance of a single NSF check may be insufficient grounds for nondischargeability of the debt. However, the issuance of several NSF checks, to numerous creditors without depositing funds to cover the checks, constitutes a prima facie case for nondischargeability under § 523(a)(2)(A) (obtaining services or property by misrepresentation). Taylor v. Howell (In re Howell), 3 ABR 411 (Bankr. D. Alaska 1994) (Ross, J.). Civil penalties assessed under state law for NSF checks are not dischargeable under § 523(a)(2)(A) (willful and malicious injury). Taylor v. Howell (In re Howell), 3 ABR 470 (Bankr. D. Alaska 1994) (Ross, J.). Default judgment determining nondischargeability of debt will not be set aside unless the debtor can show a meritorious defense. Kleberg First Nat'l Bank v. Kubick (In re Kubick), 3 ABR 416, 422 (Bankr. D. Alaska 1994) (Ross, J.). An innocent spouse's discharge should not be adversely affected by wrongful conduct of spouse. Kleberg First Nat'l Bank v. Kubick (In re Kubick), 3 ABR 416, 422 (Bankr. D. Alaska 1994) (Ross, J.). "Property of the estate," for purposes of determining whether discharge may be revoked under § 727(d)(2), may include a debtor’ undisclosed, concealed interest in property s transferred to a relative. Battley v. Vockner (In re Vockner), 3 ABR 425 (Bankr. D. Alaska 1994) (Ross, J.). For collateral estoppel purposes, the issue of whether the debtor brought an action in bad faith and for purposes of harassment under the Fair Debt Collection Practices Act is "identical" to the issue of whether the debtor’ conduct was "willful and malicious" under § 523(a)(6). Thus, the s state court’ finding of bad faith will be given collateral estoppel effect on the "willful and malicious" s injury issue. Alaska Financial Services v. Brown (In re Brown), 3 ABR 462 (Bankr. D. Alaska 1994) (Ross, J.). A debt by a mother to her children is not dischargeable under § 523(a)(6) when the mother spent the money contained in a savings account she was required to maintain for the benefit of her children under a divorce decree. The mother spent the money on herself when she had a steady Alaska Bankruptcy Court Decisions 1997-1998 Page 15 income and money in the bank of her own. Henrie v. Beatty (In re Beatty), 3 ABR 530 (Bankr. D. Alaska 1994) (MacDonald, J.). A debtor who acts, in good faith, upon the advice of his attorney does not have the requisite intent to hinder or delay a creditor. Briske v. North Slope Borough, 3 ABR 295, 299 (D. Alaska 1993) (Sedwick, J.) citing In re Adeeb, 787 F.2d 1339, 1343 (9th Cir. 1986). However, reliance on legal advice obtained based on partial disclosure of the relevant facts does not preclude a finding of actual intent to hinder or delay creditors. Id. citing In re Mascolo, 505 F. 2d 274, 276 (1st Cir. 1974). Denial of discharge under § 727(a)(2) for transferring property of the estate with intent to defraud creditors and under § 727(a)(4) for making false oaths affirmed on appeal where debtor failed to disclose his interest in certain fuel tanks, sold the fuel tanks post petition without court approval and then made false statements about the transfer during his 2004 examination. Briske v. North Slope Borough (In re Briske), 3 ABR 295 (D. Alaska 1993). Prejudgment interest on claim for fraudulent to make a loan may be awarded in order to fully compensate lender. Prejudgment interest will be determined by state law and post judgment interest will be at the federal rate. Prescott Equipment Co. v. Dronenburg (In re Dronenburg), 3 ABR 301, 305 (Bankr. D. Alaska 1994) (MacDonald, J.). In order to recover under § 523(a)(4) for "fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny," there must be a pre-existing trust relationship. Prescott Equipment Co. v. Dronenburg (In re Dronenburg), 3 ABR 301, 305 (Bankr. D. Alaska 1994) (MacDonald, J.). Minor's purchase of alcohol, which he shared with friend who caused auto accident, did not cause "willful and malicious injury" to victim for purposes of exception to discharge under § 523(a)(6) of the Bankruptcy Code (careful discussion of "willful and malicious" concept). Damesek v. Holta (In re Holta), 3 ABR 106 (Bankr. D. Alaska 1993) (MacDonald, J.). Guardian ad litem fees incurred in custody dispute are nondischargeable child support under § 523(a)(5). Harrington v. Wood (In re Wood), 3 ABR 86 (Bankr. D. Alaska 1992) (MacDonald J.). Creditor who prevailed in dischargeability litigation denied attorneys fees. Notwithstanding contractual provision for attorneys fees, where issues involve not basic contract enforcement questions, but issues peculiar to federal bankruptcy law, attorneys fees will not be awarded. Key Bank of Puget Sound v. Martin (In re Martin), 2 ABR 398 (Bankr. 9th Cir. 1992) (MacDonald, J.). Alaska Bankruptcy Court Decisions 1997-1998 Page 16 State court has concurrent jurisdiction to determine dischargeability issues. In re McDonald, 2 ABR 362 (Bankr. D. Alaska 1992) (Ross, J.). Under § 523(a)(2)(A), fraudulent inducement to make loan not sufficient to establish that damages proximately resulted from the misrepresentation; discharge denied based upon (i) debtors' evasion of collection efforts by closing bank accounts, dealing in cash, avoiding service of writ of execution and transfer of funds into daughter's account, (ii) nondisclosure of assets/values in bankruptcy schedules, and (iii) failure to explain change of net worth from $780,000 to minus $1.5 million in less than two years. Cummins Financial, Inc. v. Norman (In re Norman), 2 ABR 248 (Bankr. D. Alaska 1991) (MacDonald, J.), rev'd in part, Cummins Financial, Inc. v. Norman (In re Norman), 3 ABR 8 (D. Alaska 1992) (Holland, J.) (For a claim to be excepted from discharge under § 523(a)(2)(A), creditor need only prove that extension of credit was induced by fraudulent representation, not that loan losses were proximately caused by fraudulent representation.). Elements of claim for fraudulent misrepresentation under § 523(a)(2)(A) are: (1) a representation of fact with debtor, (2) that was material, (3) that the debtor knew at the time to be false, (4) that the debtor made with the intention of deceiving the creditor, (5) upon which the creditor relied, (6) that the creditor's reliance was reasonable, and (7) that damage proximately resulted from the misrepresentation; prejudgment interest based on state law, but post-judgment interest based on federal rate; punitive damages and attorneys' fees not recoverable in nondischargeability actions based on fraud. Caswell v. Briske (In re Briske), 2 ABR 89 (Bankr. D. Alaska 1991) (MacDonald, J.); see also Cummins Financial, Inc. v. Norman (In re Norman), 2 ABR 248 (Bankr. D. Alaska 1991) (MacDonald, J.) (elements of claim under § 523(a)(2)(A)), Prescott Equipment Co. V. Dronenburg (In re Dronenburg), 3 ABR 301 (Bankr. D. Alaska 1994) (MacDonald, J.) (elements of claim under § 523(a)(2)(A)), Rice v. Johnson (In re Johnson), 3 ABR 311, 314 (Bankr. D. Alaska 1994) (MacDonald, J.) (elements must be proven by a preponderance of the evidence). Claim arising from prepetition sale of debtor's business, induced by fraudulent financial statements, nondischargeable; damages under § 523(a)(2)(B) measured in accordance with Restatement (Second) of Torts § 549 (1976); damages for mental anguish or stress not recoverable for fraud, nor are remedies of rescission or specific performance available in an exception to discharge case; attorneys' fees not recoverable in proceedings under § 523(a)(2)(B). Morrow v. May (In re May), 1 ABR 488 (Bankr. D. Alaska 1991) (MacDonald, J.), aff'd, May v. Morrow (In re May), 3 ABR 37 (Bankr. 9th Cir. 1992) affirmed, Morrow v. May (In re May), 3 ABR 247 (9th Cir. 1993); see also Rice v. Johnson (In re Johnson), 3 ABR 311, 314 (Bankr. D. Alaska 1994) (MacDonald, J.) (awarding out of pocket costs rather than the "benefit of the bargain" where both parties had unclean hands), aff’ Rice v. Johnson (In re Johnson), 3 ABR 515 (Bankr. 9th Cir. 1994) (Volinn, Ashland and d Ollason, JJ.). Father's debt to State of Alaska for foster care, though not a debt "to a spouse, former spouse, or a child of the debtor," is nondischargeable; sanctity of discharge questioned. Nelson v. State of Alaska (In re Nelson), 2 ABR 4 (Bankr. D. Alaska 1991) (Ross, J.). Alaska Bankruptcy Court Decisions 1997-1998 Page 17 Dischargeability deadline strictly enforced, but time complaint received by clerk, not time of date stamp, controls. Norwood v. Dowd (In re Dowd), 2 ABR 32 (Bankr. D. Alaska 1991) (Ross, J.). Characterization of divorce settlement award as (nondischargeable) "support" or (dischargeable) "property settlement" controlled by bankruptcy law, not state law. Wing v. McKelvie (In re McKelvie), 1 ABR 472 (Bankr. D. Alaska 1991) (Ross, J.); see also Whitfield v. Gabler (In re Whitfield), 1 ABR 496 (Bankr. D. Alaska 1991) (MacDonald, J.), Willis v. Willis (In re Willis), 3 ABR 308, 310 (Bankr. D. Alaska 1994) (Ross, J.) "Principal focus should be on the intent of the parties or the divorce court when responsibility to pay marital obligations was assigned to a debtor at the time of the divorce proceeding (not when the bankruptcy petition was filed or at the time of the dischargeability hearing)." Willis v. Willis, 3 ABR at 308. Educational loan not dischargeable under § 523(a)(8)(B) hardship exception unless debtor proves: (1) debtor cannot maintain "minimal" standard of living if forced to repay educational loan, (2) circumstances indicate that this state of affairs is likely to persist for a significant portion of the repayment period of loan, and (3) debtor has made good faith efforts to repay loan. Alaska Commission on Post Secondary Education v. Jester, 1 ABR 503 (D. Alaska 1991) (Singleton, J.); see also Petrini v. State of Alaska (In re Petrini), 2 ABR 288 (Bankr. D. Alaska 1992) (Ross, J.) (applying Jester three-part test). Federal tax lien not affected by discharge. Miranda v. United States of America (In re Miranda), 2 ABR 122 (Bankr. D. Alaska 1991) (MacDonald, J.); see also Connor v. United States (In re Connor), 2 ABR 138 (Bankr. D. Alaska 1991) (MacDonald, J.) (federal tax lien against former Alaska Supreme Court Justice's pension not avoided by discharge) affirmed, Connor v. United States (In re Connor), 3 ABR 455 (9th Cir. 1994). VIII. Avoidance Powers. A. Preferences. Debtor in possession’ waiver of avoidance claims is binding upon trustee in s converted case, but the waived claims may be prosecuted by creditors if the waiver is personal to the trustee. In re Martech USA, Inc., 4 ABR 480 (Bankr. D. Alaska 1997) (MacDonald, J.). Judicially mandated stock pledge subject to preference avoidance. In re James L. Dodson, 5 ABR 19 (Bankr. D. Alaska 1997) (Ross, J.). Monies collected pursuant to a writ of garnishment during the 90 days prior to bankruptcy may be avoided as a preference if the writ was issued outside the preference period. Alaska Bankruptcy Court Decisions 1997-1998 Page 18 Accord Prescott Equipment Co. v. Dronenburg (In re Dronenburg), 3 ABR 301, 305 (Bankr. D. Alaska 1994) (MacDonald, J.). B. Fraudulent Transfers. The right to pursue a fraudulent transfer action becomes property of the estate as of the petition date, even if such an action was commenced by a creditor prepetition. Generally, only the Trustee or debtor-in-possession is entitled to prosecute the avoidance action. Accordingly, the court disallowed the proof of claim filed by the creditor against the estate since (1) the creditor did not possess a direct claim against the debtors, and (2) the creditor did not possess a claim against the property that potentially would be recovered. In re 4M 2B Investors, 4 ABR 148 (Bankr. D. Alaska 1995) (Ross, J.). Statute of limitations on fraudulent transfer action does not begin to run until the trustee knows, or should know, of the transfer. In re L. Olsen, 3 ABR 158 (Bankr. D. Alaska 1993) (Singleton, J.), aff'd Olsen v. Zerbetz (In re Olsen), 4 ABR 13 (9th Cir. 1994). The six year statute of limitation provided in AS 09.10.050 is the appropriate statute of limitations for fraudulent transfers avoidable under Alaska law. Barstow v. Ferrara (In re Ferrara), 3 ABR 472 (Bankr. D. Alaska 1994). Given timing of transfers, relationships among transferees, suspicious structuring of transactions, and debtors' retention of control, transfers found to be for the purposes of hindering, delaying or defrauding creditors; continuing concealment brought transfers within reachback period. Loveless/Tollefson Properties v. Harris (In re Harris), 3 ABR 261 (Bankr. D. Alaska 1993) (Ross, J.). Where leasehold estate recovered in avoidance action, 60 day period under § 365(d)(4) of the Bankruptcy Code begins to run from the date the leasehold estate is reinstated, rather than entry of the order for relief. In re Olympic, Inc., 3 ABR 127 (Bankr. D. Alaska 1993) (Holland, J.). C. Strong Arm Powers. The Trustee can use § 544(a)(3), which grants to the Trustee the status of a bond fide purchaser, to establish superior rights in mining claims when the parties asserting rights vis-a-vis the estate do not have recorded interests. Bennie Leonard v. Eric E. Wieler, et al., (In re Gold King Mines, Inc.), 4 ABR 372 (Bankr. D. Alaska l996) (Ross, J.). D. Post Petition Transfers. A bankruptcy court will set aside a judgment obtained in an independent action for "fraud upon the court" only if there is clear evidence of an unconscionable scheme that improperly Alaska Bankruptcy Court Decisions 1997-1998 Page 19 influenced the court in entering the judgment; no ruling on claim allowance because issue moot (no asset case). Ricks v. Forshey (In re Ricks), 2 ABR 143 (Bankr. D. Alaska 1991) (MacDonald, J.). Period of limitations under § 549 tolled where debtors fail to notify trustee of postpetition transfer. Zerbetz v. Olsen (In re Olsen), 2 ABR 269 (Bankr. D. Alaska 1992) (Ross, J.). E. In General. Waiver of right to jury trial contained in loan agreement binds Chapter 7 trustee. Battley v. National Bank of Alaska (In re Martech USA, Inc.), 4 ABR 447, 471 (Bankr. D. Alaska 1996). Waiver of right to attack validity of prepetition security interests does not preclude Chapter 7 trustee from seeking equitable subordination of secured claims, as to all general unsecured creditors, pursuant to 11 U.S.C. § 510(c). Battley v. National Bank of Alaska (In re Martech USA, Inc.), 4 ABR 447, 470 (Bankr. D. Alaska 1996). IX. A. Claim Issues. Secured Claims. State court prepetition judgment that debtor’ former spouse entitled to s marital share of estate property (rather than partnership charging order) binding upon Bankruptcy Court under doctrine of full faith and credit. Under Alaska law, which is binding on this point, pendancy of state court appeal did not impair issue or claim preclusion effect of state court judgment, but state court finding on valuation too remote from petition date to be binding upon valuation of secured claim. In re Linda L. McQueary d/b/a Diamond H Ranch, 5 ABR 1 (Bankr. D. Alaska 1997) (Ross, J.). Prior perfected UCC security interest in "flat fish" and proceeds (perfected in Alaska and Washington) is superior to Washington State statutory a "processor lien" in favor of fishermen who deliver fish to a fish processing vessel. The Court questioned whether the Washington statute should be applied extraterritorially to fish delivered in international waters adjacent to Alaska when the processing vessels typically delivered the fish to Alaska ports (except when it was the last haul of the season when they would deliver their catch to Washington ports). Even if extraterritorial application was appropriate, the Court concluded that the facts of the case favors application of Alaska law under a choice of law analysis. The main factors viewed by the Court were that the fishery was closer to Alaska, and the processor mostly offloaded in Alaska; that the processor was owned by an Alaska corporation; that fishermen were from at least both Washington and Alaska and perhaps other places, which led the Court to conclude that viewing the choice of law from the processor's perspective would lead to more uniformity in result. Applying Alaska law, whether UCC law or Alaska fish processing Alaska Bankruptcy Court Decisions 1997-1998 Page 20 lien law, led to the conclusion that the prior perfected UCC security interest would be superior in right. In addition, the Court refused to find that seamen on the processing vessel possessed seamen's maritime lien that would be superior to either the UCC lien or the processor's lien. No case law for such an extension of the doctrine granting fishermen on a fishing boat a lien relating to their "lay share" of the catch was presented and, using a conservative interpretation approach, the Court refused to extend the doctrine. Although the Court raised preference and perfection issues with respect to the UCC lien, those issues were not before the Court, and the Court did not address any of these issues. In re Cold Sea International, Inc., 4 ABR 322 (Bankr. D. Alaska l996) (Ross, J.) Bank's deed of trust rights on property for construction loan made to builder are not subject to limitation contained in Fikes v. First Federal Savings & Loan Assoc. of Anchorage, 533 P.2d 25l (Alaska l975) vis-a-vis purchaser of home. Purchaser must pay reasonable value for the home. If purchaser decides not to purchase the home, it is entitled to an equitable lien for amount of materials and labor expended in enhancing the property. National Bank of Alaska v. Barstow, et al. (In re Quigley Enterprises, Inc.), 4 ABR 335 (Bankr. D. Alaska l996) (Ross, J.). A secured creditor who conducts a non-judicial foreclosure without notice to a purportedly junior lienholder lost her claim that her security interest was prior to the SBA's interest. Sowell v. Davis (In re Sowell), 4 ABR 92 (Bankr. D. Alaska 1995). Lien rights may be altered or impaired in a Chapter 11 plan where the secured creditor received adequate notice of the modification of its rights under a Chapter 11 plan. In re Hawkins Enterprises, 3 ABR 432 (Bankr. D. Alaska 1994) (MacDonald, J.). Collateral can be surcharged for fees and expenses under § 506(c) of the Bankruptcy Code only to the extent of the benefit to the secured creditor, which trustee bears the burden of proving in quantifiable terms. F/V Pacific Star v. Barstow (In re Eagle Fisheries), 3 ABR 114 (Bankr. D. Alaska 1993) (Sedwick, J.). Under AS 45.09.140(10), the Alaska Uniform Commercial Code does not apply to a security interest created by a deed of trust. Jackson v. Federal Home Loan Mortgage Corp. (In re L & C Development), 3 ABR 139 (Bankr. D. Alaska 1993) (Holland, J.) Unsecured portion of undersecured claim calculated by: (1) determining total allowed claim on petition date under § 502, (2) determining total allowed secured claim under §506(a), (3) deducting allowed secured claim from total claim, and (4) if estate is solvent, adding postpetition interest per §§ 726(a)(5). In liquidation case, transaction costs (including attorneys' fees) are deducted from collateral value to determine amount of allowed secured claim. Credit bid in maritime foreclosure is not conclusive as to value of collateral in determining amount of secured claim. Appropriate interest rate under § 726(a)(6) is federal judgment rate under 28 U.S.C. 1961 on petition date. In re Colpitts, 3 ABR 196 (Bankr. D. Alaska 1993) (Ross, J.). Alaska Bankruptcy Court Decisions 1997-1998 Page 21 Work performed on relocation of building from straddling lot line to within lot not "original construction" under AS 34.34.060(c); where parties participated in prior hearing, evidence may be considered in subsequent hearing; marshaling of assets governed by state law. In re Seaward, 3 ABR 170 (Bankr. D. Alaska 1993) (Ross, J.). No stripdown allowed under Chapter 7. Miranda v. United States of America (In re Miranda), 2 ABR 122 (Bankr. D. Alaska 1991) (MacDonald, J.); see also Raihl v. United States (In re Raihl), 2 ABR 193 (Bankr. D. Alaska 1991) (MacDonald, J.) (no Chapter 7 stripdown of federal tax lien); Connor v. United States (In re Connor), 2 ABR 138 (Bankr. D. Alaska 1991) (MacDonald, J.) (no Chapter 7 stripdown of federal tax lien). In valuing secured claim under § 506(a), liquidation costs should not be deducted from the value of the security when the debtor plans to retain the collateral. Hypothetical sales and other disposition costs not to be deducted from value of secured creditor's claim where debtor intends to retain the property. Goldome Realty Credit Corp. v. Perron, 2 ABR 414 (D. Alaska 1992) (Holland, J.); Lomas Mortgage USA v. Wiese (In re Wiese), 3 ABR 68 (9th Cir. 1992). In valuing residence for purposes of Chapter 13 stripdown, there should be no deduction of sale costs because sale not contemplated; mortgage insurance not included in secured claim. First Guaranty Mortgage v. Huber, 2 ABR 1 (D. Alaska 1991) (Kleinfeld, J.); see also Lomas Mortgage U.S.A. v. Fischer (In re Fischer), 2 ABR 323 (D. Alaska 1992) (Singleton, J.) (value of secured claim under Chapter 13 plan does not include value of mortgage insurance); Lomas Mortgage USA v. Wiese (In re Wiese), 3 ABR 68 (9th Cir. 1992) (mortgage insurance not to be taken into consideration in calculating the value of a secured claim under § 506(a) and §1322(b)(2)); Hartzberg v. State of Alaska (In re Hartzberg), 2 ABR 30 (Bankr. D. Alaska 1991) (MacDonald, J.) (Chapter 11 confirmation). For purposes of § 522(f)(1), property valued as of petition date. In re Yerrington, 2 ABR 25 (Bankr. D. Alaska 1991) (MacDonald, J.). Secured transactions (Washington UCC-9): listing debtor's proper name as trade name of incorrectly described debtor satisfies requirements for financing statement; combination of documents satisfies written security agreement requirement; "chief executive office" under UCC 9-103 defined. Barstow v. Murray (In re The Health Corporation), 2 ABR 103 (Bankr. D. Alaska 1991) (MacDonald, J.). B. Priority Claims. Secured creditor in prepetition possession of collateral acted for its own interests in preserving collateral and thus is not entitled to status of custodian under section 543, is not entitled to administrative expense claim under section 503(b)(3)(E), and, as to Alaska Bankruptcy Court Decisions 1997-1998 Page 22 postpetition expenses, is not entitled to administrative expenses under section 503(b)(1)(A). In re Verb, Inc., 4 ABR 492 (Bankr. D. Alaska 1997) (Ross, J.). C. Tax Claims. Ninth Circuit holds that good faith purchaser under Section 545(2) of the Bankruptcy Code is not necessarily a purchaser for “adequate and full consideration” as described in Section 6323(b)(1)-(h)(6) of the Internal Revenue Code. Therefore, Trustee of the bankruptcy estate was not allowed to avoid tax liens on basis of Section 545(2). Battley v. United States of America (In re James and Mary Berg), 5 ABR 105 (Ninth Circuit 1997). Court issued a “tentative ruling” that an escrow agent for proceeds of a vessel sale must deduct employment taxes and pay them to the government prior to payment to the Maritime Wage Lien Claimants. Midas Asset Management Corp. v. Atlas Asset Management Corp. (In re Cold Sea International, Inc.), 5 ABR 65 (Bankr. D. AK 1997) (Ross, J.). Judge Ross effectively overrules his earlier decision of In re Ryan Air Service, Inc., 3 ABR 375 (Bankr. D. AK 1994) by holding that 11 USC § 505(a)(2)(B) requires that a refund be “properly requested” under the taxing statute. A Bankruptcy Court does not have jurisdiction to make a free standing judgment that a refund is appropriate. The extensions of time limits found in 11 USC § 108(b) are not sufficiently long to make debtor’ current request timely. See In re Richard E. Wagner, 5 ABR 44 (Bankr. D. AK s 1997) (Ross, J.). “Effectively overruled by Judge Ross in In re Richard E. Wagner, 5 ABR 44, 50 (Bankr. D. AK 1997).” In a Chapter 11 case, debtor denied ability to recoup tax refund against I.R.S. tax claim since the tax refund did not arise from the same transaction as the I.R.S’ tax claim. Recoupment is restricted to circumstances where the claims arise from the same transaction. Debtor would have been allowed an offset if he had filed for tax refund in a timely manner. In re Richard E. Wagner, 5 ABR 44 (Bankr. D. AK 1997) (Ross,J.). The I.R.S. established by a preponderance of the evidence that it conformed with the 26 U.S.C. § 6331(d) requirement of a Notice Before Levy, even though the I.R.S. could not produce a copy of the Notice itself, but where the I.R.S. did produce a mailing list indicating that notice was sent to the debtor/taxpayer's last known address. Additionally, the court held that the post-petition remittance of a Permanent Fund Dividend by the State of Alaska to the I.R.S. is not a violation of the automatic stay where the I.R.S. conducted a valid levy against the debtor/taxpayer prior to the petition date. Finally, the court held that a litigant cannot recover attorneys' fees and administrative costs under Alaska Bankruptcy Court Decisions 1997-1998 Page 23 26 U.S.C. § 7430 where positions taken by the I.R.S. were "substantially justified," meaning nonfrivolous. In re Camacho, 4 ABR 115 (Bankr. D. Alaska 1995) (MacDonald, J.). An indirect partner is entitled to be served with a copy of the Notice of Beginning of Administrative Procedure by the IRS. Camacho v. US (In re Camacho), 3 ABR 445 (Bankr. D. Alaska 1994) (MacDonald, J.) rev'd 4 ABR 270 (D. Alaska 1995) (Singleton, J.). When the IRS has filed a Notice of Tax Lien, a bankruptcy trustee may not avoid the federal tax lien under § 545(2) because the trustee does not qualify as a "purchaser" for purposes of 26 U.S.C. § 6323(b). Battley v. USA (In re Berg), 4 ABR 210 (Bankr. 9th Cir. 1995) reversing Battley v. USA (In re Berg), 4 ABR 89 (Bankr. D. Alaska 1995) (Ross, J.). The increased interest payable on tax motivated transactions under 26 U.S.C. §621(d) does not constitute a "penalty" and should be included in determining the amount of § 507(a)(8)(A) priority claim. In re Hall, 4 ABR 222 (Bankr. D. Alaska 1995) (MacDonald, J.). A bankruptcy court may determine the amount or legality of a tax claim pursuant to § 505(a) because the tax claim had not been adjudicated by a judicial or administrative tribunal. In re Chugach Alaska Corp., 3 ABR 359, 360 (Bankr. D. Alaska 1994) (MacDonald, J.). Even when a plan has been confirmed, the Bankruptcy court can determine under § 505, whether the Department of Labor properly applied the penalty rate for the debtor's share of the employment security taxes when the issue affects the scope of discharge under § 1141 and raises discrimination issues under § 525. In re Ryan Air Service, 3 ABR 375 (Bankr. D. Alaska 1994) (Ross, J.). The grounds for adjustment of ad valorem taxes under AS 29.45.210 are unequal, excessive or improper assessments or under valuation. The debtor bears the burden of proof. In re Chugach Alaska Corp., 3 ABR 359, 360 (Bankr. D. Alaska 1994) (MacDonald, J.). Charging a penalty rate for unpaid state taxes on the basis of delinquent taxes which have been discharged under § 1141 violates the Supremacy Clause and violates § 525 of the Code. In re Ryan Air Service, Inc., 3 ABR 375, 380 (Bankr. D. Alaska 1994). Claim for real estate taxes, which under state law give rise solely to in rem claims, not allowed where debtor no longer has any interest in the real property. In re Smith, 3 ABR 230 (Bankr. D. Alaska 1993) (Ross, J.). Federal tax lien attaches only to the residual value of liquor license sale proceeds after satisfaction of state and local taxes, but, as a matter of federal law, prior federal tax lien is superior to the claims of trade creditors who filed objections to the transfer. U.S.A. v. Stone (In re Stone), 3 ABR 275 (9th Cir. 1993). Alaska Bankruptcy Court Decisions 1997-1998 Page 24 Debtors' interests in pension plan and 401(k) plan are "property" or "rights to property" that are subject to a federal tax lien. Raihl v. U.S.A. (In re Raihl), 3 ABR 161 (Bankr. 9th Cir. 1993) (Russell, J.). Debtor allowed to carry back net operating losses to offset previously assigned income, but debtor may not retain excess assigned income. (ANCSA corporation net operating loss sale). In re Chugach Alaska Corporation, 2 ABR 386 (Bankr. D. Alaska 1992) (MacDonald, J.). The imposition of alternative minimum tax and environmental tax on debtor (an ANCSA corporation) does not deny debtor the benefit or use of its tax losses and credits contrary to § 1804(e)(5) of the Internal Revenue Code. Debtor (an ANCSA corporation) may not deduct costs incurred in Native child custody matters are ordinary and necessary expenses of its trade or business. In re Chugach Alaska Corporation, 2 ABR 525 (Bankr. D. Alaska 1992) (MacDonald, J.). Reversed in part, U.S.A. v. Chugach Alaska Corp., 3 ABR 205 (D. Alaska 1993) (Holland, J.), affirmed, Chugach Alaska Corp. v. U.S.A., 3 ABR 501 (9th Cir. 1994). ANCSA corporation may offset 1990 net operating losses against 1987 assigned income; ANCSA net operating losses may fully offset 1987 income in calculating Alternative Minimum Tax. Retirement pay earned postpetition is not subject to prepetition federal tax lien. Connor v. United States of America (In re Connor), 2 ABR 482 (Bankr. 9th Cir. 1992). Alaska liquor license is property subject to federal tax lien. Alaska's statutory condition for the transferability of a liquor license, i.e., payment of trade creditors, establishes a property interest in trade creditors that violates the supremacy of a federal tax lien. United States of America v. Battley (In re Kimura), 2 ABR 453 (9th Cir. 1992). Bankruptcy court has subject matter jurisdiction to determine effect of discharge and abandonment on federal tax lien on debtors' interest in 401(k) plan; federal tax lien not affected by discharge; no need for valuation of debtors' interest in 401(k) plan because no Chapter 7 stripdown allowed. Miranda v. United States of America (In re Miranda), 2 ABR 122 (Bankr. D. Alaska 1991) (MacDonald, J.); see also Raihl v. United States (In re Raihl), 2 ABR 193 (Bankr. D. Alaska 1991) (MacDonald, J.) (no stripdown of a federal tax lien). Debtor's Alaska liquor license is property to which a federal tax lien may attach, but the federal tax lien is subordinate to the "liens" or "holds" allowed under Alaska law. United States v. Stone (In re Stone), 2 ABR 127 (Bankr. 9th Cir. 1991). Federal tax lien against former Alaska Supreme Court Justice's pension not avoided by discharge; Bankruptcy court has subject matter jurisdiction to determine effect of discharge on federal tax lien; no Chapter 7 stripdown of federal tax lien. Connor v. United States (In re Connor), 2 ABR 138 (Bankr. D. Alaska 1991) (MacDonald, J.); see also Anderson v. United States of America (In re Anderson), 2 ABR 82 (Bankr. D. Alaska 1991) (MacDonald, J.) (I.B.E.W. pension plan is not Alaska Bankruptcy Court Decisions 1997-1998 Page 25 property of the estate but is subject to federal tax lien), aff'd, Anderson v. United States of America (In re Anderson), 3 ABR 59 (Bankr. 9th Cir. 1992). D. Allowance/Disallowance of Claims (Including Bar Date Issues). Excusable neglect does not enable tardily filed claim in a Chapter 13 case from sharing in distributions from the estate, but due process grounds may justify claim participation where debtor used wrong address on the matrix. In re Emil C. Johnson, 5 ABR 11 (Bankr. D. Alaska 1997) (Ross, J.). Failure to timely file a claim does not result in discharge of debt; stay against enforcement of untimely filed but nondischargeable support claim not favored. In re Emil C. Johnson, 5 ABR 11 (Bankr. D. Alaska 1997) (Ross, J.). Creditor who received notice of motion for extension of time to file schedules and plan, but no other notices in the case, not put on inquiry notice and due process requires allowance of its late filed claim. In re Emil C. Johnson, 5 ABR 15 (Bankr. D. Alaska 1997) (Ross, J.). Claim of creditor who learns about bankruptcy in time to file tardy claim under section 726(a)(2)(C) is subject to discharge since creditor is deemed to have learned about bankruptcy in time to make a timely claim for purposes of section 523(a)(3)(A). In re Alfred J. Ferrara and Gloria J. Ferrara, 5 ABR 26 (Bankr. D. Alaska 1997) (Ross, J.). Where a creditor was employed by a Chapter 11 estate and, therefore, knew of the case in time to file a proof of claim before the claims bar date, the creditor's late filed claim does not qualify for treatment under § 726(a)(2)(C). In re J.H. Moneymaker Construction, 4 ABR 228 (Bankr. D. Alaska 1995) (Ross, J.). Due to the Ninth Circuit decision in In re Chabot, 992 F.2d 891 (9th Cir. 1993), an SBA judgment lien is non-avoidable under 11 U.S.C. § 522(f) even though the amount of the prior deeds of trust and the debtor's homestead exemption exceed the value of the property before taking into account the SBA lien. In re Janes, 4 ABR 163 (Bankr. D. Alaska 1995) (Ross, J.). Proof of claim filed one month after Chapter 11 bar date allowed as amended claim where claim had been listed in schedules at $0, but was not listed as "disputed, unliquidated, or contingent." In re Harbor Fuel Company., Inc., 3 ABR 273 (Bankr. D. Alaska 1993) (Ross, J.). Excusable neglect preserves administrative expense claim submitted after plan bar date. D & A Supermarkets, Inc. v. Kenai Peninsula Borough (In re D & A Supermarkets, Inc.), 3 ABR 220 (Bankr. D. Alaska 1993) (Ross, J.). On reconsideration, lack of adequate notice of bar date precludes Alaska Bankruptcy Court Decisions 1997-1998 Page 26 consideration of prejudice to debtor resulting from late filing of claim. D & A Supermarkets, Inc. v. Kenai Peninsula Borough (In re D & A Supermarkets, Inc.), 3 ABR 226 (Bankr. D. Alaska 1993) (Ross, J.). Motion to delay Chapter 7 distribution to allow amendment to schedules adding creditor denied where debtor had been aware of claim for more than one year. In re Dzienkowski, 2 ABR 395 (Bankr. D. Alaska 1992) (Ross, J.); In re Dzienkowski, 2 ABR 402 (Bankr. D. Alaska 1992) (Ross, J.). Objection to allowance of claim denied as moot in no asset case. Ricks v. Forshey (In re Ricks), 1 ABR 521 (Bankr. D. Alaska 1991) (MacDonald, J.). X. Chapter 11. Sale of debtor’ primary asset outside the ordinary course of business s justified on the basis that (a) business reason for the sale articulated, (b) sale fair and reasonable, (c) sale preceded by adequate marketing, (d) sale negotiated in good faith, (e) sale an “arms-length” transaction. Sale outside of Chapter 11 plan pursuant to section 363(b) justified on basis of broad creditor, equity and other interest holder support, coupled with risk of declining value of asset. In re Stewart Petroleum Company, 4 ABR 529 (Bankr. D. Alaska 1997) (MacDonald, J.). Separate classification of ex-spouse’ claim permitted because class not s gerrymandered to create impaired accepting class and separately classified claim may be nondischargeable. In re James L. Dodson, 5 ABR 19 (Bankr. D. Alaska 1997) (Ross, J.). Plan provision pledging stock to secure obligation as to which debtor agreed to indemnify creditor “does not discriminate unfairly, and is fair and equitable” as to creditor’ option to purchase the stock. In re James L. Dodson, 5 ABR 19 (Bankr. D. s Alaska 1997) (Ross, J.). Court concludes that post-petition adequate protection stipulation did not amount to an assumption of aircraft leases nor did the stipulation commit debtor to cure defaults under 11 U.S.C. § 1110. Thus, Court denies defendants motion for summary judgment to dismiss the preference action brought by the Trustee. Barstow v. Marubeni, et al. (In re MarkAir, Inc.), 5 ABR 126 (Bankr. D. AK 1997) (Ross, J.). The Bankruptcy court made several rulings regarding confirmation issues under § ll29(a) and (b) in the context of consideration of a plan of reorganization for which confirmation was denied. The rulings made by the Court are as follows: (a) § ll29(a)(l) requirement of separate classification was not met since plan did not contain class for equity interest holders; (b) classification of general unsecured creditors separately from unsecured judgment creditors (one for tort claim and Alaska Bankruptcy Court Decisions 1997-1998 Page 27 one for breach of contract claim) was acceptable, since they were "not substantially similar," and different treatment was also acceptable (although both groups of unsecured creditors were to be paid l00% simply in different ways); (c) debtor's attempt to exempt commercial property as homestead violates § 522, since property wasn't listed in exemption schedule and Court noted other potential problems with assertion of homestead exemption on commercial property; (d) plan failed to include statement regarding securities required by § ll23(a)(6); (e) use of Chapter 11 filing to avoid supersedeas bond requirement in appealing judgments was justified under the circumstances since it eliminated immediate dismemberment of business, thus § ll29(a)(3) good faith requirement was met (note, motion to dismiss on bad faith grounds was also denied); (f) in assessing feasibility requirement of § ll29(a)(ll), the Court found that unsecured claims must be paid in full including postpetition interest before equity holders receive anything -- the Court found insufficient evidence to make a determination as to feasibility; and (g) the plan failed to meet the cramdown requirements of § ll29(b)(2)(B) since the record lacked expert opinion testimony justifying interest rate proposed in the plan which precluded the Court from making an appropriate present value analysis. Additionally, interest rate provision was not tied to the default provisions. In re Nome Commercial Co. (jointly administered with case of Samford Wayne Brown and Carrol A. Brown), 4 ABR 358 (Bankr. D. Alaska l996) (MacDonald, J). In determining the fairness, reasonableness and adequacy of a proposed settlement agreement, the court must consider: (i) the probability of success in the litigation; (ii) the difficulties, if any, to be encountered in the matter of collection, (iii) the complexity of the litigation involved, and the expense, inconvenience and delay necessarily attending it; (iv) the paramount interest of creditors and a proper deference to their reasonable views in the premises. In applying these factors, a settlement will not be approved where the debtor has failed to investigate other claims against the creditor and the parties to the settlement have failed to present evidence as to why these other potential claims should be compromised. In re Martech, 4 ABR 43 (Bankr. D. Alaska 1994) (MacDonald, J.). Plan may only be modified before "substantial consummation." In re Martinson Gravel and Crane, Inc., 3 ABR 331, 336 (Bankr. D. Alaska 1994) (Ross, J.). Substantial consummation occurs when more than 50% of the distributions have been made. Creditors may settle their claims agreeing to a treatment that is different from the treatment afforded under a confirmed plan without modifying the plan under § 1127. However, the court will not allow the debtor to enforce the settlement when the settlement was obtained with misleading information. In re Martinson Gravel and Crane, Inc., 3 ABR 331, 340 (Bankr. D. Alaska 1994) (Ross, J.). Confirmation cannot be revoked except during the 180 day period set forth in § 1141. In re Hawkins Enterprises, 3 ABR 432 (Bankr. D. Alaska 1994) (MacDonald, J.). New value exception to absolute priority rule recognized, but debtor's unsecured promise to make monthly payments is not money or money's worth, i.e., new value. Boyd v. SeattleMortgage, 2 ABR 407 (D. Alaska 1992) (Holland, J.). Alaska Bankruptcy Court Decisions 1997-1998 Page 28 XI. Chapter 13. Child support obligations not includable in a Chapter 13 plan and not subject to post-confirmation stay. In re Paul Thomas Moreno, 5 ABR 6 (Bankr. D. Alaska 1997) (Ross, J.). Court concludes that unsecured debt arising post-petition by virtue of a motion to invalidate liens brought by the debtor under Section 522(f) of the Bankruptcy Code must be included in eligibility determination for Chapter 13 petition. Court conditionally dismisses Chapter 13 case unless debtor withdraws its motion to avoid lien. Court also notes in footnote that debtor’ contingent liability related to a house owned by s another individual must be included in unsecured debt calculation for eligibility purposes since claim is unsecured pursuant to Section 506(a) of the Bankruptcy Code. In re Frank Rudolph Pluid, 5 ABR 137 (1997) (MacDonald, J.). Court denies confirmation of Chapter 13 Plan since Plan did not appropriately include a provision for environmental remediation costs for a property debtor desired to retain. Debtors failed to provide evidence of the costs of remediation or debtor’ ability to pay for any such costs. Court admonishes the debtors to be more s specific with the payment provisions in any subsequently filed plan. In re Rodney E. Lewis and Sheila J. Lewis, 5 ABR 134 (1997) (MacDonald, J.). In denying confirmation of debtor's Second Amended Chapter 13 Plan, the court highlighted a list of principals which precluded the Plan's confirmation. The court stated that the proposed Chapter 13 Plan should have a proper Plan analysis, description of mandatory minimum payments (for a "net-income" plan), and a demonstration of the feasibility of scheduled payments. Additionally, the court stated the Plan must pay secured creditors fully, with interest, over the life of the Plan, and the debtor must provide evidence of the market rate of interest and the market term of the loan to support debtor's treatment of secured claims. Additionally, the court stated that the debtor must provide either evidence of secured creditors' approval of the treatment of secured claims under the Plan or cram-down evidence under 11 U.S.C. § 1325(a)(5)(B)(2). Finally, the court noted that the Plan may not provide for the debtor making "early payment deals" with unsecured creditors on a piecemeal basis since this would violate the spirit and intent of Chapter 13, as well as violating 11 U.S.C. § 1325(a)(3). In re Rogers, 4 ABR 137 (Bankr. D. Alaska 1995) (MacDonald, J). Chapter 13 plan confirmation proceedings held in abeyance pending adjudication of wrongful death claims by District Court. In re Young, 3 ABR 256 (Bankr. D. Alaska 1993) (MacDonald, J.). Alaska Bankruptcy Court Decisions 1997-1998 Page 29 Statement of factors to be considered in determining whether good faith requirement under 11 U.S.C. § 1325(a)(3) satisfied. In re Young, 3 ABR 256 (Bankr. D. Alaska 1993) (MacDonald, J.), following In re Fischer, 136 B.R. 819, 829-30 (D. Alaska 1992). Dewsnup v. Timm, 112 S.Ct. 773 (1992), does not overrule or undermine In re Houghland v. Lomas & Nettleton Co. (In re Houghland), 886 F.2d 1182 (9th Cir. 1989). Goldome Realty Credit Corp. v. Perron, 2 ABR 414 (D. Alaska 1992) (Holland, J.); Lomas Mortgage USA v. Wiese (In re Wiese), 3 ABR 68 (9th Cir. 1992) (refusing to reexamine Houghland); Alaska Housing Finance Corporation v. Kurth, (In re Kurth), 3 ABR 83 (9th Cir. 1992) (refusing to reexamine Houghland). THIS LINE OF AUTHORITY HAS BEEN OVERRULED BY NOBLEMAN V. AMERICAN SAVINGS BANK, ___ U.S. ___ (1993). No Chapter 13 stripdown of line on residence; prior Ninth Circuit decisions overruled by Nobleman. Alaska Housing Finance Corp. v. Graham, 3 ABR 235 (9th Cir. 1993); Lomas Mortgage USA v. Roberts, 3 ABR 237 (9th Cir. 1993); National Bank of Alaska, N.A. v. Parker, 3 ABR 239 (9th Cir. 1993). In valuing secured claim under § 506(a), liquidation costs should not be deducted from the value of the security when the debtor plans to retain the collateral. Alaska Housing Finance Corporation v. Ferguson, 3 ABR 1 (D. Alaska 1992) (Singleton, J.); Goldome Realty Credit Corp. v. Perron, 2 ABR 414 (D. Alaska 1992) (Holland, J.); Lomas Mortgage USA v. Wiese (In re Wiese), 3 ABR 68 (9th Cir. 1992). Under Chapter 13 plan, mortgage arrearages are to be allocated to secured portion of bifurcated claim and must be cured within a reasonable time. Goldome Realty Credit Corp. v. Perron, 2 ABR 414 (D. Alaska 1992) (Holland, J.); Alaska Housing Finance Corporation v. Ferguson, 3 ABR 1 (D. Alaska 1992) (Singleton, J.). Lack of equity test under § 362(d)(2) is inapplicable in Chapter 13 cases. Alaska Housing Finance Corporation v. Ferguson, 3 ABR 1 (D. Alaska 1992) (Singleton, J.); Lomas Mortgage U.S.A. v. Fischer (In re Fischer), 2 ABR 323 (D. Alaska 1992) (Singleton, J.). Order confirming Chapter 13 Plan is res judicata as to all justifiable issues that could of been decided at the confirmation hearing, including adequate protection, lack of equity, and necessity for a successful rehabilitation. Lomas Mortgage USA v. Wiese (In re Wiese), 3 ABR 68 (9th Cir. 1992). Under Chapter 13 plan debtor can cure arrearages on mortgage, notwithstanding acceleration of the debt and entry of judgment of judicial foreclosure. In re Christensen, 2 ABR 474 (Bankr. D. Alaska 1992) (MacDonald, J.). Dismissal of Chapter 13 case affirmed (tax protester debtor): (i) bad faith filing, (ii) perjury in the Chapter 13 petition, (iii) failure to cooperate with the trustee, (iv) unreasonable delay Alaska Bankruptcy Court Decisions 1997-1998 Page 30 prejudicial to creditors, and (v) failure to make post-petition payments. Hymes v. Citibank Mastercard (In re Hymes), 2 ABR 315 (Bankr. 9th Cir. 1992). Section 362(d)(2) not applicable in Chapter 13 cases; value of secured claim under § 1325(a)(5) does not include value of mortgage insurance; standards and factors in determining "good faith" of Chapter 13 plan discussed. Lomas Mortgage U.S.A. v. Fischer (In re Fischer), 2 ABR 323 (D. Alaska 1992) (Singleton, J.). No per se rule barring Chapter 13 debtor from classifying unsecured prepetition child support payments in a separate class that receives a larger distribution than general unsecured creditors. In re Fillingim, 1 ABR 445 (Bankr. D. Alaska 1991) (Ross, J.). XII. Dismissal/Conversion. Dismissal for "bad faith filing" requires consideration of all the circumstances; filing to obtain stay of state court judgment pending appeal not necessarily bad faith; case dismissed for failure to comply with bankruptcy filing/reporting requirements. In re Askinuk Corp., 3 ABR 251 (Bankr. D. Alaska 1993) (MacDonald, J.). Court may sua sponte dismiss a case as a "bad faith filing," where the debtor has failed to file tax returns for eight years, thereby precluding the Court from determining the amount of the IRS s priority claim. In re Chryson, 3 ABR 525 (Bankr. D. Alaska 1994) (MacDonald, J.). Voluntary Chapter 7 debtor may not dismiss case if dismissal would prejudice interested parties (in this case the federal government, since nondischargeable taxes would be discharged in subsequent case). In re Willison, 3 ABR 93 (Bankr. D. Alaska 1993) (Ross, J.). Accord In re Stevens, 2 ABR 156 (Bankr. D. Alaska 1991) (Ross, J.) (Voluntary Chapter 7 debtor not entitled to dismiss case if dismissal would cause "legal prejudice" to interested party.). XIII. Miscellaneous. Test for relation back rule for substitution of plaintiffs (creditors to be substituted in avoidance action for trustee, who was bound by debtor in possession’ s waiver), derived by analogy from Rule 15(c), is whether the defendant has received such notice of the action that the defendant will not be prejudiced in maintaining a defense on the merits. In re Martech USA, Inc., 4 ABR 480 (Bankr. D. Alaska 1997) (MacDonald, J.). Debtor willfully failed to pay trust fund taxes within meaning of 26 U.S.C. § 6672 because he either knew that the trust fund taxes were not being paid or knew that there was a grave risk that the trust fund tax would not be paid and was in a position to determine whether the trust fund taxes were being paid. In re Neil G. Bergt, 4 ABR 515 (Bankr. D. Alaska 1997) (Ross, J.). Alaska Bankruptcy Court Decisions 1997-1998 Page 31 Bankruptcy Appellate Panel decisions, though not binding, are entitled to respect. In re Paul Thomas Moreno, 5 ABR 6 (Bankr. D. Alaska 1997) (Ross, J.). Court denies motion for modification of judgment. Court stands by its earlier ruling denying emotional damages on the basis that debtor’ conduct was not s sufficiently malicious to warrant emotional damages. Court also stands by its earlier ruling denying damages related to debtor’ actions with respect to a four-plex on the grounds that s the record did not contain evidence of specific misrepresentations vis-à-vis the four-plex by the debtor. Subramanian v. Talwar (In re Sanjay Talwar and Molina Talwar), 5 ABR 122 (Bankr. D. AK 1997) (Ross, J.). Trustee of individual bankruptcy estate, as sole shareholder of corporate entities, possessed right to waive attorney-client privilege on behalf of corporation, but under facts of instant case, crime fraud exception to attorney-client privilege would be sufficient in any event for access to the corporate documents. Individual debtor’ pres petition conduct constituted a “crime-fraud” constituting a waiver of her attorney-client privilege and work produce privilege with respect to “fact” work product. However, an “innocent attorney” can defend his or her own assertion of a qualified privilege as it relates to “opinion” work product, even where the tainted client may not. Court investigates distinction between “fact” and “opinion” work product. Court concludes that several items listed in attorneys’ privilege log constitute protected “opinion” work product. In re Raejean Bonham, 5 ABR 85 (Bankr. D. AK 1997) (Ross, J.). Sanctions in the form of reasonable attorneys’ fees were appropriate against the debtor under rule 9011(a) for the attorneys’ fees of a creditor incurred as a result of debtor’ bankruptcy that the Court concludes was filed for an improper purpose. Debtor s engaged in a series of transfers pre-petition that the Court characterized as “’ bankruptcy’ ‘ estate planning’ of the highest order.” Under Rule 9011, Bankruptcy Courts must consider both frivolousness and improper purpose on a sliding scale, where the more compelling a showing as to one element, the less decisive need be the showing as to the other. Court cites Marsch v. Marsch (In re Marsch), 36 F.3d 825, 830 (9th Cir. 1994). In re Alice D. Fullenwider, 5 ABR 55 (Bankr. D. AK 1997) (MacDonald, J.). Whether a notice of cash collateral motion satisfies due process is a question of law; two to three days notice (without copy of cash collateral agreement) to 20 largest unsecured creditors and to holders of interests in property of interim hearing on cash collateral agreement, and more than 15 days notice (with copy of cash collateral agreement) to all interested parties of final hearing, satisfied noticing requirements of Bankruptcy Code, Bankruptcy Rules and due process clause. Battley v. National Bank of Alaska (In re Martech USA, Inc.), 4 ABR 447, 465462 (Bankr. D. Alaska 1996). Alaska Bankruptcy Court Decisions 1997-1998 Page 32 Chapter 7 trustee is bound by cash collateral agreements entered into by debtor-inpossession and by court order approving cash collateral agreements. Battley v. National Bank of Alaska (In re Martech USA, Inc.), 4 ABR 447, 462 (Bankr. D. Alaska 1996). Under Alaska law, all contracts in Alaska contain an implied covenant of good faith and fair dealing, but breach of this covenant is a tort only in the surety or insurance context. Battley v. National Bank of Alaska (In re Martech USA, Inc.), 4 ABR 447, 464 (Bankr. D. Alaska 1996), citing Municipality of Anchorage v. Gentile, 922 P.2d 248, 260 (Alaska 1996). Alaska law does not recognize the torts of interference with corporate governance or for violation of standard banking practices. Battley v. National Bank of Alaska (In re Martech USA, Inc.), 4 ABR 447, 464-465 (Bankr. D. Alaska 1996). Chapter 7 trustee lacks standing to bring action for fraud committed against certain creditors of the estate; this claim belongs to the affected creditors, rather than to the estate. Battley v. National Bank of Alaska (In re Martech USA, Inc.), 4 ABR 447, 465-466 (Bankr. D. Alaska 1996). Allegations in complaint, denied by defendant, are not binding judicial admissions. Battley v. National Bank of Alaska (In re Martech USA, Inc.), 4 ABR 447, 466 (Bankr. D. Alaska 1996). Reiteration of allegations of complaint, unsupported by affidavits or any of the other types of evidentiary material listed in Fed. R. Civ. P. 56(c), insufficient to defeat motion for summary judgment. Battley v. National Bank of Alaska (In re Martech USA, Inc.), 4 ABR 447, 468 (Bankr. D. Alaska 1996), citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-324 (1986). Equitable subordination under § 510(c) is based upon inequitable conduct of a creditor and, in the case of a non-insider of the debtor, requires a showing of egregious conduct or gross misconduct tantamount to fraud, overreaching or spoliation to the detriment of others. Battley v. National Bank of Alaska (In re Martech USA, Inc.), 4 ABR 447, 470 (Bankr. D. Alaska 1996), citing Unsecured Creditors’ Committee v. Pioneer Commercial Funding Corp. (in re Pacific Exp., Inc.), 69 BR 112, 116 (9th Cir. App.) and Matter of Services Inc., 29 BR 139, 169 Bankruptcy E.D.N.Y (1983). Where creditor has filed a proof of claim, preference, fraudulent transfer and 506(c) claims become part of claims allowance process subject to court’ equitable jurisdiction, s and so there is no right to jury trial on claim for avoidance of unauthorized post-petition transfers under § 549 or for equitable subordination claims under § 510(c). Battley v. National Bank of Alaska (In re Martech USA, Inc.), 4 ABR 447, 470-471 (Bankr. D. Alaska 1996). Alaska Bankruptcy Court Decisions 1997-1998 Page 33 Request to admit under Fed. R. Bankr. P. 36 all the allegations of a 76-page complaint fails to satisfy requirement that “each matter of which an admission is requested shall be separately set forth.” Battley v. National Bank of Alaska (In re Martech USA, Inc.), 4 ABR 447, 472 (Bankr. D. Alaska 1996). Section l08(c) stayed the seven year statute of limitations for bringing an adverse possession claim when the Chapter ll bankruptcy was filed in the sixth year of the running of the statute. The statute would remain tolled until, at a minimum, 30 days after relief from the automatic stay was granted. Bennie Leonard v. Eric E. Wieler, et al., (In re Gold King Mines, Inc.), 4 ABR 372 (Bankr. D. Alaska l996) (Ross, J.). Bankruptcy judge did not abuse his discretion in approving Trustee's settlement of State Court lawsuit. Bankruptcy judge had conducted four days of trial and gave "painstaking, meticulous consideration" to the factor set forth in In re A&C Properties, 784 F.2d l377 (9th Cir. l986). Bankruptcy judge employed probability analysis to conclude that the potential downside for the estate was significantly greater than the amount at which the Trustee proposed to settle. Further, largest creditor for the plaintiff and party with which the Trustee was settling supported the settlement. Linda M. Smith v. Larry D. Compton, 4 ABR 4l3 (Bankr. D. Alaska l996) (Branson, U.S. Magistrate Judge). The obligation of a trustee or debtor-in-possession to make full rental payments under § 365(d)(3) ceases on the entry date of the order authorizing the rejection of the executory contract or lease. In re MarkAir, 4 ABR 232 (Bankr. D. Alaska 1995) (Ross, J.). Costs may be awarded to a prevailing party in an adversary proceeding involving matters of federal law, despite the language in In re Fobian, 921 F.2d 1149, 1153 (9th Cir. 1991). Stenga v. 4M 2B Investors (In re 4M 2B Investors), 4 ABR 260 (Bankr. D. Alaska 1996) (Ross, J.). When evaluating the fairness, reasonableness and adequacy of a proposed settlement, a bankruptcy court must follow the factors established in A.C. Properties, 784 F.2d 1377 (9th Cir. 1986). These factors are (a) the probability of success in the litigation, (b) the difficulties, if any, to be encountered in the matter of collection, (c) the complexity of the litigation involved and the expense, inconvenience, and delay necessarily attending it, and (d) the paramount interest of the creditors and a proper deference to their reasonable views in the premises. In analyzing the proposed settlement, the court cited with approval law establishing that the trustee of a trust, or other fiduciary, has a duty to keep clear and accurate accounts and, if he or she fails to do so, all presumptions are against him or her, and all obscurities and doubts are resolved adversely to him or her. In re Smith, 4 ABR 99 (Bankr. D. Alaska 1995) (MacDonald, J.), affirmed in Linda Smith v. Larry Compton, 4 ABR (Bankr. D. Alaska 1996) (Branson, J.). When asserting equitable estoppel against the government, one must meet two threshold tests beyond those required by traditional estoppel. The threshold tests are (1) affirmative Alaska Bankruptcy Court Decisions 1997-1998 Page 34 misconduct beyond mere negligence, and (2) serious injustice arising out of the government's act which outweighs any damage to the public interest by the imposition of liability. The court also held that an informal compromise between the debtor and the I.R.S., which was not approved by the court, is not an enforceable accord and satisfaction. In re Talford L. Bray, 4 ABR 126 (Bankr. D. Alaska 1995) (Ross, J.), see also Talford L. Bray, 4 ABR 134 (Bankr. D. Alaska 1995) (Ross, J.) (which cites U.S. v. Hemmen, 51 F.3d 883, (9th Cir. 1995) as support for the decision in 4 ABR 126). Litigation over whether a ground lease was a lease or rather an executory contract, as defined by 11 U.S.C. § 365, turns principally on federal bankruptcy law. Accordingly, the prevailing party is not entitled to fees under In re Fobian, 921 F.2d 1149 (9th Cir. 1991), though the prevailing party is entitled to costs pursuant to FBRP 7054 and FRCP 54(d). In re 4M 2B Investors, 4 ABR 148, 150 (Bankr. D. Alaska 1995) (Ross, J.). SBA is a government agency that must be served pursuant to Fed. Rule of Civil Procedure 4(d)(4) by serving the summons and complaint on the United States and mailing a copy by registered or certified mail to the SBA. Failure to properly serve the United States justified dismissal of the adversary proceeding, given the Court's perception that the debtor had been manipulating the bankruptcy system. Bolt v. Small Business Administration (In re Bolt), 3 ABR 285 (Bankr. D. Alaska 1993) (Ross, J.). As a discovery sanction, a bankruptcy court may enter default judgment against a debtor who fails to respond to discovery. Olsen v. Zerbetz (In re Olsen), 4 ABR 16, 23 (9th Cir. 1994). Debtor failed to meet redemption and state law rescission exceptions to mootness rule for appeals from unstayed order for sale of property. Preblich v. Battley (In re Preblich), 3 ABR 241 (9th Cir. 1993). Certification of partial judgment under Civil Rule 54(b) denied where factual basis supporting partial judgment is interwoven with factual basis of outstanding issues. In re Martinson Gravel and Crane, Inc., 2 ABR 471 (Bankr. D. Alaska 1992) (Ross, J.). Failure to make full disclosure to an opponent in litigation does not constitute a fraud on the court. James v. Dick Fischer Development (In re Gaudiane), 2 ABR 431 (D. Alaska 1992) (Muecke, J.). Bankruptcy court judge objects to recusal where his lack of confidence in debtor's credibility was based upon prior hearings. In re J. R. Marine, Inc., 2 ABR 373 (Bankr. D. Alaska 1992) (Ross, J.). Alaska Bankruptcy Court Decisions 1997-1998 Page 35 Waiver of sovereign immunity under § 106(a) allows debtor to recover from IRS payment erroneously made pursuant to levy (taxpayer's claim against debtor should have been disallowed). Haida Corp. v. Coleman Drilling, Inc. (In re Haida Corp.), 2 ABR 298 (Bankr. D. Alaska 1992) (Ross, J.). No interest will be awarded in a judgment against the United States unless there is a separate waiver of sovereign immunity for interest. Haida Corp. v. Coleman Drilling, Inc. (In re Haida), 3 ABR 383 (Bankr. D. Alaska 1994). Bankruptcy judge need not recuse or disqualify himself from case involving debtor who was formerly represented by judge's law clerk so long as law clerk does not participate in the case. In re Lindgren, 1 ABR 513 (Bankr. D. Alaska 1991) (Ross, J.). Request for status conference, when no contested proceedings are pending, denied as request for advisory ruling. In re Gold King Mines, Inc., 1 ABR 519 (Bankr. D. Alaska 1991) (Ross, J.). Alaska Bankruptcy Court Decisions 1997-1998 Page 36