Schedules not dispositive of amount of, or liability for, a debt for purposes of 109(e)

In re Moomand (Bankr. N.D. TX 2004)

Debtors' Chapter 13 was subject to dismissal on the basis that total liquidated debts as of the date of filing exceeded the limits of Sec. 109(e) of the Code. Debtors' Schedules indicate that they were sole owners of a business and owed unsecured debts of $379,807.25. Debtors scheduled two separate debts to the Texas Comptroller: $248,678.20 for the period beginning October 1, 1999 and ending September 30, 2002, and another debt listed as unknown in amount and no date or range of dates is specified to indicate when the debt arose. Both debts are listed as disputed, but none of the unsecured debts, including both ones to the Comptroller, are denominated as contingent or unliquidated. On September 3, 2004 the Comptroller filed a motion seeking dismissal of the case on the basis that Debtors were ineligible under 109(e). The Comptroller argued that the Court needed to look no further than Debtors' Schedules. The Court had previously declined to adopt a per se rule that debts which were merely disputed must be included in the 109(e) analysis, stating that unless the equities of the case required a different result, a debt denominated as "disputed" should be included in the 109(e) eligibility analysis if, on its face, it was a legally enforceable debt as of the date of the Petition. Conversely, where the "dispute" required a creditor to establish the debtor's liability, the debt should not count for 109(e) purposes. Hatzenbuehler, 282 B.R. at 832 (citations omitted). [In re Hatzenbuehler, 282 B.R. 828, 833 (Bankr. N.D. Tex. 2002)]

(Ed. Note: although the Court in this case acknowledged that some "disputed" debts should not be included in the 109(e) analysis where the nature of the dispute goes to the liability for the debt, in this case it found on the evidence that as a matter of law the debtor was liable for the tax debt, and hence the claims were included, resulting in dismissal of the case.)

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Post-Petition crop disaster aid not property of the Estate

In re Burgess (5th Cir. 2004)

A crop disaster payment from the Federal Government to a farmer who was the debtor in a closed Bankruptcy case should not have been treated as property of the Estate where the legislation authorizing the payment did not exist at the time of the Bankruptcy.

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Court may award fees under 330 where terms of engagement approved under 328

Factual Background Airspect Air, Inc./Nischwitz v. Miskovic (In re Airspect Air, Inc.), 385 F.3d 915 (6th Cir. 2004).

United States Court of Appeals for the Sixth Circuit considered whether the Bankruptcy Court abused its discretion in declining to award Attorneys fees to Debtor's counsel under Sec. 328 notwithstanding the Bankruptcy Court's approval of the terms of that professional's engagement, and instead awarding fees in a substantially reduced amount under Sec. 330. The Sixth Circuit held that a determination of whether a fee arrangement like the one at issue has been pre-approved under Sec. 328 should be judged by the "totality of the circumstances." Having applied this standard, the Sixth Circuit concluded that the Attorney's contingency fee agreement had not been pre-approved by the Bankruptcy Court and conditions of employment of any professionals engaged under Sec. 327 must be "reasonable," including an engagement entered into on a retainer or contingency fee basis. Sec. 330(a) provides that, subject to Sec. 328, the Court shall allow reasonable compensation for actual, necessary services rendered by professionals. A court that has approved the terms and conditions of a professional's employment under Sec. 328 may authorize fees under an arrangement, under Sec. 330(a), other than that previously approved under Sec. 328 if the Court finds that the arrangement under Sec. 328 proves to be "improvident" under the circumstances.