Commercial Banking, Collections, and Bankruptcy

Bankruptcy Court did not err, in instant single real estate asset Chapter 11 proceeding, in sustaining creditor's objection to debtor's proposal (as part of its reorganization plan) to substitute creditor's mortgage lien on said real estate with lien on 30-year Treasury bonds that approximated value of said real estate. Barring substitution of collateral was appropriate where instant creditor was undersecured in said real estate, and proposed substitution, which would have required creditor to wait 25 years to fully recover on its lien, would not be substantially equivalent to lien on real estate where risk profile of substitute collateral did not match risk profile on instant real estate lien. Also, Dist. Ct. did not err in dismissing instant bankruptcy proceeding after rejecting instant proposal since it was not required to consider debtor's subsequent proposal where it had previously rejected two proposals, and where third and last proposal was made well beyond 90-day deadline for submitting proposals.

Dist. Ct. did not err in affirming Bankruptcy Ct. order that had approved settlement and distribution of funds from sale of certain disputed property that had been owned by corporate debtor. While creditor opposed $65,000 that had been distributed to debtor's attorneys, creditor lacked standing to object to said payment where source of funds had come from two individuals, who also held claims to said property and had received portion of sale proceeds from said property. Moreover, because funds paid to attorneys were never assets of bankruptcy estate, priority scheme did not apply to said funds. Ct. further found that settlement, which allowed debtor's bankruptcy estate to receive only 50% of sale proceeds, was reasonable.

Ct. of Appeals lacked subject-matter jurisdiction to consider direct appeal from Bankruptcy Ct. order granting defendant-creditor's motion for summary judgment in debtors' class action adversary complaint alleging that creditor violated Wisc. statute by publishing medical treatment information when filing proofs of claim in certain bankruptcy cases after Bankruptcy Ct. had determined that debtors had failed to present proof of actual damages. Bankruptcy Ct. lacked authority under Article III to enter final judgment on debtors' claims, even though said claims were core proceedings that arose out of Title 11 bankruptcy case, since debtors' claims were private matters involving liability under Wisc. law that could only be resolved by Article III court if filed in federal court. Ct. further noted that outcome might have been different had Bankruptcy Ct.'s grant of summary judgment involved adjudication of creditor's proof of claim.

Dist. Ct. did not err in finding in instant ERISA action that two solvent business entities, which were under common control with third insolvent entity, were jointly and severally liable for withdrawal liability generated when insolvent entity ceased operations and stopped paying into union's pension fund. Under MPPAA, all trades or businesses under common control are treated as single employer for purposes of determining withdrawal liability under 29 USC section 1301(b)(1), and Dist. Ct. could properly conclude that solvent entities were qualifying trades or businesses where: (1) one solvent entity leased property to insolvent entity; and (2) second solvent entity earned rental income, paid business management fees and claimed business-related income deductions on tax forms. Moreover, all three entities were under common control for purposes of imposing withdrawal liabilty where each entity, which had originally been controlled by single individual, was included in bankruptcy estate of Chapter 11 proceeding that had been filed by insolvent entity prior to ceasing its operations. Fact that solvent entities were limited liability corporations did not require different result.

Dist. Ct. did not err in granting defendants' motion to dismiss on ground of res judicata plaintiffs' action alleging breach of lease, breach of guaranty and fraud arising out of defendants-corporations' cancellation of commercial lease where plaintiffs' similar state-court fraud action against officers of same corporations had been dismissed with prejudice due to failure to state cause of action. State-court dismissal was tantamount to adjudication on merits, and both state-court action and instant lawsuit arose out of same alleged statements made by individual defendants on behalf of instant corporate defendants and concerned same issue as to whether corporate defendants had right to cancel instant lease. Fact that plaintiffs could not have sued instant individual defendants for breach of lease did not require different result or excuse plaintiffs from splitting instant claims where plaintiffs were required to bring into single lawsuit all claims against instant individual defendants and corporations arising out of alleged breach of lease.

Record failed to contain sufficient evidence to support jury's $65,998,411 award in action alleging that defendant failed to abide by contract calling for defendant to divide equally between plaintiff and another aircraft carrier military flight business when defendant diverted certain flight assignments to different aircraft carrier. Record showed that purported contract lacked required details concerning standard price terms and/or formula for calculating price so as to render said contract enforceable. Ct. further found that plaintiff could not obtain alterative recovery under promissory estoppel theory, even though plaintiff alleged that it spent $28 million in additional aircraft in reliance on instant promise to award plaintiff future flight assignments, where record showed that plaintiff's reliance was unreasonable due to fact that several key components of contract had been unresolved at time of plaintiff's expenditure.

Ct. of Appeals dismissed as moot creditor's appeal of Bankruptcy Ct. order denying creditor's claim for percentage of debtor's profits in certain shopping center that comprised sole asset of debtor. Creditor failed to obtain stay of sale of shopping center pending creditor's appeal of Bankruptcy Ct. order, as required under 11 USC section 363(m), and creditor failed to also include in notice of appeal any issue regarding Bankruptcy Ct. order approving liquidation plan that distributed proceeds of shopping center sale. As such, creditor would be unable to obtain any substantive relief even if he could prevail on merits of his appeal, and creditor could not belatedly attack distribution of sale proceeds if no stay had been obtained.