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.