Nebraska Supreme Court reverses District Court ruling in favor of Bankruptcy Chapter 7 trustee that had garnished a contractors bank account. Although judgment debtor had an account balance when the judgment creditor filed its garnishment, the judgment debtor already was in default to the Bank who had a perfected lien on its accounts. Myers v. Christensen, S-08-1212, 278 Neb. 989 The trustee is the judgment creditor, or garnishor; Gencon is the judgment debtor; and Charter West is the garnishee. The case turns on the question of whether, on the date the garnishment summons was served, Gencon had a right to the deposit account which was superior to that of Charter West. Only if that were so could Charter West have been “indebted to” or holding “property or credits of” Gencon within the meaning of the garnishment statutes and therefore liable as a garnishee § 25-1030.02. Due to the existence of Charter West’s perfected security interest, Gencon had no enforceable right to the proceeds of the deposit account on the date that the garnishment summons was served and therefore, the trustee could have no such right. In other words, the trustee could not acquire a claim by garnishment which was superior to the claim of Charter West arising from its perfected security interest. Because of Bank's perfected security interest in the deposit account, which was far exceeded by the amount of Gencon’s indebtedness then in default, Charter West was not “indebted to” or holding “property or credits of” Gencon at the time of service of the garnishment summons.

Bankruptcy sale of former Husker lineman's trophies nets $28,500. Journal star.com. "A court-ordered auction of former Nebraska football player Aaron Taylor's championship hardware has brought in $28,500. It took about 30 minutes to sell Taylor's seven championship rings and his Outland Trophy on Saturday morning in Scottsbluff. Bids were taken in person and online. The trophy netted the highest bids, selling for $6,800. The rings sold for $2,000 to $5,900. The auction was forced by the failure of the Husker-themed Scarlet and Cream Letter Club restaurant Taylor started in Omaha with other former NU players and his resulting bankruptcy."

Increased bankruptcy filings for 2008 and so far this year. Omaha.com

Filings are up all over

Bankruptcy statistics for Nebraska, Iowa and nationwide for the first eight months of this year and for all of 2008: January-August 2009 Nebraska bankruptcy filings up 13 percent from the same period last year, to 5,051 Iowa up 30 percent, to 6,702 Nationally, up 34 percent to 921,659 For 2008 Nebraska bankrutpcy filings up 25 percent from 2007, to 6,715 Iowa up 15 percent to 7,853 Nationally, up 33 percent to 1.064 million. Sources: U.S. Bankruptcy Court District of Nebraska; National Bankruptcy Research Center

Nebraska bankruptcies

Statistics on Nebraska bankruptcies for all of 2008 and the first eight months of 2009: Filing type: 2008 Through Aug. Omaha office Chapter 7: 2,126 1,560 Chapter 9: 0 2 Chapter 11: 18 9 Chapter 12: 1 1 Chapter 13: 1,287 834 Total: 3,432 2,406 Lincoln office Chapter 7: 2,592 2,138 Chapter 9: 0 0 Chapter 11: 9 18 Chapter 12: 16 14 Chapter 13: 666 475 Total: 3,283 2,645 Nebraska totals Chapter 7: 4,718 3,698 Chapter 9: 0 2 Chapter 11: 27 27 Chapter 12: 17 15 Chapter 13: 1,953 1,309 Total: 6,715 5,051 Source: U.S. Bankruptcy Court District of Nebraska

Follow up: Omaha area builder of luxury homes Gateway Builders files Chapter 11 bankruptcy petition. Omaha.com. Gateway Homes Inc. is seeking protection from creditors in a Chapter 11 bankruptcy filing, after subcontractors filed at least 100 construction liens against the custom-home builder in the past month. Bob Ginn, Gateway's attorney, said Monday that the company has obtained the cooperation of its largest financing banks to complete and sell homes now under construction in order to maximize the return to all Gateway creditors. He plans to file motions seeking for that to happen, but a bankruptcy judge must approve the motions for construction to proceed. Gateway said in court papers that it owes a total of $3.28 million in unsecured claims to its 20 largest creditors. Court documents show Gateway's estimated assets are $0 to $10,000, but Ginn said that amount was mistakenly reported. "If that box was checked, it would be checked in error," Ginn said, "because the total assets would be in the $1 million to $10 million range." Ginn said Gateway's total inventory consists of eight custom homes under construction and 19 spec homes, which are homes without a specific buyer built on speculation that they will sell. Of the spec homes, some are completed and are models that prospective buyers can tour, while others were still under construction, Ginn said. Most are nearly finished, he said. Gateway owner Kevin Hebner declined to comment Monday and referred questions to Ginn. Gateway, a builder of mostly $250,000 to $400,000 custom homes, closed its doors two weeks ago and halted construction as subcontractors and suppliers filed dozens of liens. Construction liens are notices placed on public record of a debt due. Anyone who performs services or provides goods for improvements on real estate can file a lien within 120 days from the last date that services were performed or goods were provided. If a property has a lien, its sale cannot close unless a lien has been dealt with in some manner, ranging from lawsuits to foreclosures or payment. Chapter 11 allows a debtor to reorganize or liquidate according to a plan. "Filing bankruptcy allows us to sell the houses, and the creditors' interests are protected because their liens attach to the sale proceeds," Ginn said. "If we didn't file the bankruptcy, we couldn't sell the houses, because we would have to some way take care of those liens." Ginn said he would file a series of motions seeking authorization to complete and sell the homes under construction and formulating a method to assess the validity and amount of claims and liens. Ginn said he probably would file the motions this week. But it is highly unlikely a judge would enter his decision on the motions before a March 6 meeting of creditors at the Roman L. Hruska Courthouse in Omaha, Ginn said. There also are required waiting periods for objections. "We understand the urgency and will move forward as quickly as we can, but within those constraints," Ginn said. There could be more creditors than mentioned in the bankruptcy filing's "list of creditors holding the 20 largest unsecured claims." A dozen suppliers and subcontractors contacted before and after the filing declined to comment or did not return phone calls. The companies include lumber suppliers, plumbers, cabinet makers, carpet suppliers, concrete companies, brick suppliers, electricians, hardwood floor installers and insulation companies. The deadline to file a proof of claim is June 4.

Omaha are Jiffy Lube franchisee files Chapter 11. New Hampshire Business Review. Heartland Automotive Services Inc. of Omaha, Neb., owner of several Jiffy Lube locations around the country – including West Lebanon, N.H -- has filed for Chapter 11 bankruptcy protection. Heartland is the largest Jiffy Lube franchisee in the country, according to its Web site, and operates some 438 sites in 20 states across the country including the Boston area. The company filed for Chapter 11 protection at the United States Bankruptcy Court for the Northern District of Texas on Jan. 7 in order to restructure its financial situation and resolve issues with its franchisor, Houston, Texas-based Jiffy Lube International. Ralph Tschantz, senior vice president of marketing for Heartland, said its stores, including the one in West Lebanon, will remain open during the proceedings. He also said he is not expecting a reduction in workforce. “Hopefully, consumers will notice no difference in service,” said Tschantz. “We also hope our employees will continue to have confidence in offering that service. It should be business as usual.” A man who answered the phone at the West Lebanon location but said he did not wish to be identified, confirmed that the site was operated by Heartland and was expecting to remain open during the reorganization. He also said he was not anticipating any layoffs, in fact, he said he needed to hire about five more employees to add to his current staff of 10. According to a statement on Heartland’s Web site, the company filed for Chapter 11 because of what it calls a “breakdown of negotiations with Jiffy Lube International to resolve long-simmering disputes regarding the companies’ relationship” over advertising and marketing, and support from the franchisor, product pricing from JLI’s parent, Shell Oil Co., and expansion strategies. Economic pressures in the volatile gas and oil market were also cited as reasons for the filing. Heartland said it anticipates going back to the negotiating table with JLI after the initial stabilization phase of its reorganization, which was to go heard in court on Jan. 23. If settlements still can’t be reached on the issue, Heartland said it will seek a rejection of its franchise agreements and rebrand the business. Heartland said in the statement that it had $8 million in cash on hand at the time of the filing. Representatives of JLI did not return phone calls by deadline.

Subcontractors file dozens of construction liens against Omaha area luxury homebuilder. Omaha.com. Subcontractors such as electricians and plumbers have filed about 100 construction liens this month in Sarpy and Douglas Counties against Gateway Homes, a builder of mostly $250,000 to $400,000 custom homes in the Omaha metropolitan area.The number of liens — which is unusually high against a single builder in a short period — reflects not only one builder's struggles in a slow housing market but also the trickle-down impact on subcontractors.Gateway Homes has closed its doors, stopped construction and retained Bob Ginn, an attorney specializing in bankruptcy. Gateway owner Kevin Hebner referred questions to Ginn. Asked if the company was filing for bankruptcy, Ginn said, "At this juncture, all options are still on the table." Ginn said that because he was retained only Friday, he was still familiarizing himself with the case and could not comment further. Douglas County Register of Deeds Diane Battiato said the liens against Gateway started with three in December and then ballooned to 49, with claims of unpaid debts totaling $305,616 through Monday. Sarpy County Register of Deeds Lloyd Dowding said about 50 construction liens had been filed against Gateway through Monday. Construction liens are commonly used by subcontractors or suppliers to protect themselves, Dowding said. But to have that many filed against one company in a month's time is unusual, he said. "The last time we had a great influx of construction liens was with Benchmark Homes," Battiato said. Benchmark, once the Omaha area's third-largest home builder, collapsed in March 2006 after the founder's suicide prompted subcontractors and suppliers to file more than 2,000 liens. After Benchmark filed for bankruptcy, a judge authorized the sale of more than 100 completed and mostly completed homes. Gateway Homes, which is smaller than Benchmark, was issued 23 single-family building permits in 2007 and 32 in 2006, according to the Metro Omaha Builders Association. Lee Sharpe, Gateway's field operations manager, said Hebner's Jan. 22 announcement to employees that the company was closing came as a shock because of Hebner's repeated reassurances during the housing downturn that the company was fine. Sharpe said that even though he was surprised by the closing, the signs of the company's financial struggles started about a year ago, when some subcontractors were refusing to work for Gateway because of unpaid bills. Hebner at first appeared to take care of the problems, Sharpe said. But one contractor recently appeared at the office demanding to be paid. When he wasn't, he left and immediately filed liens, calling another subcontractor, Sharpe said. "It just snowballed," Hebner said. Matt Thomas, owner of the Tile Man, a Council Bluffs company, said it appeared that a meeting Hebner called with some subcontractors in late December might have sparked some of the liens. Hebner told subcontractors that he was trying to get them money, Thomas said. "If people would have just held out and let him do his thing, we all would have gotten paid," Thomas said. "But there were a few that just didn't understand it. . . . I figured with the market so bad, that I'm going to stick it out to the end, and he just might be able to make a comeback." Thomas, who has worked as a subcontractor for Gateway for eight years, continued working on a job for Hebner until hearing of Hebner's Jan. 22 meeting with employees. "Through the grapevine, I hear that he's locked his doors. That pretty much triggered that it's over, it's done. I said, 'Pack up your tools and go, it's over,'" Thomas said. "There's no reason to go forward with your work if you know you're not going to get paid." Thomas said he filed liens against Gateway Homes on Jan. 23 and 24. Thomas said his paychecks were delayed in the past, but he didn't file liens then because he needed the work. "He gives you work, so you give him the benefit of the doubt," Thomas said. "And then it got later and later." He said he was supposed to be paid every 30 days, but he received his last payment Nov. 24. "He's a good guy, he means well, but it all caught up with him," Thomas said of Hebner.

Bankrupt used car dealer owed a $150000 federal court judgment to a former female employee due to his partner's flagrant sexual harassment of her. Eighth Circuit Court of Appeals finds the federal court employment discrimination verdict under 42 U.S.C. § 2000e-3(a) was not dischargeable as a willful and malicious injury according to 11 USC 523(a)(6). Holly Sells v. Michael Porter 09/21/2007 U.S. Court of Appeals Case No: 07-6008 and No: 07-6013 U.S. Bankruptcy Court for the Eastern District of Arkansas

US Supreme Court overrules Ninth Circuit decision that restricted creditors' attorney fee claims in Bankruptcy Court.TRAVELERS CASUALTY & SURETY CO. v. PACIFIC GAS AND ELECTRIC CO.No. 05-1429. SCOTUS slaps the Ninth Circuit again like a red headed step child. Chapter 11 debtor Pacific Gas & Electric insured itself for California worker compensation claims and acquired a bond through Travelers to make sure Pacific could cover worker compensation claims. When Pacific Gas filed chapter 11 Travelers requested additional security and sought provisions for additional attorney fees through the claim proceedings. The federal district court and the Ninth Circuit agreed that the attorney fees provision was not allowed citing Ninth Circuit precedent In re Fobian, 951 F. 2d 1149 (CA9 1991) Supreme court reverses, finding that the bankruptcy code does not prohibit categorically attorney fees that arise solely from bankruptcy issues. The Fobian rule finds no support in the Bankruptcy Code, either in §502 or elsewhere. In Fobian, the court did not identify any provision of the Bankruptcy Code as providing support for the new rule. Congress, of course, has the power to amend the Bankruptcy Code by adding a provision expressly disallowing claims for attorney’s fees incurred by creditors in the litigation of bankruptcy issues. But because no such provision exists, the Bankruptcy Code provides no basis for disallowing Travelers’ claim on the grounds stated by the Ninth Circuit. Justice Alito declined to consider Travelers' belated argument that 506 which considers secured claims somehow limits unsecured attorney fee claims.