Debtor moved to redeem her car for $500. The secured lender did not object. Neither Debtor nor the secured lender appeared at the preliminary hearing on the motion. The Court took the motion under advisement and concluded the motion should be denied without prejudice because of service problems.

Creditor held a security interest in all or substantially all of the Debtor’s assets. Debtor sought to limit creditor’s secured claim to the value of its collateral under § 506(a). The Court observed that there are three approaches to the burden of proof on a motion to value secured claims under § 506(a):  one approach places the burden solely on the secured creditor to establish the amount and extent of its lien; a second approach places the burden solely on the moving party (usually the debtor); and a third approach employs a burden shifting approach applicable to claims objection proceedings that places the initial burden on the debtor to overcome the presumed validity and amount of the creditor’s secured claim, which, once met, shifts the ultimate burden of persuasion to the creditor to establish the extent of its lien and the value of the collateral. Ultimately, under the circumstances of this particular case, the Court declined to adjudicate the motion to value collateral based on which party failed to meet its burden of proof and, in the exercise of its fact-finding role, fixed the value of the creditor’s collateral at or near the confirmation date based on the best evidence presented. Because the replacement value of the individual assets was greater than enterprise, (going concern) value, the Court used replacement value to determine the value of the secured creditor’s collateral that the Debtor intended to use in the continued operation of its business post-confirmation.   

Prior to Motiva Performance Engineering, LLC’s bankruptcy filing, the state district court adjudged Motiva to be the owner of Settlement Funds paid by an insurance company as compensation for the loss of use of a vehicle owned by Motiva, which Defendant William Ferguson (part owner of Motiva) had claimed belonged to him. The district court ordered that if Ferguson had not already disbursed the Settlement Funds to Motiva, he was required to turn them over to a state court plaintiff in partial satisfaction of his judgment against Motiva. Ferguson did not abide by the state court’s order and Motiva filed bankruptcy. The trustee filed this adversary proceeding against Ferguson and his affiliates seeking, inter alia, turnover of the Settlement Funds. Ferguson claims that he already turned over the Settlement Funds by causing his wholly owned law firm to (1) pay Motiva’s bankruptcy counsel retainer, and (2) to deposit funds in Motiva’s DIP account. In a motion for summary judgment, the trustee argued that the retainer and the deposit were loans from Ferguson’s law firm to Motiva and sought an order requiring Ferguson to turn the Settlement Funds over to Motiva’s bankruptcy estate. Concluding that genuine issues of material fact preclude summary judgment, the Court denied the trustee’s motion.

The U.S. Trustee’s office objected to special counsel’s fee application, arguing that the Court did not pre-approve the contingent fee when counsel was employed, and that under a “reasonableness review” the fee was too high. Special counsel disagreed, asserting that the Court pre-approved the contingent fee, so a reasonableness review was not permitted. The Court found that it pre-approved the contingent fee arrangement, so it would be improper to conduct a reasonableness review. Alternatively, the Court held that the fee was reasonable.