In re Catherine's Distribution, Inc., BANK WDNC May 15, 2002(Whitley) - When an agreement if found not to be a true lease but instead a disguised financing transaction, but then underlying res is titled property whose titles show the "lessor" as "owner", the security interest is not unperfected so as to be avoidable in bankruptcy under 11 U.S.C. 544. In cases such as this where the lessor/secured creditor's name is listed on the certificate of title as "owner," the lender has substantially complied with the state titling statutes, and its security interest is perfected and unavoidable.

Crawford v. Mullins, Case No. 00-5013 (Bankr. W.D.N.C. April 24, 2001)(Whitley) - In a Chapter 7 adversary proceeding, the Trustee brought an action under Section 544(b) claiming that the defendant, the debtor's former attorney, had engaged in a civil conspiracy to defraud the debtor's creditors. The Trustee sought an in personam judgement against the defendant/former attorney for the value of the transferred assets. The defendant sought to dismiss the Trustee's claim for failure to state a claim upon which relief can be granted. The defendant argued that a claim of civil conspiracy is neither an avoidance of a transfer of a debtor's property nor a claim held by the debtor. The defendant further argued that it is an action which must be brought by the debtor's creditor's, not the Trustee. Consequently, the defendant argued, the Trustee lacked standing to bring the action. The Court denied the defendant's motion, holding that the Trustee can bring this cause of action. This is because, under Virginia case law, the debtor's creditors could bring this cause of action against the defendant.

IN RE JONES, Case No. 96-30469 (Bankr. W.D.N.C., July 15, 1996)(J. Wooten) - The Court held that 11 U.S.C. 1322(b)(2) did not prevent the modification of a creditor's claim that was secured by a perfected lien on the debtor's principal residence and an unperfected lien on the debtor's automobile. The Court noted that the Chapter 13 Trustee could utilize his avoidance powers under 11 U.S.C. 544 to avoid the lien of a creditor on the debtor's automobile because the creditor had not had its lien noted on the title to the automobile prior to the filing of the petition. However, the Court held that whether or not a trustee may be able to avoid one of a secured creditor's liens under 11 U.S.C. 544 is irrelevant for the purposes of determining whether that creditor is secured solely by a lien on the debtor's principal residence. The Court further held that whether or not a creditor holds liens on property other than real estate constituting the debtor's residence should be determined according to state law as of the date of the petition, independently of post-bankruptcy events. Therefore, the Court held that if the Chapter 13 Trustee was to defeat the creditor's lien on the debtor's automobile under 11 U.S.C. 544, the creditor would be secured solely by a lien on the debtor's principal residence, without the benefit of 11 U.S.C. 1322 protection. Accordingly, the Court overruled the creditor's objection to confirmation of the debtor's Chapter 13 plan.

SIGMON V. MILLER-SHARPE (IN RE MILLER), 197 B.R. 810 (W.D.N.C., June 18, 1996)(J. Potter) - The District Court held that 11 U.S.C. 544 confers a status on a bankruptcy trustee, but nothing in 11 U.S.C. 544 makes the trustee an agent for the creditors empowered to bring claims on behalf of the creditors against third parties, even though success would produce benefits for the estate and therefore indirectly to the creditors whose claims were pursued.

IN RE HYDE, Case No. 95-20070 (Bankr. W.D.N.C., Nov. 28, 1995)(J. Hodges) - Under N.C.G.S. 1C-1601(a)(3), a debtor may exempt up to $1,500 in only one automobile. In a case in which the debtor owns multiple automobiles with a small total value, the trustee should be permitted to abandon the cars under 11 U.S.C. 544. The trustee should have this discretion where 1) the total value of all of the debtor's automobiles is less than the allowed exemption under the statute, 2) disposition of the non-exempt vehicles would not produce a substantial benefit to the estate, and 3) abandonment would not cause any substantial abuse.

IN RE CALHOUN, Case No. 95-31004 (Bankr. W.D.N.C., Nov. 3, 1995)(J. Whitley) - The Court held that under the doctrine of equitable subordination, a creditor had a perfected security interest in the Chapter 13 debtor's automobile even though the creditor's lien was not noted on the certificate of title prior to the filing of the bankruptcy petition. The Court also held that under N.C.G.S. 25-9-301, the holder of a perfected security interest enjoys rights that are superior to the rights of the Trustee as a hypothetical judicial lien creditor under 11 U.S.C. 544(a)(1).

HILLIER V. BLUE RIDGE SAVINGS BANK, INC. (IN RE COLLEGE WALK LIMITED), Case No. 91-10110 (Bankr. W.D.N.C., April 4, 1995)(J. Hodges) - The applicable limitations period for the trustee's claims for avoidance of fraudulent conveyances under 11 U.S.C. 544 is governed by 11 U.S.C. 546(a), which requires the commencement of an action within two years after the appointment of the trustee. As to claims based on non-bankruptcy law, 11 U.S.C. 108(a) requires the trustee to bring these actions before the later of the expiration of the applicable statute of limitations period (as if the bankruptcy case had not been filed) or "two years after the order for relief." Under Federal Rule of Bankruptcy Procedure, an order or judgment is effective from the date of its entry on the court's docket. Therefore, under 11 U.S.C. 108(a), the limitations period begins when the Order for Relief is docketed, not when it is signed by the judge.

IN RE WINKLER, 164 B.R. 728 (Bankr. W.D.N.C. 1994) - If a restriction on transferability of the debtor's interest in an ERISA pension plan is enforceable at the date of the petition, it is excluded from the estate by 11 U.S.C. 541(c)(2), even though the restriction is terminated or becomes unenforceable after bankruptcy.

IN RE KABBASH, Case No. 92-50456 (Bankr. W.D.N.C., May 26, 1993)(J. Wooten) - Chapter 13 debtors share the trustee's avoiding powers under 11 U.S.C. 544(a) and can utilize 11 U.S.C. 506(d) to invalidate the lien of a second mortgage holder who described the real property of the debtors as being in an incorrect county and recorded the mortgage instrument in the wrong county, even though the debtors themselves had actual knowledge of the second mortgage.

IN RE PRICE, Case No. 93-30052 (Bankr. W.D.N.C., May 14, 1993)(J. Hodges) - Sears' lien on the Chapter 13 debtors' property was not obtained in violation of the North Carolina Retail Installment Sales Act, and was therefore not avoidable, because Sears had taken a security interest in the items purchased on the debtors' charge account and each purchase was secured only by the items then purchased (while the provisions of the Act in question limit their application to those situations where the seller takes a security interest in goods previously sold to the buyer to secure subsequent sales).

GRAY V. MOODY (IN RE MOODY), Case No. A-B-86-00413, Adv. Proc. No. 87-0013 (Bankr. W.D.N.C., May 13, 1988)(J. Hodges) - The debtor requested a creditor to loan funds to a third party. The debtor also owed a debt of his own to the creditor. Shortly prior to filing bankruptcy, the debtor paid $5,000 to the creditor, but it was not clear as to which debt the sum was to be applied. The trustee sued to recover the payment. The court concluded that it was equally likely that the $5,000 was to be applied to the debt owed by the debtor and not to the debt owed by the third party. This made the payment a preference under 11 U.S.C. 547(b)(1) and (2). The payment was also a fraudulent transfer under 11 U.S.C. 548(a)(2). Additionally, the trustee attempted to sue the debtor's partners for payment of the partnership's debts. The court found that the trustee did not have the power to assert claims against third parties on the behalf of creditors of the estate under either 11 U.S.C. 541(a)(1) or 11 U.S.C. 544(a).