Author Archives: Bill Kellum

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Core proceedings are proceedings or issues that are entirely related to the bankruptcy case. The bankruptcy judge presides over these issues. Core proceedings in a bankruptcy case include:

  • Matters concerning estate administration. For example, the court has jurisdiction over the bankruptcy trustee’s duties in administering the estate.
  • Matters concerning creditors’ claims. For example, if the trustee objects to a creditor’s claim, the court has jurisdiction over the objection.
  • Matters concerning the debtor’s exemptions. For example, if the trustee objects to the debtor’s exemptions, the court has jurisdiction over the objection.
  • Matters concerning the debtor or the trustee obtaining credit. For example, in a Chapter 13 case, the debtor must seek court permission before incurring debt.
  • Matters concerning the debtor or other parties turning over property to the estate. For example, if another person is holding property of the debtor, the court can order that person to turn that property over to the trustee.
  • Proceedings to determine, avoid or recover preferences. The trustee can seek to recover money the debtor paid to creditors during the preference period, and the court will have jurisdiction over the matter.
  • Proceedings to determine, avoid or recover fraudulent transfers. The trustee can seek to recover money the debtor fraudulently transferred, and the court will have jurisdiction over the matter.
  • Motions to terminate, modify, or annul the automatic stay. For example, if a creditor files a motion to lift the automatic stay so the creditor can foreclose or repossess, the court will hear the motion.
  • Proceedings to determine dischargeability or to object to dischargeability of certain debts. For example, if a creditor objects to the debtor’s discharging its particular debt, the bankruptcy court would hear the objection.
  • Proceedings to determine the validity, extent or priority of liens.
  • Confirmation of bankruptcy plans, such as the plan you file in a Chapter 13 case.
  • Matters concerning the use or lease of bankruptcy estate property.
  • Matters concerning the sale of bankruptcy estate property.

This list is non-exhaustive; core proceedings also include any other proceedings that involve the administration of the bankruptcy estate.

Non-Core Proceedings

Non-core proceedings are proceedings that do not arise under bankruptcy law, even if some of the issues in the case relate to the bankruptcy. For example, if the bankruptcy debtor is in the middle of a divorce, the divorce is a non-core proceeding. Although the debtor’s property affects the bankruptcy estate, the bankruptcy judge cannot determine the outcome of a divorce case. Similarly, if a bankruptcy debtor is involved in a personal injury lawsuit, the bankruptcy court has no control over the personal injury case, even though the proceeds may be bankruptcy estate property.

When a bankruptcy case involves a number of core and non-core issues combined, the bankruptcy judge must determine issue by issue whether he or she has jurisdiction over each one.

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MRCP 59(a) provides that the trial court may grant a new trial ” … in an action tried without a jury, for any of the reasons for which rehearings have heretofore been granted in suits in equity in the courts of Mississippi.” In non-jury cases ” … the court may open the judgment if one has been entered, take additional testimony, amend findings of fact and conclusions of law or make new findings of fact and conclusions, and direct entry of a new judgment.”

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Statutory order of preference for appointment of Administrator.  § 91-7-63, MCA.

  • Surviving spouse.
  • Next of kin, if not otherwise disqualified.
  • Other third party, bank or trust company.
  • If no application is made within 30 days of the decedent’s death, administration may be granted to a creditor or other suitable person.
  • If no application is made and the decedent left property in Mississippi, county administrator or sheriff may be appointed.  § 91-7-79 and -83, MCA.
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There are two types of fiduciary relationships: 1. Those created under the law, (a) as applied to particular relationships governed by statute (such as partner and partnership) or by legal proceedings (such as administrator and heir), or (b) as applied to contractual relationships (such as principal and agent or attorney and client); and 2. Those that are created by case law as a result of the factual circumstances underlying the relationship of the parties and the transactions at issue.

These types of unique fiduciary duties occur in various factual circumstances.1 While there is no definitive description of a fiduciary relationship, one source describes it as:

[T]he acting of one person for another; the having and the exercising of influence over one person by another; the reposing of confidence by one person in another; the dominance of one person by another; the inequality of the parties; and the dependence of one person upon another. In addition, courts have considered weakness of age, mental strength, business intelligence, knowledge of the facts involved or other conditions giving to one an advantage over the other.

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To establish a claim on fraudulent misrepresentation, the elements of fraud must be proven by clear and convincing evidence. Levens v. Campbell, 733 So. 2d 753 (¶ 35)(Miss. 1999). These elements include: (1) a representation; (2) its falsity; (3) its materiality; (4) the speaker’s knowledge of its falsity or ignorance of its truth; (5) his intent that it should be acted upon by the person and in the manner reasonably contemplated; (6) the hearer’s ignorance of its falsity; (7) his reliance on its truth; (8) his right to rely thereon; and (9) his consequent and proximate injury.

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In order to initiate an administration for a decedent who died without a will, a petition must be filed in the county in which the decedent resided.

The decedent’s heirs are given priority to serve as administrators or administratrix of the estate for thirty days.  After 30 days, the appointment of an administrator or administratrix is within the discretion of the court.  In order for letters of administration to be granted, the individual who petitions to be appointed as the administrator or administratrix must meet three requirements.  First, the prospective administrator or  administratrix must be at least eighteen years of age.  Second, the prospective administrator or administratrix must not have been convicted of a felony.  Third, the prospective administrator or administratrix must be of sound mind.  Prior to letters of administration being granted, the petitioner must take an oath that is required by statute.  In addition, unless waived or reduced by the court, the petitioner must give bond in an amount equal to the value of the decedent’s personal estate.

 Three disinterested persons are appointed to compile an inventory and appraise the decedent’s chattels, goods, and personal estate; this requirement excludes money and choses in action.  The inventory and appraisement must be completed thirty days after letters of administration are granted.  In addition, the administrator or administratrix must make an inventory of the decedent’s money that comes into the administrator’s possession and debts owed to the decedent.  In the event that the court waives the appraisal and inventory requirement, the inventory that is prepared by the administrator or administratrix must also list and value any of the decedent’s property that is in his or her possession.

 The administrator or administratrix of an estate must make a diligent effort to identify and notify the decedent’s creditors.   After completing these tasks, the administrator or administratrix must file an affidavit indicating compliance with these mandates.  Subsequently, a notice to creditors must be published once a week for three consecutive weeks.  The preferred means of notification is publication in a newspaper that is circulated in the county of the decedent’s residence.  If the claim of a creditor is not probated and registered with the clerk of the court within ninety days of the first publication, the claim is forever barred.

Mississippi Code Ann §91-7-83 provides that if there are no individuals who qualify to act as administrators, the chancery clerk or court may appoint the sheriff who shall administer the estate.

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Letters of administration are granted when an individual who petitions to be appointed as the administrator or administratrix meets three requirements.  First, the prospective administrator or  administratrix must be at least eighteen years of age.  Second, the prospective administrator or administratrix must not have been convicted of a felony.  Third, the prospective administrator or administratrix must be of sound mind.  The petitioner must then take an oath that is required by statute.  In addition, unless waived or reduced by the court, the petitioner must give bond in an amount equal to the value of the decedent’s personal estate. 

Unless waived for good cause, three disinterested persons are appointed to compile an inventory and appraise the decedent’s chattels, goods, and personal estate; this requirement excludes money and choses in action.  The inventory and appraisement must be completed thirty days after letters of administration are granted.  In addition, the administrator or administratrix must make an inventory of the decedent’s money that comes into the administrator’s possession and debts owed to the decedent.  In the event that the court waives the appraisal requirement, the inventory that is prepared by the administrator or administratrix must also list and value any of the decedent’s property that is in his or her possession.

 The administrator or administratrix of an estate must make a diligent effort to identify and notify the decedent’s creditors.   After completing these tasks, the administrator or administratrix must file an affidavit indicating compliance with these mandates.  Subsequently, a notice to creditors must be published once a week for three consecutive weeks.  The preferred means of notification is publication in a newspaper that is circulated in the county of the decedent’s residence.  If the claim of a creditor is not probated and registered with the clerk of the court within ninety days of the first publication, the claim is forever barred.

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Pursuant to 28 U.S.C. ‘1334(a), the United States District Court has original and exclusive jurisdiction over all bankruptcy cases, and pursuant to ‘1334(b), the District Court has original but not exclusive jurisdiction of all civil proceedings arising under the Bankruptcy Code (11 U.S.C. ‘101 et. seq.), or arising in or related to cases under the Bankruptcy Code.

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Courts generally find that the automatic stay does not halt criminal contempt proceedings to punish the debtor for contumacious conduct; orders to pay criminal restitution to the victim of a crime; or issuance of summonses, determination of guilt and imposition of fines in connection with traffic citations.

If, however, they are merely disguised debt collection actions, a few courts find either that they are stayed by §362 and/or that they may be enjoined under §105. Most courts disagree, holding that, even if the effect of the prosecution is to collect the debt, the action is still criminal and not subject to the stay. Such courts generally conclude that the prosecutor’s independent judgment as to whether or not to pursue the matter precludes the action from being treated as that of the private creditor.

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The automatic stay provides a period of time in which all judgments, collection activities, foreclosures, and repossessions of property are suspended and may not be pursued by the creditors on any debt or claim that arose before the filing of the bankruptcy petition. The stay automatically goes into effect when the bankruptcy petition is filed and provides a breathing spell for the debtor, during which negotiations can take place to try to resolve the difficulties in the debtor’s finances. 11 U.S.C. § 362(a).

The filing of a petition, however, does not operate as a stay for certain types of actions listed under 11 U.S.C. § 362(b). For example, the stay does not apply to the commencement or continuation of a criminal action or proceeding against the debtor or the commencement or continuation of a civil action or proceeding

  • for the establishment of paternity;
  • for the establishment or modification of an order for domestic support obligations;
  • concerning child custody or visitation; or
  • for the dissolution of a marriage, except to the extent that such proceeding seeks to determine the division of property that is property of the estate.

Under specific circumstances, the secured creditor can obtain relief from the automatic stay. For example, when the debtor has no equity in the property and the property is not necessary for an effective reorganization, the secured creditor can seek an order of the court lifting the stay to permit the creditor to foreclose on the property, sell it, and apply the proceeds to the debt. 11 U.S.C. § 362(d). Unsecured creditors can also seek relief from the automatic stay, for example, to continue state court litigation that was pending before the Chapter 11 case was filed.