Ms. Calloway divorced Mr. Bowles and shortly before a final judgment was entered in their equitable distribution proceeding, she filed Chapter 13. Just prior to Ms. Calloway’s bankruptcy filing, the state court judge circulated a preliminary ruling to the parties via email, stating that he believed an unequal distribution of the marital assets in favor of Mr. Bowles would be equitable and that Ms. Calloway would be required was to pay a total of $50,514 by means of monthly payments of $300, due to the her liquidation of two retirement accounts, which had a total value of roughly $31,000. Additionally, since their separation, Ms.… Read More
Mr. Faison filed a voluntary Chapter 11 bankruptcy seeking, among other things, to continue to develop real property against which Summit Bridge held several claims. Summit Bridge objected to confirmation of Mr. Faison’s (third) plan of reorganization based on infeasibility at it was a “visionary scheme” that was “based on speculation, hope and desire, and has no demonstrable objective fact or facts as its foundation.”
While stating that it believed Mr. Faison could ultimately propose a feasible plan, the bankruptcy court found the current plan infeasible. This was in part due to a failure to treat each parcel of property in the proposed development as unique and of differing values, high degree of speculation as to both the values of the lots and the costs of expenses, etc.… Read More
Mr. Smith filed Chapter 11 bankruptcy after Wells Fargo commenced foreclosure on real property. The amended proposed plan provided for the cram-down of the secured claim held by Wells Fargo to $60,000.00. The Confirmation Order provided “that confirmation is expressly conditioned upon [Mr. Smith] providing for the payment of all claims assertable against [Mr. Smith’s] estate as specified in the Plan and in this Order.” The Chapter 11 case was, however, dismissed at Mr. Smith’s request two years later, after which Wells Fargo recommenced foreclosure. The Superior Court, hearing the foreclosure on appeal, held that the pursuant to 11 U.S.C.… Read More
Debtor’s Chapter 13 plan was confirmed cramming down the claim of Greater Piedmont Credit Union against mobile home and land, prior to the filing of the Proof of Claim by GPCU showing that title to the mobile home had been cancelled, affixing it to the real property. Within thirty days of confirmation and before the passing of the bar date for filing claims, GPCU filed a Motion pursuant to Rule 60(b) for relief from the Confirmation Order based on mistake.
The bankruptcy court held that to obtain relief under Rule 60(b)(1), GPCU was required to show:
(1) That the underlying motion was filed within one year of the date the Confirmation Order;
(2) That GFCU had a meritorious defense;
(3) That the Debtor would not be unfairly prejudiced by having the judgment set aside; and
(4) The existence of mistake, inadvertence, surprise, or excusable neglect as a ground for relief.… Read More
Confirmation of the Debtor’s Chapter 13 plan was delayed for 15 months due to an adversary proceeding to cram-down a residential mortgage held by JPMorgan Chase. Following dismissal of the adversary proceeding, the Debtor proposed a plan that would have run for 60 months from confirmation. Because that plan would have run for a total of 75 months from the first §341 Meeting of Creditors, the Trustee objected.
Finding that this issue had already been addressed by the 4th Circuit in West v. Costen, 826 F.2d 1376, 1378 (4th Cir. 1987), the bankruptcy court held that “he applicable commitment period cited in § 1329(c) begins with the first payment made under a confirmed plan and not the first payment due under a proposed plan, which is typically due within one month of filing the petition.” This is still subject to the other requirements of § 1329, including good faith, but any delays in the adversary proceeding were “not fully or even mostly the debtor’s fault” and the Trustee’s failure to engage had further delayed that proceeding.… Read More
11 U.S.C. § 1325(a)(4), often called the “Best Interests of the Creditors” or the “Liquidation” test, requires that:
the value, as of the effective date of the plan, of property to be distributed under the plan on account of each allowed unsecured claim is not less than the amount that would be paid on such claim if the estate of the debtor were liquidated under chapter 7 of this title on such date;
As such, Chapter 13 Debtors must pay unsecured creditors at least as much as those creditors would get in a Chapter 7 liquidation. But it is important to keep in mind that a Chapter 7 liquidation is not without costs- the Chapter 7 Trustee will receive a strictly calculated commission pursuant to 11 U.S.C.… Read More
The Debtor purchased two gas stations, against which Petromax held Deeds of Trust, including against fixtures, in the amount of more than $2.4 million. Upon filing Chapter 11, the Debtor valued the gas stations at $1.3 million. The Debtor’s second proposed plan had eight classes of claims, but Class 7, which consisted of only $5,760.52 in unsecured claims, was the sole impaired class in favor of the plan, with the City of Greenville, holding a claim for $915.42, being the lone claimant to vote. The impairment to Class 7 was a 20 month delay in payment.
While a debtor may proceed to confirmation even in the absence of accepting ballots from all impaired classes pursuant to § 1129(b)(1) if, among other things, at least one impaired class of claims accepts the plan, and the remaining requirements of § 1129(a) are met, “there must be some other properly classified group that is also hurt and nonetheless favors the plan.” In re 266 Washington Associates, 141 B.R.… Read More
Following a Motion for Relief from Stay filed by ASC, the Debtor argued that ASC was not a a “party in interest” and lacked standing as there was neither an endorsement on the note nor an allonge affixed and presented in support of the Motion. \
Avoiding this issue, the Bankruptcy Court held “that a confirmed Chapter 13 plan, which represents a new contractual agreement between debtors and their creditors, is res judicata on the issue of a creditor’s rights as a party in interest with standing to seek relief from the stay.” In re Jeter, No. 08-07872-HB, 2011 WL 6014173, at *3 (Bankr.… Read More
Pursuant to 11 U.S.C. § 1129(e), in a small business case, a plan shall be confirmed not later than forty-five days after it is filed, unless the time for confirmation is extended. In a Chapter 11 case, a disclosure statement complying with 11 U.S.C. § 1125 shall be filed with the plan. In this case, a disclosure statement was neither filed with the Plan nor did the Plan contain adequate information under § 1125 to also serve as a disclosure statement as it did not include an accounting of funds
on hand, projections of income to be earned, and itemization of assets or even a description of the Debtor’s nature and history or any information regarding its books and records.… Read More
The Chapter 11 plan, confirmed in 2001, provided that the liability of the guarantors was capped at the amount of the Recapitalized Debt. The creditor, originally Wachovia, however, argued that this provision was impermissible and should not be given effect now.
The bankruptcy court found that this argument was fallacious. First, the terms of the confirmation order had been fully negotiated by a sophisticated creditor with an experienced attorney from a large law firm.
That aside, pursuant to both A.H. Robins Company, Inc. v Mabey, 880 F. 2d 694 (4th Cir. 1989) and the more recent Behrmann v. National Heritage Foundation, 663 F.… Read More