Subscribe to All Opinions20 B 20833
Chapter 11 subchapter V debtor confirmed its consensual plan. After the effective date of the plan, and after four payments were made to creditors, debtor requested authority to modify the confirmed plan. The U.S. Trustee objected on the grounds that the plan was substantially consummated and could not be modified. HELD: 11 U.S.C. § 1193(b) permits a debtor to modify a plan confirmed under § 1191(a) at any time after confirmation and before substantial consummation. “Substantial consummation” is defined in 11 U.S.C. § 1101(2) and contains three elements. The parties did not dispute that the first and second elements were satisfied. Debtor took the position that payments under the plan were de minimis, which did not satisfy the third requirement of “commencement of distribution under the plan.” The court determined that under the plain, unambiguous language of the statute, § 1101(2)(C) requires only that distribution under the plan has begun. “It means, simply, that the process contemplated in the confirmed plan is underway.” Since four payments had been made, the process of distribution was underway and the plan was substantially consummated. Therefore, the debtor could not modify the plan.
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Judge David D. Cleary
June 6, 2022
May 27, 2022
21 B 10216
Trustee objected to confirmation of Debtor’s chapter 13 plan on the grounds that he did not propose the plan in good faith and that the plan does not provide that all of his projected disposable income will be committed to unsecured creditors. HELD: Objection overruled. Debtor established by a preponderance of the evidence that he proposed the plan in good faith. The testimony supported a finding that he is separated from his non-filing spouse and that his amended schedules I and J represent his current financial situation. Debtor also established that his plan provides for all of his projected disposable income to be applied to make payments to his unsecured creditors. The proper test for whether his separated spouse’s income should be included asks if her income is paid on a regular basis for the household expenses of the debtor or his dependents. Also, as a below-median debtor, his claimed expenses are necessary and reasonable; this was a question of fact resolved by the testimony, exhibits and judicial discretion. Finally, Debtor established the amount of his income.
April 29, 2022
22 B 00998
Chapter 13 Trustee sought dismissal of Debtor’s case as well as a bar to refiling. HELD: While automatic dismissal was not appropriate, cause existed to dismiss the case under 11 U.S.C. § 1307(c). There was no evidence that Debtor, who owed significant arrearages to two mortgagees and had not made any postpetition mortgage payments, could propose a feasible plan. Additionally, Debtor did not timely file his schedules, did not attend two scheduled meetings of creditors and did not make his first plan payment until well past the deadline in § 1326. The court declined to impose a 180-day bar to refiling under § 109(g)(1). Trustee did not prove that Debtor deliberately and intentionally failed to abide by court orders or to appear before the court in proper prosecution of the case. The court also denied the Trustee’s request to impose a bar under § 349, finding that the evidence did not establish that Debtor filed this case in bad faith.
Judge Jacqueline P. Cox
May 27, 2022
22 BK 02485 (Involuntary)
A receiver appointed in a domestic relations case to sell the husband’s assets sought leave to respond to an involuntary bankruptcy petition filed against the Alleged Debtor, a corporate entity in which the husband had an interest. A petitioning creditor, a mortgagee who had a secured interest in real estate owned by the Alleged Debtor, objected. The court ruled that the receiver could file motions to dismiss or to intervene. The receiver was not allowed to answer the involuntary petition because Bankruptcy Code section 303(a) and Bankruptcy Rule 1011(a) allow only debtors and non-petitioning general partners of debtors to do so.
19 BK 28687, 22 AP 00019
The Trustee filed an Adversary Complaint seeking to invalidate a law firm’s statutory attorney’s fees lien and to limit its recovery of fees because its purported lien failed to meet the statutory requirement to disclose its interest, the fee that the client owed the firm. In its Motion to Dismiss, the firm asserted that it complied with the statute. The court disagreed with the firm and denied its motion, finding that it failed to disclose the fee that the client owed.
Judge Deborah L. Thorne
Judge LaShonda A. Hunt
April 27, 2022
16bk34329, 18ap00290
Chapter 7 Trustee sought to avoid an indirect transfer by Debtor to gratuitously repay a debt he did not owe. Following a trial, the Court holds the Trustee did not meet his burden of establishing an avoidable transfer of Debtor’s property interest under 11 U.S.C. § 544, or demonstrate actual or constructive fraud under Illinois fraudulent transfer law. Judgment will be entered in favor of Defendants.
Chief Judge A. Benjamin Goldgar
Judge Donald R. Cassling
20 B 10492, 20 A 00273