In Murphy, Jr. v. O’Donnell v. Goalski, 474 F.3d 143 (4th Cir. 2007), the Fourth Circuit determined when and how a confirmed Chapter 13 plan may be modified. There were two fact patterns at issue in this matter and the Court started out by setting forth the principal that a confirmed Chapter 13 plan is “a new and binding contract, sanctioned by the court, between the debtors and their pre-confirmation creditors,” id., citing Matter of Penrod, 169 B.R. 910, 916 (Bankr.N.D.Ind. 1994). The Court continued that, “like other contracts, a confirmed Chapter 13 plan is subject to modification.” Murphy, 474 F.3d at 148 (citing In re Arnold, 869 F.2d 240, 241 (4th Cir. 1989); but see snarky comment (unlike other contracts, both parties do not need to consent to the modification). Section 1329 of the Bankruptcy Code provides that a confirmed plan may be modified at any time after confirmation…Read More
In 1995, the Fourth Circuit decided Cen-Pen Corp. v. Hansen, 58 F.3d 89 (4th Cir. 1995), which decided the notice requirements within a Chapter 13 case to alter the security interests of a secured creditor. The facts around how the security interest arose were a little convoluted, but suffice it to say, the pre-bankruptcy security status of the lien was not at issue. However, the Hanson’s filed a Chapter 13 plan that treated Cen-Pen as an unsecured creditor. The plan further required creditors to submit proofs of claim and objections within a specified time period and provided that the plan would be automatically confirmed if no objections were received. A few years after the Hansen’s received their discharge, Cen-Pen filed a Complaint in bankruptcy court to determine the validity of its liens on the Hanson residence The Hanson’s argument rested on 11 USC § 1327(c) which reads that, “[e]xcept as…Read More
In 1993, the Fourth Circuit decided Piedmont Trust Bank v. Linkous, 990 F.2d 160 (4th Cir. 1993), which addressed the notice required to a secured creditor when confirmation of a bankruptcy plan requires a valuation under 11 USC 506(a) of the bankruptcy code. In this case, Piedmont owned a security interest in a mobile home and a vehicle and was due balances of roughly $18,000.00 on the mobile home and $4,000.00 on the vehicle. The Chapter 13 plan proposed by Linkous treated only $6,000 of the mobile home loan as secured and $1,000.00 of the car loan as secured. The Plan treated the remaining balances as unsecured. Piedmont was given a summary of the Chapter 13 plan but was not otherwise notified of the ‘506(a) valuation. The Chapter 13 Plan was confirmed and two weeks later Piedmont filed its claims which treated the full balance of the claims as secured.…Read More
In re Hernandez; Case No. 07-11413-RGM; March 3rd, 2008 The simple non-delivery of funds does not necessarily equate to embezzlement, larceny, or a willful and malicious injury. However, where there is an applicable trust agreement with a corporate entity, the obligations of which are guaranteed by the debtor who is also an officer and person in control of the corporation’s operations in which the defalcation occurred, the debtor’s obligation under the guarantee agreement is not dischargeable under 11 USC § 523(a)(4).
In re Rodriguez; Case No. 07-13577-RGM; March 3rd, 2008 This matter was before the court on a proposed reaffirmation agreement under §524 that was not fully completed. Therefore the court determined that the reaffirmation was not effective. This case also pointed to an interesting issue of the juridical person who is the creditor. The court noted that the reaffirmation identifies “Branch Banking & Trust Company or one of its affiliates (hereafter collectively BB&T)” and then the reaffirmation was signed by Pretice Faircloth, who identified himself as “Asst. Vice President” under the name “BB&T Bankruptcy,” which the court notes does not appear to be a juridic entity and there is nothing else to indicate that Mr. Faircloth is authorized to enter into a reaffirmation agreement on behalf of the specific creditor to whom the debtor is indebted.
In re Rowe Furniture; Case No. 06-11143-SSM; March 4th, 2008 This matter was before the court on the motion by Riverside Claims, LLC (“Riverside”) to allow a total of thirteen claims it filed after the claims bar date as amendments of claims that were timely-filed in the related case of the debtor’s parent holding company. Riverside had filed claims in the parent companies case, but after the claims bar date for this case had run, and on the last day to object to the claims in the parent companies case, the parent company objected to the claims on the grounds that liability for those claims lie with the Debtor in this case. Upon realizing its error, Riverside re-filed its claims in the present case and brought this motion to have them allowed as amendments to claims filed in the case of the parent company. Except in Chapter 11 cases—in which…Read More