Motion to approve compromise was denied because the attorney filing the motion did not represent the debtor in the Chapter 13 case but rather in tort litigation and notice of the settlement terms and of the hearing were not served on all creditors as required by Bankruptcy Rule 2002(a)(3).
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Judge James E. Massey (Retired)
Debtor’s objection seeking disallowance of proof of an unsecured claim arising from an equity security was construed as seeking subordination of the claim under section 510. The Court subordinated the claim but held that the fact that the claim was based on a security did not negate that it was in fact a claim and could not be disallowed under section 502 merely because it was “based on an equity investment.”
The Chapter 7 Trustee objected to the proof of a fully secured claim on the ground that the Trustee abandoned the property securing the claim and that Respondent should look to its collateral for satisfaction of its debt. Objection denied. The basic issue raised is not about disallowance under section 502 but about whether the claim is fully secured under section 506(a).
In this Chapter 13 case, Debtors objected to the proof of claim of the lender, stating that they disputed its “validity” and that the claim misstated the amount of the prepetition arrearage. The relief demanded was to direct the Trustee not to pay anything to the claimant until it amended its claim. Counsel then submitted a proposed order that would have disallowed the entire claim. Objection denied. Submitting an order provides for relief not requested in the motion is unprofessional. The claim as a whole was not in dispute, and hence disallowance was not permitted under section 502.
The Chapter 7 Trustee objected to and sought disallowance of a proof of a claim that asserted it was fully secured by a mechanics lien. The premise of the objection was that the claimant should look to its collateral. The Trustee held funds derived from another source as to which the claimant asserted no interest. Objection denied. Like the objection in the Bryant case above, this one also confuses disallowance under section 502, which says nothing disallowance due to collateral for a claim, and a determination under section 506(a) that the claimant has no unsecured claim. A Chapter 7 trustee only pays unsecured claims under section 726, and this claimant asserted neither an unsecured claim nor an interest in funds held by the Trustee.
Motion for default judgment against a bank was denied because the certificate of service of the summons and complaint failed to show that this defendant, which is insured by the FDIC, was properly served under Fed. R. Bankr. R. 7004(h).
Debtor objected to and sought disallowance of the secured portion of a proof of claim of the IRS on the ground that he was surrendering the property in his Chapter 13 plan. Objection denied. The objection stated no basis for disallowing the claim under section 502. A debt does not cease to be enforceable merely because collateral is surrendered or abandoned or because the stay is lifted. Nor does allowance of a claim that is secured automatically mean that it is entitled to be paid in bankruptcy.
Motion for reconsideration denied under Fed. R. Civ. P. 59(e), made applicable in adversary proceedings by Fed. R. Bankr. P. 9023.
When attempting to file a petition in this case in the ECF system, the filer uploaded a document that did not include a petition. No petition was subsequently filed. Under section 301, a case is commenced by the filing of a petition. Because no petition was filed, Debtor never filed a case. No automatic stay ever existed. The file purporting to be a case was closed .
Motion for relief from stay granted pursuant to section 362(d)(2). Debtor did not have to prove feasibility of a plan to prevail but at a minimum had to show facts that
would enable the Court to assess the probability that a plan could be confirmed - that an effective reorganization is “in prospect.” Debtor has not provided sufficient proof to make a reliable assessment of the feasibility of a plan.