In a latest choice, a district court docket reversed the choice of the chapter court docket and clarified the unbiased obligation of the Chapter Courtroom to make sure that a Chapter 13 Plan satisfies the required necessities of the Chapter Code, no matter the events’ conduct. In re: BRUCE D. PERRY, Debtor. KRISTA PREUSS, Standing Chapter 13 Tr., SDNY, Appellant, v. BRUCE D. PERRY, Appellee., No. 20-CV-4617 (CS), 2021 WL 4298192 (S.D.N.Y. Sept. 21, 2021)
Within the proceedings under, the debtor filed a Chapter 13 chapter petition, which included unsecured claims totaling $427,103.70. Id. at 1. The debtor’s petition additionally included a $2,000 monthly expense for an “RV cost.” The debtor’s amended Chapter 13 Plan that included proposed funds of $575 monthly for 60 months. Id. On the affirmation listening to, the Chapter 13 Trustee (the “Trustee”) orally objected that (1) the unsecured quantity exceeds the unsecured debt restrict for Chapter 13 instances, and that (2) the RV expense was inappropriate. Id. The chapter court docket dismissed these objections as a result of the Trustee had not “well timed put them in writing.” The court docket entered a affirmation order, and denied the Trustee’s subsequent movement to reargue. Id. The Trustee then filed a discover of enchantment.
Within the enchantment, the Trustee argued that the plan was confirmed in error, as each the quantity of unsecured debt and the RV bills have been inappropriate, and that by failing to contemplate these arguments and summarily confirming the plan, the chapter court docket “didn’t undertake its unbiased obligation to make sure that the Plan conformed to Provisions of the Chapter Code.” Id. at 2 (citing Trustee Br. at 7-8).
District Choose Cathy Seibel agreed, noting that part 1325(a) of the Chapter Code “instructs a chapter court docket to substantiate a plan provided that the court docket finds, inter alia, that the plan complies with the ‘relevant provisions’ of the Code.” Id. (citing United Pupil Assist Funds, Inc. v. Espinosa, 559 U.S. 260, 277 (2010)). Choose Seibel quoted additional excerpts from Espinosa, which “mandates that ‘chapter courts have the authority – certainly, the duty – to direct a debtor to adapt his plan to the necessities of’ the Chapter Code.” Id. (citing Espinosa, 559 U.S. at 277). Which means chapter courts should make “unbiased dedication[s] . . . earlier than a plan is confirmed” and that “chapter courts are ‘require[d] . . . to deal with and proper a defect in a debtor’s proposed plan even when no [party] raises the problem.” Id. (citing Espinosa, 559 U.S. at 277-78, n.14).
Choose Seibel noticed that the chapter court docket “declined to contemplate” the problems raised by the Trustee “as a result of no well timed written objection was made,” and defined that the absence of a “well timed objection doesn’t imply . . . that the Plan met” the necessities of the Chapter Code. Id. Particularly, “§109(e)’s requirement that Debtor’s noncontingent, liquidated, unsecured debt be lower than $419,275.00.” Id. Choose Seibel dismissed arguments on the contrary, reversed the chapter court docket’s choice, and remanded the matter for the chapter court docket to “handle the deserves of the Trustee’s arguments within the first occasion.” Id. at 3.
