Now Updating

Summarizing by Amir Shachmurove

In re Escarcega, et al.

Case Type:
Case Status:
NC-16-1333 through -1336, and NC-16-1358 (9th Circuit, Sep 06,2017) Published
In a lengthy opinion, the BAP: (1) held that (a) confirmed Chapter 13 plans could not cannot properly provide the debtors with the right to unilaterally modify the plan without notice and court approval; (b) held that Chapter 13 plans that purported to bypass the notice and hearing requirements were the product of bad faith; (3) held that the bankruptcy court's refusal to confirm or deny the debtors' Chapter 13 plans within 45 days of the 341 meeting was proper; and (4) thoroughly excoriated the Chapter 13 trustee for failing to object to these non-standard plan modifications.
Procedural context:
Two local bankruptcy court judges held joint hearings in five Chapter 13 cases to review certain proposed changes to the court's form Chapter 13 plan. Debtors' counsel submitted multiple briefs in response to requests from the bench. As a result, the debtors' plans were neither confirmed nor denied within 45 days of the 341 meeting(s). After briefing and hearing, the judges concluded that the non-standard plan modifications were inconsistent with sections 1328 and 1329, and thus the plans were not proposed in good faith. The debtors timely appealed.
Two law firms proposed modifications to the court's form Chapter 13 plan. The effect of the non-standard modifications was twofold. First, the non-standard plan modifications called for unsecured creditors to receive no distributions, even if the debtor's income was greater than the median income. Second, the non-standard plan modifications effectively give the debtors the right to shorten their Chapter 13 plans without notice or court approval. The local Chapter 13 trustee did not object to these non-standard plan provisions. Two bankruptcy judges collected several cases and held a joint hearing on whether the Chapter 13 plans could be confirmed.
JURY, FARIS, BRAND, US Bankruptcy Judges

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