Case Type:
Case Status:
21-1086, 21-1126 (9th Circuit, Apr 27,2022) Published
Publishing so as to explain the role of a bankruptcy court to set the commitment period during which a debtor must pay its projected disposable income or its value in a subchapter V case, the U.S. Bankruptcy Appellate Panel of the Ninth Circuit (BAP) affirmed the orders confirming the chapter 11 plan of Orange County Bail Bonds Inc. (DR), the debtor, and denying the motion to convert or dismiss of Legal Service Bureau, Inc., d/b/a Global Fugitive Recovery (Global), a creditor, issued by the U.S. Bankruptcy Court for the Central District of California (BC) in two related appeals.
Procedural context:
The DR filed its chapter 11 plan and disclosure statement in December 2019. Prior to the final hearing on approval of the disclosure statement, it filed an amended petition, electing to proceed as a small business debtor under subchapter V. In response, Global filed a motion to convert or dismiss the case and objected to the DR's amended petition for a variety of reasons. Among them, Global accused the DR of filing its petition as a litigation tactic to forestall Global's collection efforts and to gain a litigation advantage in a prepetition action pending in California Superior Court (State Court), questioned the DR's ability to fund a plan due to California legislation that threatened to severely impact the bail bond industry, and objected to the amended petition as impermissibly allowing the DR to change course several months into the case, creating a procedural quagmire, and thus constituting cause to dismiss or convert because statutory deadlines under subchapter V had already passed. Eventually, after rescheduled hearings, California voters' repeal of the bail reform that Global cited in its motion to dismiss, and two more amended plans and disclosure statements, the BC denied this motion and confirmed the DR's plan, as amended to account for the trustee's objections and with further modifications agreed to at a hearing held on March 4, 2021.
More than just the DR and a single creditor caused the underlying mess. The DR was a small bail bond company, and Global is a bail fugitive recovery business that contracts with such companies. In 2014, the DR entered into a surety bail bond agreement with Parwin Saddozai (Parwin) and Imron Saddozai (Imron) as bail bond agent for their imprisoned son, Shikeb Saddozai (Shikeb). As collateral, Imron provided a deed of trust on her residence (Saddozai Property). Shikeb failed to appear at his hearing, and the DR thus retained Global,. Global eventually located Shikeb in the Philippines and, in collaboration with the U.S. Marshals Service, returned Defendant to the United States in May 2015. Global invoiced the DR $300,000 for its service, and the DR then invoiced Imron $326,412.29 for Global’s fee, legal fees, and a past due balance on the bond premium, further advising her that it would initiate foreclosure proceedings within 30 days if she did not pay the amount due. Disputing the obligation, Imron filed suit in the State Court in the hopes of securing a release of the deed of trust. The State Court first stayed the pending foreclosure; later, it consolidated the case with a separate suit filed by Global against the DR. Ultimately, the State Court entered judgment in favor of Global, and against the DR, in the amount of $327,750,3 and it entered judgment in favor of the DR, and against Imron, in the amount of $326,000. The DR appealed the judgment, and Imron cross-appealed. But after she was dismissed, Imron filed a chapter 13 bankruptcy petition. Stymied, Global then filed suit against the DR's principals, Leslie Anne Miller and Robert Miller, seeking to establish alter ego liability for the judgment,
Scott H. Gan; Laura S. Taylor; and William J. Lafferty

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