In re: VICTORIA M. GEWALT,

Case Type:
Consumer
Case Status:
Reversed and Remanded
Citation:
BAP No. EC-21-1172-TBG (9th Circuit, Feb 02,2022) Not Published
Tag(s):
Ruling:
A Subchapter V plan cannot be confirmed unless it complies with 11 U.S.C. § 1123(b)(5). Thus, the debtor's plan, which did not require the reorganized debtor to make periodic payments to a non-consenting creditor with a lien on the debtor’s residence, violated 11 U.S.C. § 1191(a)(1) by violating 11 U.S.C. § 1123(b)(5). In addition, the secured creditor's appeal was not equitably moot because, among other reasons, the debtor had not sold or disposed of any property as a result of plan confirmation.
Procedural context:
A secured creditor appealed the bankruptcy court's confirmation of a Subchapter V plan that eliminated the debtor's obligations to make monthly payments to an objecting secured creditor.
Facts:
The debtor borrowed more than $1,000,000 from a bank and secured her obligations by granting the bank a deed of trust on her residence. The promissory note requires the debtor to make monthly payments to the bank. After defaulting, the debtor filed a Chapter 11 petition to avoid foreclosure. At that time, the debtor was nearly $200,000 in arrears. The debtor elected to proceed under Subchapter V. The debtor has no disposable monthly income. She filed a Subchapter V liquidating plan. The plan required her to sell or refinance her residence and other properties within two years of the plan's effective date and to pay creditors from the proceeds of the refinancing or sales. The bank voted against, and objected to, confirmation. The bank argued that the plan violated 11 U.S.C. §§ 1123(b)(5) and 1129(b) by eliminating the debtor's obligation to make monthly payments to the bank.
Judge(s):
TAYLOR, BRAND, and GAN, Bankruptcy Judges

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