- Case Type:
- Case Status:
- AZ-19-1028-FLB (9th Circuit, Aug 21,2019) Published
- BAP for 9th Cir. affirmed ruling of bankruptcy court (D. Az.) confirming chapter 11 plan. Treatment of unsecured creditors satisfied 1129(a)(7) requirement that unsecured creditors would receive at least as much as they would receive in chapter 7 liquidation. Third party contribution of $15,000 to plan satisfied new value exception to absolute priority rule under 1129(b) sufficient for debtor to retain exempt property.
- Procedural context:
- Bankruptcy court (D. Az.) confirmed debtor's chapter 11 plan over objection of creditors. Creditors appealed to BAP for 9th Cir.
- Juarez, a licensed real estate broker, worked with his longtime domestic partner, Leticia. Juarez and Leticia initially worked at Realty Executives McConnaughay. All commissions they earned were payable to Mr. Juarez and deposited into the couple’s joint bank account. Leticia periodically withdrew the portion of the commissions that she had earned and deposited it into her personal bank account. In the 22 months prior to the petition date, Mr. Juarez or Leticia transferred over $72,000 from the joint account to Leticia. Four months prior to the petition date, Mr. Juarez and Leticia left Realty Executives McConnaughay and began working with Realty Executives in Phoenix. Mr. Juarez managed a team that included Leticia and had discretion to determine the commissions for his team. During this time, Mr. Juarez and Leticia received separate paychecks. In 2011, Mr. Juarez borrowed $200k from Creditors. Around 2014, Creditors sued Juarez in Arizona state court for breach of contract and other claims. In 2017, Juarez filed bankruptcy under chapter 11. The day before filing bankruptcy, he formed an LLC (UBLA) to acquire a vacant lot. Juarez paid some of Leticia's personal expenses from the DIP account, and made other unexplained cash withdrawals. Juarez filed a plan that included a "new value" contribution of $15k from Leticia in the third year. Creditors objected that plan wasn't filed in good faith based on 5% distribution to them, Juarez's unexplained withdrawals of postpetition funds, payment of Leticia's expenses, and failure to include Leticia's income and assets.
- Faris, Lafferty, Brand
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