- Case Type:
- Case Status:
- MB 17-021 (1st Circuit, Feb 01,2018) Not Published
- Secured creditor was not in contempt of confirmation order and confirmed chapter 11 plan where the plan and order imposed no duty or requirement that the secured creditor could have violated. On a related note, the BAP affirmed the bankruptcy court’s conclusion that an order stating only that the plan was “granted” and confirmation objections were “overruled” was sufficient to constitute a confirmation order. Affirmed.
- Procedural context:
- Over a year after the chapter 11 debtor’s plan was confirmed, the debtor filed an adversary proceeding against the secured creditor to seek redress for alleged violations of the confirmed plan. Three counts of the complaint were dismissed under Fed. R. Civ. P. 12(b)(6) with leave given to amend. The debtor appealed that dismissal, which was affirmed by the district court an remanded with instructions to dismiss the three counts. Finding no substantive obligation that lender could have violated, the bankruptcy court dismissed the fourth count (contempt), and the debtor filed this appeal.
- Debtor and his wife own residential property that was encumbered by a mortgage signed by both Debtor and his wife to secure repayment of a note executed ONLY by Debtor’s nondebtor spouse. Under Debtor’s plan, the secured creditor’s claim was written down from $673,000 to $354,000—the approximate value of the property. The plan imposed no specific obligation on the secured creditor (including no obligation to accept payments, nor any statement that payments made were in satisfaction of the secured claim). A year after plan confirmation, the secured creditor stopped accepting payments from Debtor, claiming it had no record of Debtor as a customer, and sent a notice of default to the nondebtor spouse, who was not paying the deficiency between the original claim amount and the amount approved in the plan.
- Godoy, Finkle, and Cary
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