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Summarizing by Amir Shachmurove

In re Pertuset

12b0009n.06; Docket No. 12-8014
The Sixth Circuit Bankruptcy Appellate Panel affirmed the rulings of the Bankruptcy Court for the Southern District of Ohio which denied confirmation of the debtor's Chapter 12 plan and dismissed their case with prejudice for a period of two years. The BAP also affirmed lower court rulings denying motions to continue the confirmation hearing, making evidentiary requests and seeking reconsideration. The seven issues raised by the debtors on appeal, and the BAP's reasoning are: 1) whether objections to claims stripped them of presumptive validity (no, because not raised below and because parties cannot simultaneously proceed pro se and with counsel); 2) whether creditors had standing to file claims or seek relief (yes, because scheduled as undisputed by the debtors and were parties in interest); 3 & 4) whether denial of pro se requests and oral motion to continue confirmation hearing was error (no, because requests were meritless and there was no abuse of discretion); 5) whether dismissal with prejudice for two years was error (no, because of the debtors' bad faith); 6) whether denial of plan confirmation was error (no, because the plan failed to meet the best interests of creditors test, the feasibilty test, or the good faith requirement); and 7) whether denial of the motion to reconsider was error (no, because the motion did not fall under any of the permissible grounds in Bankruptcy Rules 9023 and 9024).
Procedural context:
The debtors appealed a March 5, 2012 bankruptcy court order which denied the debtors' various pro se filings and oral motion to continue the confirmation hearing, denied confirmation of their plan and dismissed their case with prejudice for a period of two years. The debtors also appealed a March 30, 2012 order denying their motion for reconsideration.
The debtors filed their first Chapter 12 case in November, 2009, which was dismissed in April, 2010 for failure to timely file a plan and continuing loss to the estate. That dismissal was upheld on appeal at 438 B.R. 354. This case was filed in September, 2011. The debtors operated a timber business, although their schedules reflected no expenses associated with the business. The debtors listed several secured creditors with undisputed debts, including Quality Car and Truck Leasing, Farm Credit Services of Mid-America and American Savings Bank. These creditors all filed claims, and two of them filed motions for relief and a motion to dismiss the case. The Chapter 12 Trustee objected to confirmation of the plan on feasiblity and lack of specifity grounds. The testimony at the meeting of creditors revealed the debtors had only two oral contracts with family members to harvest and sell timber, and the debtors refused to disclose any details about the contracts. The debtors provided inconsistent or incomplete financial information. A plan was filed one day prior to the deadline for doing so, without a liquidation analysis or any type of financial projections. The plan did question the validity of several secured claims. The Court set various deadlines leading up to a January 9, 2012 confirmation hearing, but granted a motion to continue the hearing until January 25th even if an amended plan was filed. The debtors made several pro se filings questioning jurisdiction, seeking summons for a mortgage forensic auditor and private attorney general, and objections to 17 of the 21 claims in the case via a proposed order. After the initial ruling denying confirmation and dismissing the case with prejudice, the debtors filed a motion for reconsideration, alleging judicial bias, threats of sanctions against their counsel, repeating earlier pro se claims, and alleging conduct such as "servicing misconduct" and "violations of the False Claims Act".
Fulton, Harris and Shea-Stonum; opinion by Fulton

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