Roberts v. Livdahl (In re Livdahl)

Case Type:
Case Status:
BAP No. AZ-18-1223-TaLB (9th Circuit, Apr 15,2019) Not Published
BAP for 9th Circuit affirmed ruling of bankruptcy court (D. Az.) overruling objection to chapter 11 plan confirmation by secured creditor. Bankruptcy court properly ruled plan was filed in good faith, was in best interests of creditors, and was feasible. Creditor lacked standing to object on behalf of other creditors who voted to accept plan. Plan complied with 11 U.S.C. § 1129. Ruling by bankruptcy court in alternative that creditor failed to prosecute objection by failing to appear at confirmation hearing did not violate creditor's due process rights.
Procedural context:
Creditor objected to confirmation of chapter 11 plan. Bankruptcy court (D. Az.) overruled objection and confirmed plan. Creditor appealed to BAP for 9th Circuit.
In October 2015, creditor obtained a large judgment for fraud and unjust enrichment against Debtor (the “Claim”). The Arizona Court of Appeals affirmed the judgment, and, through judgment enforcement activities, creditor fully secured the Claim. He also foreclosed his judgment lien on Debtor’s house and acquired it through credit bid at the sheriff’s sale. Thereafter, Debtor filed a chapter 11 petition. Creditor obtained judgment from the bankruptcy court rendering the Claim nondischargeable. He also obtained stay relief and evicted her from possession of the house. Creditor’s acquisition of Debtor’s house through credit bid reduced but did not eliminate the fully secured Claim. Debtor proposed plan that would pay unsecured creditors in full over five years and to pay the Claim in full with interest at a rate found appropriate by the bankruptcy court. But, the plan did not amortize the payment on the Claim evenly over the seven year payment period. Instead, it provided for annual payments totaling $20,000 and a balloon payment at or before the end of the seven-year period. Creditor objected that treatment amounted to negative amortization, but Debtor claimed rights to offset against the Claim that, coupled with reduction of the debt as a result of the credit bid, made this characterization uncertain as of the confirmation hearing. Creditor also objected plan was not proposed in good faith because Debtor was consistently dishonest and consistently delayed plan confirmation, that the plan unjustifiably delayed conversion to chapter 7, and that the plan was not feasible because of the alleged negative amortization of the Claim.Notwithstanding filed objection, creditor failed to appear at confirmation hearing.
Taylor, Lafferty, and Brand

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