Ellett Law Offices, P.C.

Since 1993, Ellett Law Offices has provided thousands of clients with quality bankruptcy attorney representation. Bankruptcy law is complicated but you will be guided through the process by a knowledgeable and experienced bankruptcy attorney.

What is the Difference between a Chapter 7 and a Chapter 13 Bankruptcy?

August 25, 2014 by  
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versusMillions of consumers every year benefit from consumer bankruptcy. Among the most commonly filed forms of bankruptcy are Chapter 7 and Chapter 13, both can only be filed by natural persons, not by corporations.  A husband and wife can file jointly in the same case or file separately.

While both Chapter 7 and chapter 13 provide consumers relief under the United States bankruptcy code, there are significant differences between the two.  As a result, the type of bankruptcy appropriate for your situation will depend on your specific circumstances. An experienced Phoenix bankruptcy attorney will be able to review your finances and then advise you as to what type of bankruptcy, if any, could benefit you.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the most common type of bankruptcy filed in the United States. Also known as a “liquidation bankruptcy,” Chapter 7 bankruptcy involves liquidating a debtors non-exempt assets and using the proceeds to pay off outstanding debts. Most debts that are not satisfied are discharged, meaning that they are completely wiped out. Importantly, there are certain debts that are nondischargable in most circumstances, including student loans and any unpaid child support payments. Among the types of debts that are generally dischargeable include:

  • Credit card debt
  • Personal loans
  • Civil judgments
  • Business loans
  • Payday loans

More information here:

Chapter 13 Bankruptcy

Chapter 13 bankruptcy differs significantly from Chapter 7 bankruptcy. In  a Chapter 13, a debtor is able to keep most of his or her property, while restructuring debts and making payments of a court approved payment plan.  In many chapter 13 cases only a very small fraction of unsecured dect is repaid- most of it is discharged upon completion of the case. In a  Chapter 13 bankruptcy a consumer makes payment to a trustee who distributes funds to creditors. Generally, Chapter 13 bankruptcy is beneficial for people who have steady income who are having difficulty keeping up with their monthly payments. Chapter 13 can also be effectively used to avoid foreclosure in many cases as well.

More information:

Contact a Phoenix bankruptcy lawyer today to schedule a free consultation

If you are experiencing financial difficulty, bankruptcy may be an option you may want to consider. Bankruptcy is not right for everyone, and an experienced Phoenix bankruptcy lawyer will be able to go your situation and advise you if he or she believes that bankruptcy could benefit you. Attorney Ronald J. Ellett has over 20 years of experience helping Phoenix consumers obtain a fresh start through bankruptcy. To schedule a free consultation, call Ellett Law Offices today at (602) 235-9510.



When Can A Bankruptcy Attorney Bring Suit Within A Bankruptcy Case?

July 7, 2014 by  
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Before a bankruptcy attorney brings a suit within a bankruptcy case, the bankruptcy attorney must first ascertain whether “the action at issue stems from the bankruptcy itself or would necessarily be resolved in the claims allowance process.” Stern v. Marshall, 131 S. Ct. 2594, 2618 (2011). Section 157(b)(1) authorizes a bankruptcy court to “hear and determine all cases under title 11 and all core proceedings arising under title 11, or arising in a case under title 11.” However, the Supreme Court, in Stern v. Marshall, held that it is unconstitutional for a bankruptcy court to resolve a state common law claim and that “Congress may not vest in a non-Article III court the power to adjudicate, render final judgment, and issue binding orders in a traditional contract [or tort] action arising under state law, without consent of the litigants, and subject only to ordinary appellate review.” Id. at 2615.

Even if the estate has a claim against a creditor, who filed a proof of claim in the bankruptcy proceedings, the bankruptcy court still does not have power to adjudicate the claim. For example, in Stern v. Marshall, the debtor’s stepson initiated a defamation claim against the estate, and the debtor filed a counterclaim that was based on state common law. The Supreme Court explained that “there was never any reason to believe that the process of adjudicating [the stepson’s] proof of claim would necessarily resolve [the debtor’s] counterclaim.” Id. at 2617. Therefore, a creditor cannot consent to a bankruptcy court’s adjudication of a claim that is not resolved in the process of ruling on a creditor’s proof of claim.

Equitable Subordination

July 7, 2014 by  
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Equitable subordination is an equitable remedy for bankruptcy debtors or creditors when one creditor has performed inequitable conduct that has harmed the debtor or creditors of the bankruptcy estate. Equitable subordination was codified in the Bankruptcy Code under section 11 U.S.C. 510 (c) and is within the court’s discretion whether this remedy will be utilized.
In order for a court to grant an equitable subordination claim, three elements must be met: (1) the claimant engaged in some type of inequitable conduct, (2) the misconduct injured creditors or conferred unfair advantage on the claimant, and (3) that subordination would not be consistent with the Bankruptcy Code. In re First Alliance Mortgage Co., 471 F.3d 977, 1006 (9th Cir. 2006) (citing Matter of Mobile Steel Co., 563 F.2d 692, 701 (5th Cir. 1977)). Even though equitable subordination is an equitable remedy, it “is a dramatic remedy, and one that is rarely granted.” In re GTI Capital Holdings, LLC, No. 03-07923-SSC, 2007 WL 2493671 at *14 (Bankr. D. Ariz. Aug. 30, 2007). The Ninth Circuit has explained that gross and egregious conduct is required before a court will equitably subordinate a claim. In re First Alliance Mortgage Co., 471 F.3d at 1006. Additionally, “the level of egregious conduct necessary for equitable subordination is high; even independently tortious and fraudulent conduct does not necessarily rise to the level required for equitable subordination in bankruptcy.” Id. (citing In re First Alliance Mortgage Co., 471 F.3d at 1007).

Bankruptcy Attorneys Are Allowed To Be Paid Out of Disposable Monthly Income (DMI) in a Chapter 13 Bankruptcy Case

June 23, 2014 by  
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Bankruptcy attorneys are allowed to be paid out of Disposable Monthly Income (DMI) in a Chapter 13 bankruptcy case. Courts have generally held that the term “ unsecured creditor” is a catch all term designed to address creditors not referenced elsewhere by Congress in allowing debtors to deduct certain payments to unsecured creditors. Since bankruptcy attorney fees are not included in form B22C, they are allowed to be paid out of the debtor’s disposable monthly income. In re Puetz, 370 B.R. 386, 391 (Bankr. D. Kan. 2007); In re Smith, 09-64409, 2012 WL 6553786 (Bankr. N.D. Ohio Dec. 14, 2012); In re Echeman, 378 B.R. 177 (Bankr. S.D. Ohio 2007).

Further, the Advisory Committee Notes to Official Form B22C agree, noting,

“The Chapter 13 form does not provide a deduction from disposable income for the Chapter 13 debtor’s anticipated attorney fees. There is no specific statutory allowance for such a deduction, and none appears necessary. Section 1325(b)(1)(B) requires that disposable income contributed to a Chapter 13 plan be used to pay ‘unsecured creditors.’ A debtor’s attorney who has not taken a security interest in the debtor’s property is an unsecured creditor who may be paid from disposable income.” In re Puetz, 370 B.R. 386, 391 (Bankr. D. Kan. 2007) (citing Official Bankruptcy Form 22 advisory committee note ¶ D.3).

Advance Consultation with Expereinced Bankruptcy Attorney Is Best Way to Avoid Pitfalls of Preference Statute

June 23, 2014 by  
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Often a person facing the prospect of bankruptcy assumes it would be in their interest to pay off a debt to a friend or family member prior to the bankruptcy filing. Nothing could be further from the truth. These payment may be subject to capture by the bankruptcy estate. In other words, the representative of the bankruptcy estate can sue the recipient of the payments and take the money away from them. There are ways to protect assents in advance of a bankruptcy filing, but making a preferential payment is not one of them. Consulting with an experienced bankruptcy counsel early in the process will allow for the optimization of asset protection and exemption planning. Those who reside in Arizona should consult with an Arizona Bankruptcy Attorney because bankruptcy exemptions are based on the state of  residence.

In order to successfully establish a prima facie case for recovery of a preferential payment,, a plaintiff must prove that the payment was: (I) a transfer, (ii) of an interest of the debtor in property, (iii) made to or for the benefit of a creditor, (iv) for or on account of an antecedent debt, (v) made while the debtor was insolvent, (vi) made within 90 days or one year, in the case of an insider that (vii) resulted in the creditor receiving a greater distribution than it otherwise would have in a hypothetical chapter 7 distribution. Typically, a preference claim must be brought within twp years from the bankruptcy petition date to bring the preference action. The plaintiff bears the burden of proof in establishing all of the following elements of the prima facie case.

A transfer is defined by § 101 of the Code as “every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with property or with an interest in property, including retention of title as a security interest and foreclosure of the debtor’s equity of redemption.” 11 U.S.C. § 101.The transfer sought to be recovered, or avoided, must qualify as a transfer of an “interest of the debtor in property.” 11 U.S.C. § 547(b). A transfer of an “interest of the debtor in property” will include the transfer of “all legal or equitable interests of the debtor in property as of the commencement of the case.” 11 U.S.C. § 541.The transfer must have been made to or for the benefit of a creditor, as the term “creditor” is broadly defined pursuant to § 101 of the Code.: The next requirement for establishment of a successful preference case requires that the plaintiff prove that the allegedly preferential transfer was made “on account of an antecedent debt.” 11 U.S.C. § 547(b)(2). To satisfy this requirement, the debt must have been incurred prior to the allegedly preferential transfer.

For the purposes of a preference action, the Debtor is presumed to have been insolvent during the 90-day period preceding the filing of the bankruptcy petition. 11 U.S.C. § 547(f). A defendant may offer evidence to rebut the presumption of insolvency, and the plaintiff bears the ultimate burden of proof as to the Debtor’s insolvency. : A determination of insolvency is based on a typical balance-sheet assessment as to whether the liabilities of the debtor exceed the value of its assets

The preferential transfer which the Plaintiff seeks to avoid must have been made within 90 days prior to the filing of the bankruptcy petition, or between 90 days and one year before the date of filing if the creditor is an insider of the debtor. While the Bankruptcy Code provides numerous examples of parties that would qualify as insiders of a debtor, the list is not exhaustive and a determination of a party’s alleged insider status is often left to the court. The legislative history of the Bankruptcy Code provides the following definition: “one who has a sufficiently close relationship with the debtor that his conduct is made subject to closer scrutiny than those dealing at arm’s length with the debtor.”

Pursuant to § 547(b)(5), the final element that must be proven in order to establish a valid preference requires that the transfer must have enabled the creditor to receive more than the creditor otherwise would have received if: the case were a case under chapter 7 of this title; the transfer had not been made; and such creditor received payment of such debt to the extent provided by the provisions of this title. 11 U.S.C. § 547(b)(5).The practical effect of § 547(b)(5)is to precludes recovery of a transfer made to a fully secured creditor because the secured creditor would not be deemed to have received more as a result of the transfer than it otherwise would have pursuant to a chapter 7 liquidation.

Arizona Bankruptcy Attorneys Should Continue to Assert Exemption in Inherited Retirement Accounts

June 21, 2014 by  
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Bankruptcy attorneys across the country recently took notice when the United States Supreme Court issued its decision in Clark v. Rameker, 134 S. Ct. 678 ( 2013). The Court ruled that funds held in inherited Individual Retirement Accounts are not “retirement funds” within the meaning of 11 U.S.C. §522(b)(3)(C) and therefore not exempt from the bankruptcy estate under that code section.

An Arizona bankruptcy attorney will know that in the state of Arizona there is a second grounds for claiming an exemption. Bankruptcy law, 11 U.S.C. §522(b)(3)(A), allows the debtor to use State law to exempt property. Arizona state law, A.R.S. 33-1126(B), provides as follows:

B. Any money or other assets payable to a participant in or beneficiary of, or any interest of any participant or beneficiary in, a retirement plan under section 401(a), 403(a), 403(b), 408, 408A or 409 or a deferred compensation plan under section 457 of the United States internal revenue code of 1986, as amended, whether the beneficiary’s interest arises by inheritance, designation, appointment or otherwise, is exempt from all claims of creditors of the beneficiary or participant. This subsection does not apply to any of the following:

1. An alternate payee under a qualified domestic relations order, as defined in section 414(p) of the United States internal revenue code of 1986, as amended. The interest of any and all alternate payees is exempt from any and all claims of any creditor of the alternate payee.

2. Amounts contributed within one hundred twenty days before a debtor files for bankruptcy.

3. The assets of bankruptcy proceedings filed before July 1, 1987.

It is not settled whether this section will ultimately be ruled to provide for an exemption, but a strong case can be made for the allowance of an exemption for the entire interest in an inherited retirement plan in an Arizona bankruptcy case .

Bankruptcy attorneys should also note that 11 U.S.C. §522(b)(3)(A) is only available if the client meets the domicile requirement found therein.

Bankruptcy Estate that Collects Rents has Legal Obligation to Cotenants to Pay Property Taxes

June 14, 2014 by  
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Bankruptcy attorneys may be asked, “does a bankruptcy estate that owns property as a tenant in common have an obligation to pay the on-going taxes?” The general rule is that the obligation to pay taxes assessed against property held by tenants in common is the responsibility of all of the tenants in common. See Beatty v.Benton, 135 U.S. 244, 250 (1890)(tenants in common are equally entitled to the benefits of the property and equally liable fo rits burdens); 20 Am. Jur. 2d Cotenancy and Joint Ownership § 63 (2d ed. 2006). Accordingly, one tenant in common is under no legal obligation to the other cotenants to pay the taxes. See Stoltz v. Maloney, 630 P.2d 560, 563-64 (Ariz. Ct. App. 1981); 86 C.J.S. Tenancy in Common § 63 (2006). There are exception to the general rule , however. Several courts have held that because a fiduciary relationship exists between tenants in common, if a cotenant is in possession of the property and receiving all the profits and rents from it, it is the duty of that cotenant to pay the taxes owing up to the extent of the rents and profits received. See Stoltz, 630 P.2d at 563; Crossman v. Meek, 556 P.2d 325, 326 (Ariz. Ct. App. 1976); Wallach v. Korniczky (In re Korniczky), 308 B.R. 153, 157 (Bankr. W.D.N.Y. 2004); 86 C.J.S. Tenancy in Common § 89 (2006).

Common Definitions Used by Bankruptcy Attorneys in a Chapter 11 Plan

June 9, 2014 by  
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Bankruptcy attorneys often use specialized terms to communicate with each other and the Court. This can be confusing for anyone who is not a bankruptcy attorney. Attached is a list of terms commonly used in a Chapter 11 Bankruptcy Plan, along with their definitions. Moreover, many of these terms are also used in chapter 7 and chapter 13 of bankruptcy. An experienced bankruptcy attorney will be able to help you with the terminology used in bankruptcy cases. Here are some common terms and the way they are often defined in a Chapter 11 Bankruptcy:

1. “Administrative Claim”  means a Claim for administrative costs or expenses entitled to priority under Section 507(a)(1) or (b) of the Bankruptcy Code, including, without limitation, the actual, necessary costs and expenses of preserving the estate and operating the business of the Debtor. Such sums shall include wages, salaries or commissions due employees and others for services rendered after the commencement of the Case, compensation for legal and other professional services and reimbursement of expenses awarded under Sections 330(a) or 331 of the Code and all lawful fees and charges assessed against the estate under title 28 of the United States Code.

2. “Allowed Administrative Claim” means all or that portion of a Claim which both constitutes an Allowed Claim and which has been specifically allowed as an “Administrative Claim” pursuant to 11 U.S.C. §507(a)(1) or (b).

3. “Allowed Amount”  means the amount of any Allowed Claim recognized by the Debtor as valid or allowed by a Final Order of this Court.

4. “Allowed Claim or Allowed Interest” means a Claim or Interest having the following characteristics:

a) Either such Claim or Interest was listed in the Chapter 11 Schedules of the Debtor filed with the United States Bankruptcy Court for the District of Nevada (hereafter, the “Court”) pursuant to Section 521 of the Code; and (1) such Claim or Interest was not identified in those schedules as “disputed”, “contingent” or “unliquidated”; or (2) proof of such Claim or Interest has been filed with the Court in the time and in the manner prescribed by the Court, the Code and the Federal Rules of Bankruptcy Procedure; and

b) No objection to the allowance of such Claim or Interest has been interposed within the periods of limitation fixed by the Court, the Code or the Federal Rules of Bankruptcy Procedure or any order resolving any objection to the allowance of such Claim or Interest has become a Final Order.

5. “Allowed Secured Claim”  means all or that portion of a Claim which both constitutes an Allowed Claim and which has been specifically allowed as a “secured claim” pursuant to Section 506(a) of the Code.

6. “Allowed Priority Claim” means all or that portion of a Claim which both constitutes an Allowed Claim and which is entitled to priority under Section 507(a), except for those Allowed Claims entitled to priority under Section 507(a)(8).

7. “Allowed Priority Tax Claim”  means all or that portion of a Claim which both constitutes an Allowed Claim and which is entitled to priority under Section 507(a)(8).

8. “Allowed Unsecured Claim” means an Allowed Claim which is not an Allowed Administrative Claim, an Allowed Secured Claim, an Allowed Priority Claim or an Allowed Priority Tax Claim.

9. “Avoidance Claim” means a claim or cause of action of a bankruptcy estate to avoid transfers made by the debtor to the extent such claim arises under §§ 544-551 of the Bankruptcy Code.

10. “Bankruptcy Code” or “Code” means the federal statutes commonly referred to as the “Bankruptcy Code” and which are set forth in Title 11 of the United States Code (11 U.S.C. § 101, et seq.).

11. “Bankruptcy Court” means the United States Bankruptcy Court.

12. “Case” shall mean a Chapter 11 bankruptcy cases of Debtor, pending in the United States Bankruptcy Court.

13. “Claim”  means a “claim,” as defined by Section 101(5) of the Code, against the Debtor, against property of the Debtor or against property of the Estate.

14. “Class” shall mean any class into which Allowed Claims or Allowed Interests are classified pursuant to this Plan.

15. “Collateral” shall mean any real or personal property in which a person holding a Claim asserts a lien.

16. “Confirmation” shall mean the signing, by a United States Bankruptcy Judge or United States District Judge acting as a trial judge and not as an appellate judge, of all orders necessary to confirm the Plan.

17. “Confirmation Order” shall mean the order (or orders) confirming the Plan, signed by a United States Bankruptcy Judge or United States District Judge, acting as a trial judge and not as an appellate judge, after entry of such order (or orders) on the court’s docket.

18. “Consummation of the Plan” shall mean the accomplishment of all things contained or provided for in the Plan and the entry of an order closing the Case pursuant to Rule 3022 of the Federal Rules of Bankruptcy Procedure.

19. “Court” shall mean Bankruptcy Court as defined in this section of the Plan. When not capitalized, the word “court” shall mean such court exercising proper jurisdiction in the case as the context of the Plan makes appropriate. For example, as used in the phrase “entry of an order on the docket of the court”, the term “court” can refer to the United States Bankruptcy Court , the United States District Court, the Circuit Court or the United States Supreme Court, depending upon which court has issued the order in the Case.

20. “Creditor” shall mean any entity holding a Claim.

21. “Cure Amount” shall mean the amount necessary to cure any payment arrearages with respect to any executory contracts and leases to be assumed by the Debtor.

22. “Debtor” shall means the entity commencing a voluntary Case.

23. “DIP” shall mean Debtor-in-Possession.

24. “Disallowed Claim” shall mean any Claim or any portion thereof that (i) has been disallowed by a Final Order of the Bankruptcy Court, (ii) is listed in the Schedules as “$0,” contingent, disputed or unliquidated and as to which a proof of claim bar date has been established but no Proof of Claim has been timely filed or deemed timely filed with the Bankruptcy Court pursuant to either the Bankruptcy Code or any Final Order of the Bankruptcy Court or otherwise deemed timely filed under applicable law, (iii) has been agreed to be equal to “$0″ or to be expunged pursuant to the Claims Settlement Procedures Order or otherwise or (iv) is not listed on the Schedules and as to which a proof of claim bar date has been established but no Proof of Claim has been timely filed or deemed timely filed with the Bankruptcy Court pursuant to either the Bankruptcy Code or any Final Order of the Bankruptcy Court or otherwise deemed timely filed under applicable law.

25. “Disclosure Statement” shall mean the written disclosure statement the Debtor filed in this Case and approved by the Court pursuant to Section 1125 of the Code.

26. “Disputed Claim” or “Disputed Interest” shall mean either (a) a Claim or an Interest listed in the Chapter 11 schedules filed by the Debtor pursuant to 11 U.S.C. §521 and designated as “disputed”, “contingent” or “unliquidated”; or (b) a Claim or an Interest to which an objection has been filed by a party-in-interest and which objection has not been resolved by an order which has become a Final Order on or before the Effective Date.

27. “Distribution Date” shall mean any of (i) the Initial Distribution Date, (ii) each Interim Distribution Date and (iii) each Final Distribution Date.

28. “Effective Date” shall means that date designated by the plan usually the date which is  fourteen (14) days following the date of the entry of the Confirmation Order.

29. “Estate” shall mean the estate created in this Case under Section 541 of the Bankruptcy Code.

30. “Equity Holder” shall mean any holder of an Interest.

31. “Federal Rules of Bankruptcy Procedure” shall mean those rules of procedure governing bankruptcy cases and contested matters and adversary proceedings in those cases which have been promulgated pursuant to 28 U.S.C. § 2075, and any amendments to those rules applicable to this Case.

32. “Final Order” shall mean an order or judgment entered on the Court’s official docket and which: (a) has sufficient finality under applicable law to be appealable as of right, (b) has been entered on the court’s docket for a sufficient period of time such that the filing of any notice of appeal from it is subject to being dismissed as commencing an untimely appeal, (c) has not been reversed, (d) is not stayed, (e) is not the subject of a pending motion seeking relief from it, reconsideration of it, or to alter or amend it, and (f) is not the subject of a pending appeal or a pending motion for review or rehearing on appeal.

33. “General Unsecured Claim” shall mean a Claim, other than an Administrative Claim, a Priority Tax Claim, or a Secured Claim.

34. “Impaired” shall mean any Claim or Interest that is impaired within the meaning of section 1124 of the Bankruptcy Code.

35. “Impaired Claims” shall mean any claim or interest which is modified by this Plan.

36. “Insider” of a Person shall mean a person or entity that would be an “insider” of such Person under § 101(31) of the Bankruptcy Code, if such Person were a Debtor.

37. “Interest” shall mean the interests, whether or not asserted, of any holder of an equity security of the Debtor on the Order For Relief Date, as defined in Bankruptcy Code section 101(17) of the Bankruptcy Code.

38. “Lien” has the meaning set forth in section 101(37) of the Bankruptcy Code.

39. “Petition” shall mean the petition for relief under Chapter 11 of Title 11, United States Code filed by the Debtor on 12th, 2012.

40. Petition Date” shall mean the date upon which the Debtor filed its voluntary petitions for relief under Chapter 11 of Title 11, United States Code.

41. “Plan” shall mean this Chapter 11 Plan of Reorganization, including all exhibits to this Plan, either in their present form or as they may be altered, amended or modified from time to time in accordance with the provisions of this Plan, the Code and the Federal Rules of Bankruptcy Procedure.

42. “Priority Claim” shall mean a Claim entitled to priority against the Estate under Section 507(a), except for those Claims arising under Section 507(a)(8). Priority Claims do not include any Claims incurred after the Order For Relief Date.

43. “Priority Tax Claim” shall mean a Claim entitled to priority against the Estate under Section 507(a)(8). Priority Tax Claims do not include any Claims incurred after the Order For Relief Date.

49. “Professional” shall mean a person retained in the Chapter 11 Cases by separate Bankruptcy Court order pursuant to sections 327 and 1103 of the Bankruptcy Code or otherwise, but not including any person retained pursuant to the Ordinary Course Professionals Order.

44. “Proof of Claim” means a proof of claim filed by a holder of a Claim in accordance with the Bar Date Order.

45. “Reorganized Debtor” shall mean the Debtor, as reorganized, and having the rights, powers, duties and interests granted to the “Reorganized Debtor” under the Plan and the Bankruptcy Code.

46. “Schedules” means the schedules of assets and liabilities and the statements of financial affairs filed by the Debtors pursuant to section 521 of the Bankruptcy Code, as such schedules and statements have been or may be supplemented, modified or amended from time to time.

47. “Secured Creditor” shall mean any Creditor holding a lien, security interest, or other encumbrance which either (a) had been properly perfected, as required by law, with respect to the property owned by the Debtor on the Petition Date or (b) which had been conveyed to that Creditor following the date of the Petition and approval by the Court; and which is neither subject to a pending proceeding seeking to vacate or disallow it nor vacated or disallowed by court order or operation of law.

48. “Secured Parties” shall mean all secured creditors referenced in this Plan and the Disclosure Statement.

49. “Unimpaired” refers to any Claim or Interest that is not Impaired.

50. “Unsecured Claims” shall mean the class of allowed general unsecured claims.

51. “Unsecured Creditor” shall mean any holder of an Allowed Unsecured Claim.

52. “Unsecured Creditor Class” shall mean the class of holders of Allowed Unsecured Claims.

An Experienced Bankruptcy Attorney can obtain a Chapter 11 Final Decree.

June 8, 2014 by  
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An experienced bankruptcy attorney can guide you through the Chapter 11 process and obtain a Final Decree. Section 350(a) of the Bankruptcy Code provides that “[a]fter an estate is fully administered and the court has discharged the trustee, the court shall close the case.” 11 U.S.C. § 350(a). Bankruptcy Rule 3022, which implements section 350 of the Bankruptcy Code, further provides that “[a]fter an estate is fully administered in a chapter 11 reorganization case, the court, on its own motion or on motion of a party in interest, shall enter a final decree closing the case.” Fed. R. Bankr. P. 3022.

The term “fully administered” is not defined in either the Bankruptcy Code or the Bankruptcy Rules. The Advisory Committee Note to Bankruptcy Rule 3022, however, sets forth the following non-exclusive factors to be considered in determining whether a case has been fully administered: (1) whether the order confirming the plan has become final; (2) whether deposits required by the plan have been distributed; (3) whether the property proposed by the plan to be transferred has been transferred; (4) whether the debtor or [its successor] has assumed the business or the management of the property dealt with by the plan; (5) whether payments under the plan have commenced; and (6) whether all motions, contested matters, and adversary proceedings have been finally resolved. See, e.g., In re Union Home & Indus., Inc., 375 B.R. 912, 916 (B.A.P. 10th Cir. 2007) (recognizing that bankruptcy courts weigh the factors contained in the Advisory Committee Note when deciding whether to close a case).

Substantial consummation means 1) the transfer of all or substantially all of the property proposed by the plan or reorganization to be transferred; 2) assumption by the debtor or its successor under the plan of the business or management of substantially all of the property dealt with in the plan; and 3) commencement of distribution under the plan. 11 U.S.C. § 1101(2). This case has been substantially consummated pursuant to the requirements of section 1101(2) of the Code as the debtor has transferred property and commenced making payments and substantial distributions to creditors according to the terms of the confirmed Plan. The Order confirming the Plan is final, all required quarterly reports have been filed, and all quarterly fees have been paid. All motions, contested matters, and adversary proceedings have been resolved. As a result, it would be a burden on the estates and a detriment to creditors to continue incurring quarterly fees over the remaining term of the confirmed Plan. Indeed, courts have recognized that the factors to be considered in determining whether a case has been fully administered are nonexclusive and are “plainly an aid or checklist that serves to insure that there is no unfinished business before the Court or in the case.” See e.g. In re Kliegl Bros. Universal Elec. Stage Lighting Co., 238 B.R. 531, 542 (Bankr. E.D.N.Y. 1999); In re Gould, 437 B.R. 34, 38 (Bankr. D. Conn. 2010) (“Rule 3022 allows the court flexibility. It does not require that a chapter 11 case be kept open until all awarded fees and allowed claims have been paid in accordance with the confirmed plan . . . .”) (quoting In re Jay Bee Enter., Inc., 207 B.R. 536, 539 (Bankr. E.D. Ky. 1997)). Therefore, based on the aforementioned decisional authority, the Court can and should enter a final decree and close the cases.

Controlling 9th Circuit law holds that specific performance is not available after rejection of an executory contract in a bankruptcy case.

June 7, 2014 by  
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The 9th Circuit has twice explained that specific performance is NOT available after the rejection of an executory contract in a bankruptcy action. “Specific performance of a rejected executory contract cannot be required.” In Kaonohi Ohana LTD. 873 F.2d 1302,(9th Cir 1989) citing In re Pacific Express, Inc., 780 F.2d 1482, 1486 n. 3 (9th Cir.1986). Indeed the only case to allow specif performance of a rejected executory contract is In re Ground Round, 482 F.3d 15 (1st Cir. 2007). The Ground Round case has been roundly criticized. One recent opinion stated as follows: the Court finds the analysis of the First Circuit in Ground Round unpersuasive. The First Circuit acknowledged that there are cases contrary to its ruling, including an earlier First Circuit decision. Ground Round,482 F. 3d at18 n. 1 (citing Midway Motor Lodge of Elk Grove v. Innkeepers’ Telemanagement & Equip. Corp., 54 F.3d 406, 407 (7th Cir.1995) (holding that “[r]ejection avoids specific performance and results only in a claim for damages); In re Richmond Metal Finishers, Inc., 756 F.2d 1043, 1048 (4th Cir.1985) (concluding that upon rejection, other party to contract “could not seek to retain its contract rights in the technology by specific performance even if that remedy would ordinarily be available upon breach of this type of contract); Gulf Petro., S.A. v. Collazo, 316 F.2d 257, 260 (1st Cir.1963) (finding rejection of contract land sale contract precluded specific performance but finding that escrow agreement was separate and non-executory thereby entitling buyer to return of deposit held in escrow)). In re C.B.Holding Corp.,448 B.R. 684, 690 (Bcty. Del. 2012). Ground Round is poorly reasoned. Further, it is contrary to 9th Circuit precedent and should not be followed by a Court inside the 9th Circuit.

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