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attorneys and practitioners of the Bankruptcy Court for the District of Colorado)
Tolliver v. CitiMortgage et al., Adversary Proceeding No. 15-01322 HRT; Order entered December 3, 2015 (11 U.S.C. Â§ 362).
The Debtor filed an adversary proceeding against the servicer of his mortgage, and the law firm and individually-named attorneys employed by the law firm representing the servicer, which had instituted a foreclosure proceeding after the Debtor's case was dismissed and before it was reinstated. The Court found that the defendants' actions did not violate any stay that may have been reimposed on the reinstatement of the Debtor's Chapter 13 case. The Debtor's complaint, seeking sanctions under 11 U.S.C. § 362(k)(1), was dismissed. Because the Debtor did not respond to the servicer's motion for relief from stay, the Court granted that relief by separate order.
Posted: 12/4/2015 4:10:12 PM
In re Sniff, Bankr. Case No. 15-18086, Order entered October 6, 2015 (Fed. R. Bankr. P. 1004.1).
The Court found that the holder of a durable power of attorney, valid under the Colorado Uniform Power of Attorney Act, Colo. Rev. Stat. § 15-14-701, et seq., may qualify under Fed. R. Bank. P. 1004.1 as a representative for an incompetent bankruptcy debtor. Further, when the power of attorney contemplates that the attorney-in-fact will have broadest scope of authority, encompassing the right to act on the principal's behalf with respect to claims and litigation, the attorney-in-fact has the right to file a petition for bankruptcy relief and otherwise participate in a bankruptcy proceeding for the principal.
In this case, the Court concluded that there was no need for it to appoint the Debtor's wife as attorney-in-fact to act for the Debtor in their joint bankruptcy case, because the Debtor, through his general power of attorney, had already appointed his wife to act on his behalf.
Posted: 11/19/2015 3:03:20 PM
In re Escalera Resources, Co., Bankr. Case No. 15-22395, Order entered November 9, 2015 (payment of prepetition employee wages and benefits).
Noting that prepetition claims in a Chapter 11 case are typically paid only through a confirmed plan of reorganization and according to the priority scheme established in the Bankruptcy Code, the Court considered the statutory basis for allowing payment of prepetition employee wages and benefits and concluded that payment of the prepetition wages and benefits was permitted by the Bankruptcy Code and warranted in this case. In reaching this conclusion, the Court noted that Congress had afforded a very high priority to employee wages under 11 U.S.C. § 507. The Court found that under 11 U.S.C. §§ 1106, 1107, and 1108, payment of such prepetition claims is consistent with the fiduciary duty of the debtor-in-possession to stabilize, protect, and preserve the estate, including an operating business's going-concern value. The Court also held that its power to approve early payment of prepetition wage and benefits claims to employees was augmented by the Court's equitable powers, as codified in 11 U.S.C. § 105, to fill in "statutory gaps" as necessary to implement the priority scheme of the Bankruptcy Code. Accordingly, the Debtor was authorized to pay certain prepetition wages and benefits obligations.
Posted: 11/19/2015 3:00:59 PM
In re Formaneck, Case No. 10-20070 MER; Order entered July 13, 2015 (Material default of confirmed Chapter 13 Plan; conversion versus dismissal under 11 U.S.C. § 1307(c))
The Court confirmed the Debtors' sixty month Chapter 13 plan ("Confirmed Plan"), which included provisions to cure a prepetition mortgage default through payments to the chapter 13 trustee ("Trustee"), and to make post-petition mortgage payments directly to the mortgage creditor outside the Confirmed Plan. The Debtors completed all payments to the Trustee, and cured the prepetition arrears. However, the notice process under Fed. R. Bankr. P. 3002.1 revealed the Debtors' failure to make over thirty mortgage payments directly to the secured creditor. The Debtors never sought any modification of their Confirmed Plan, and the Trustee filed a motion to dismiss the case under 11 U.S.C. § 1307(c).
The issues before the Court were whether the Debtors' failure to make post-petition payments directly to the secured creditor is a "material default" by the Debtors with respect to a term in their Confirmed Plan, and if so, whether dismissal or conversion was in the best interests of creditors and the estate. The Court noted the provisions of the Confirmed Plan were binding on the Debtors under 11 U.S.C. § 1327(a), and two other divisions of this Court have recently addressed similar issues. Ultimately, the Court concluded the Debtors' failure to make over thirty post-petition payments directly to the secured creditor establishes a material default with respect to terms of the Confirmed Plan which harms both creditors and the estate. Although the Debtors made all required payments to the Trustee and the secured creditor failed to seek relief from stay to enforce it state law rights with respect to the residence, the Debtors failed to pay post-petition payments of $109,022.42 in violation of their Confirmed Plan and provided no evidence, or even allegations, as to where and how all of the income earmarked for these payments was used. The Debtors could not obtain a discharge of their debts in Chapter 13, and rewarding the Debtors with a discharge in Chapter 7 for their failure to comply with the Confirmed Plan and the Bankruptcy Code was inappropriate. In its discretion, the Court held the Debtors' material default warranted dismissal pursuant to § 1307(c)(6).
Posted: 8/25/2015 7:45:55 AM
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