Summary
recognizing potential to mislead creditors with "discharge at confirmation" language in plan and amending the original confirmation order to eliminate the language
Summary of this case from In re DetweilerOpinion
Case No. 2:12-bk-15622-RK
08-23-2012
In re KYLE STEVEN MILLER and CARMEN LORRAINE MILLER, Debtors.
Chapter 11
ORDER RECONSIDERING ORDER
CONFIRMING DEBTORS' CHAPTER 11
PLAN AND MODIFYING CONFIRMED
CHAPTER 11 PLAN
The court on its own motion reconsiders and modifies its order entered on August 14, 2012, Order Confirming Debtors' Chapter 11 Plan (the "Confirmation Order"), on grounds that the Confirmation Order contains language providing for a discharge of the debtors' prepetition debts upon confirmation of the plan. This is inconsistent with 11 U.S.C. § 1141(d)(5). See Rules 9023 and 9024 of the Federal Rules of Bankruptcy Procedure, incorporating by reference, Rules 59 and 60 of the Federal Rules of Civil Procedure (authorizing alteration or amendment of judgment or new trial or relief from judgment based on mistake of law); Turner v. Burlington Northern Santa Fe Railroad Co., 338 F.3d 1058, 1063 (9th Cir. 2003)(trial court has considerable discretion to alter or amend judgment to correct manifest error of law under Rule 59(e) of Federal Rules of Civil Procedure).
Section IV.A of the Second Amended Chapter 11 Plan of Reorganization (Docket Entry No. 138), filed on May 16, 2012 (the "Discharge") states: "This Plan provides that upon confirmation of the Plan, Debtor shall be discharged of liability for payment of debts incurred before confirmation of the Plan, to the extent specified in 11 U.S.C. § 1141. However, the discharge will not discharge any liability imposed by the Plan."
11 U.S.C. § 1141(d)(5)(A) provides: "(5) In a case in which the debtor is an individual---(A) unless after notice and a hearing the court orders otherwise for cause, confirmation of the plan does not discharge any debt provided for in the plan until the court grants a discharge on completion of all payments under the plan; . . . ."
Arguably, the Discharge may be read to be consistent with the express terms of 11 U.S.C. § 1141, including 11 U.S.C. § 1141(d)(5), because the plan states that the debtors will be discharged "to the extent specified in 11 U.S.C. § 1141." However, the plan language states that the debtors are to be discharged upon confirmation of the plan, which is not consistent with the terms of the statute, and thus, the plan language providing for the discharge of debtors upon confirmation may be seriously misleading to the affected parties, including the debtors and creditors. See 11 U.S.C. § 1129(a)(1) (Chapter 11 plan must comply with all applicable provisions of the Bankruptcy Code, 11 U.S.C.).
Accordingly, the court on its own motion reconsiders and modifies the Confirmation Order and orders that the following language of the Discharge be deleted: "This Plan provides that upon confirmation of the Plan, Debtor shall be discharged of liability for payment of debts incurred before confirmation of the Plan, to the extent specified in 11 U.S.C. § 1141. However, the discharge will not discharge any liability imposed by the Plan." The court further orders that in place of the deleted language, the following language be added to Section IV.A of the Second Amended Plan: "Pursuant to 11 U.S.C. § 1141(d)(5)(A), unless after notice and a hearing the court orders otherwise for cause, confirmation of the plan does not discharge any debt provided for in the plan until the court grants a discharge on completion of all payments under the plan. Alternatively, the court may grant a discharge pursuant to other provisions of 11 U.S.C. § 1141(d)(5)."
If the debtors or other parties wish to be heard with respect to this order, they may file a request for rehearing within 14 days of entry of this order and give notice of hearing to all affected parties pursuant to Local Bankruptcy Rule 9013-1.
IT IS SO ORDERED.
________________________
United States Bankruptcy Judge
NOTICE OF ENTERED ORDER AND SERVICE LIST
Notice is given by the court that a judgment or order entitled (specify) ORDER RECONSIDERING ORDER CONFIRMING DEBTORS' CHAPTER 11 PLAN AND MODIFYING CONFIRMED CHAPTER 11 PLAN was entered on the date indicated as "Entered" on the first page of this judgment or order and will be served in the manner indicated below: I. SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING ("NEF") – Pursuant to controlling General Order(s) and Local Bankruptcy Rule(s), the foregoing document was served on the following person(s) by the court via NEF and hyperlink to the judgment or order. As of August 23, 2012, the following person(s) are currently on the Electronic Mail Notice List for this bankruptcy case or adversary proceeding to receive NEF transmission at the email address(es) indicated below:
• Michael Jay Berger michael.berger@bankruptcypower.com, jennifer.phan@bankruptcypower.comII. SERVED BY THE COURT VIA U.S. MAIL: A copy of this notice and a true copy of this judgment or order was sent by U.S. Mail, first class, postage prepaid, to the following person(s) and/or entity(ies) at the address(es) indicated below:
• Howard Camhi hcamhi@ecjlaw.com
• Leslie A Cohen leslie@lesliecohenlaw.com,
jaime@lesliecohenlaw.com;Brian@lesliecohenlaw.com
• Hans F Famularo Hans.F.Famularo@irscounsel.treas.gov
• Jason E Goldstein jgoldstein@buchalter.com, bkgroup@buchalter.com;skoch@buchalter.com
• Paul H Kim Pkim@counsel.lacounty.gov
• S Blair Korschum ecfnotices@ascensioncapitalgroup.com
• Alvin Mar alvin.mar@usdoj.gov
• Christopher M McDermott ecfcacb@piteduncan.com
• Kenneth Miller kmiller@ecjlaw.com
• Faye C Rasch frasch@ecjlaw.com, lpekrul@ecjlaw.com
• Ramesh Singh claims@recoverycorp.com
• United States Trustee (SA) ustpregion16.sa.ecf@usdoj.gov
Debtors
Kyle Steven Miller
Carmen Lorraine Miller
2548 Ardsheal Drive
La Habra, CA 90631
Ascension Capital Group, Inc.
Capital One Auto Finance
Department
S. Blair Korschun
P.O. Box 201347
Arlington, TX 76006
Ascension Capital Group, Inc.
Attn: Capital One Auto
Finance Dept
S. Blair Korschun
P.O. Box 201347
Arlington, TX 76006
Business Partners
9301 Winnet
Chatsworth, CA 91311
Capital One Auto Finance
3901 N Dallas Pkwy
Plano, TX 75093
Capital One Auto Finance, c/o
Ascension Capital Gr
P.O. Box 201347
Arlington, TX 76006
Capital One,N.A
c/o Creditors Bankruptcy
Service
P O Box 740933
Dallas,TX 75374
Capital One,N.A
c/o Creditors Bankruptcy
Service
P O Box 740933
Dallas,Tx 75374
Centennial Bank
18837 Brookhurst St Ste
Fountain Valley, CA 92708
Chase
Po Box 15298
Wilmington, DE 19850
Chase Bank USA, N.A.
PO Box 15145
Wilmington, DE 19850-5145
Chase Mtg
Po Box 24696
Columbus, OH 43224
City of Las Vegas
Las Vegas City Attorney
400 Stewart Avenue, Ninth
Floor
Las Vegas, NV 89101
De Concini McDonald
Yetwin & Lacey, AC
2525 E Broadway
Tucson, AZ 85716
Hacienda Golf Club
718 East Road
La Habra, CA 90631
Hacienda Golf Club
Hemar, Rousso & Heald, LLP
c/o Edward S. Kim, Esq.
15910 Ventura Boulevard,
12th Floor
Encino, CA 91436
HSBC / Costco
Hsbc Retail Srvs/Attention:
Bankruptcy D
Po Box 5263
Carol Stream, IL 60197
HSBC Bank Nevada, N.A.
Bass & Associates, P.C.
3936 E. Ft. Lowell Rd., Suite
200
Tucson, AZ 85712
INTERNAL REVENUE
SERVICE
PO BOX 7346
PHILADELPHIA, PA 19101
7346
Los Angeles County
Treasurer
and Tax Collector
P.O. Box 54110
Los Angeles, CA 90054-0110
Sewer Services
Department of Finance
400 Stewart Ave
Las Vegas, NV 89101
TARGET NATIONAL BANK
C O WEINSTEIN AND
RILEY, PS
2001 WESTERN AVENUE,
STE 400
SEATTLE, WA 98121
Tnb-visa
Po Box 560284
Dallas, TX 75356
U.S. Bank, National
Association, as Trustee
c/o JPMorgan Chase Bank,
NA
Attn: OH4-7302
3415 Vision Drive
Columbus, OH 43219
Union Bank Na
PO Box 85643
San Diego, CA 92186
Union Bank Real Estate
Servicing, M-723
P.O. Box 85600
San Diego, CA 92186
Wee Wonder
7881 W Charleston St #140
Las Vegas, NV 89117
Wee Wonder
c/o Alverson Taylor
Mortenson & Sanders
7401 W Charleston Blvd
Las Vegas NV 89117
III. TO BE SERVED BY THE LODGING PARTY: Within 72 hours after receipt of a copy of this judgment or order which bears an "Entered" stamp, the party lodging the judgment or order will serve a complete copy bearing an "Entered" stamp by U.S. Mail, overnight mail, facsimile transmission or email and file a proof of service of the entered order on the following person(s) and/or entity(ies) at the address(es), facsimile transmission number(s) and/or email address(es) indicated below: