All three elements must be present to warrant a finding of substantial consummation. United States v. Novak, 86 B.R. 625, 628 (D.S.D. 1988); In re Fansal Shoe Corp., 119 B.R. 28, 30 (Bankr.S.D.N.Y. 1990); In re Bedford Springs Hotel, Inc., 99 B.R. 302, 303 (Bankr.W.D.Pa. 1989); In re Charterhouse, 84 B.R. 147, 152 (Bankr.D.Minn. 1988); In re Gene Dunavant and Son Dairy, 75 B.R. 328, 332 (Bankr.M.D.Tenn.
In re Dam Road Mini Storage, 156 B.R. 270, 271 (Bankr.S.D.Cal. 1993); In re Modern Steel Treating Co., 130 B.R. 60, 64 (Bankr. N.D.Ill. 1991). All of the requirements of the three subsections must be met in order to find substantial consummation. In re Bedford Springs Hotel, 99 B.R. 302, 303 (Bankr. W.D.Pa. 1989). The dispute in this matter arises over whether payments to creditors is governed by subsection (A) or subsection (C) of the definition of substantial consummation.
All three elements must be proved to establish substantial consummation. See In re Bedford Springs Hotel, Inc., 99 B.R. 302, 303 (Bankr. W.D.Pa. 1989). This court finds Appellants' reliance on § 1127(b) misplaced.
First of all, based on the briefing, the only element of Section 1101(2) which the appellant appears to dispute the satisfaction of is element (C) which requires a finding of commencement of distribution under the plan. As noted in the case of In re Bedford Springs Hotel, Inc., 99 B.R. 302 (Bankr.W.D.Pa. 1989), which appellant himself as cited, "Subsection (C) [of Section 1101(2)] requires only that such a distribution be commenced." Id. at 303 (emphasis in original) (citations omitted).
Bullion Hollow, 185 B.R. at 728. See In re Hayball Trucking, Inc., 67 B.R. 681 (Bankr. E.D. Mich. 1986);In re Earley, 74 B.R. 560 (Bankr. C.D. Ill. 1987); In re Bedford Springs Hotel, Inc., 99 B.R. 302 (Bankr. W.D. Pa. 1989); In re Burlingame, 123 B.R. 409 (Bankr. N.D. Okla. 1991). Instead, those courts have held "payments to creditors are not to be considered transferring property under subsection (A), but instead, fall under subsection (C) which only requires that the distribution of the payments to have commenced."
The First Circuit held that the bank's dual role did not affect its status as a good faith purchaser. Id. at 4. The same result was reached by the court in In re Bedford Springs Hotel, Inc., 99 B.R. 302 (Bankr.W.D.Pa. 1989). In a purchase of a debtor's assets through a plan, the court held that absent a showing of fraud, collusion or attempts at unfair advantage, an insider may be a good faith purchaser.
In the case of In Re Bullion Hollow Enterprises, 185 B.R. 726 (W.D.Va. 1995), the Court emphasized that all of the requirements of the three subsections must be met in order to find substantial consummation. See also In re Bedford Springs Hotel, 99 B.R. 302, 303 (Bankr.W.D.Pa. 1989). The facts of this case show that the Debtor has only made one payment to Wachovia under the plan.
Whether a plan has been substantially consummated is a question of fact to be determined upon the circumstances of each case and the evidence provided by the parties. In re Stevenson, 148 B.R. 592, 596 (D.Idaho 1992); In re Jorgensen, 66 B.R. 104, 106 (9th Cir. BAP 1986); In re Bedford Springs Hotel, Inc., 99 B.R. 302, 303 (Bankr.W.D.Pa. 1989). The burden is on the proponent of modification to show that the plan has not been substantially consummated.
In re Burnsbrooke Apartments of Athens, Ltd., 151 B.R. 455, 458 (Bankr.S.D.Ohio 1992) ("better reasoned approach is Hayball Trucking"); Scotland Guard, 139 B.R. at 266 (adopting Hayball analysis); In re Burlingame, 123 B.R. 409, 412 (Bankr.N.D.Okla. 1991) (rejecting Heatron); In re Bedford Springs Hotel, Inc., 99 B.R. 302, 303 (Bankr. W.D.Pa. 1989) (subsections (A) and (C) address very different items and require different treatment); United States v. Novak, 86 B.R. 625, 631 (D.S.D. 1988) (rejecting percentage of payment test under Heatron). The Supreme Court recently reiterated "the settled rule that a statute must, if possible, be construed in such fashion that every word has some operative effect."
In this case, the stipulations and attachments to the motion and memoranda of the creditors and the two year time lag between confirmation and the creditors' motion allow the court to determine that substantial consummation has occurred in these cases, see In re Burlingame, 123 B.R. 409, 411-12 (Bankr.N.D.Okla. 1991) (substantial consummation found so no modification of plan allowed under § 1127); In re Fansal Shoe Corp., 119 B.R. 28, 30-31 (Bankr.S.D.N.Y. 1990) (substantial consummation found so no modification of plan allowed under § 1127); In re Bedford Springs Hotel, Inc., 99 B.R. 302, 303-05 (Bankr.W.D.Pa. 1989) (in essence, granting declaratory judgment that substantial consummation had occurred); thus, conversion pursuant to § 1112(b)(7) would be inappropriate. However, the debtors have materially defaulted with respect to their confirmed plans, and thus, conversion pursuant to § 1112(b)(8) is appropriate.