In Re BDT Farms, Inc.

150 B.R. 795, 1993 Bankr. LEXIS 279, 23 Bankr. Ct. Dec. (CRR) 1622, 1993 WL 40480
CourtUnited States Bankruptcy Court, W.D. Oklahoma
DecidedFebruary 16, 1993
Docket19-10182
StatusPublished
Cited by3 cases

This text of 150 B.R. 795 (In Re BDT Farms, Inc.) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re BDT Farms, Inc., 150 B.R. 795, 1993 Bankr. LEXIS 279, 23 Bankr. Ct. Dec. (CRR) 1622, 1993 WL 40480 (Okla. 1993).

Opinion

ORDER ON DEBTOR’S MOTION FOR ORDER REQUIRING TRUSTEE TO CLOSE CHAPTER 12 CASE

PAUL B. LINDSEY, Bankruptcy Judge.

BACKGROUND

This Chapter 12 case was commenced on January 15, 1988, when debtor filed its voluntary petition under Chapter 12 of the Bankruptcy Code. 1 Debtor’s Chapter 12 plan, as modified, was confirmed by this court on June 15, 1989. Subsequently, the court entered its Order Implementing Confirmation Order on August 25, 1989, although this order was not filed until October 25, 1989.

The Chapter 12 Trustee (“Trustee”) made the final distribution of payments to secured and unsecured creditors pursuant to the plan on November 10, 1992 and, on the same day, wrote to counsel for debtor and advised that debtor still owed $542.89 in Trustee’s fees assessed against a direct payment of an administrative claim pursuant to the terms of the plan. On December 2, 1992, debtor filed its motion seeking an order requiring the Trustee to close the case, to which the Trustee objected.

A hearing was held before the court on debtor’s motion, at the conclusion of which the court required counsel for the Trustee to provide the court with an accounting of the Trustee’s fees to which Trustee asserted he was entitled, of any and all payments made by debtor, and of Trustee’s basis for asserting that such payments were in incorrect amounts. The requested accounting was timely submitted, along with a brief supporting the Trustee’s objection to debt- or’s motion.

The confirmed Chapter 12 plan provided for payments by debtor to the Trustee on October 1,1989,1990 and 1991, and April 1, 1990, 1991 and 1992. The plan provided that the administrative fee payable to the Trustee would be “at the percentage set by the Attorney General pursuant to 28 U.S.C. Section 586(e), effective on the date of the payment. ” [Emphasis supplied.] This provision, coupled with the frequent changes to the appropriate percentage during the life of debtor’s plan, has created most if not all of the problems with which this court must deal at this time.

THE ACCOUNTING — THE TRUSTEE’S CONTENTIONS

According to the Trustee’s accounting, the Chapter 12 Trustee’s fee attributable to the standing Chapter 12 Trustee in this district, as set by the Attorney general pursuant to 28 U.S.C. 586(e), was 10% on June 15, 1989, when debtor’s plan was confirmed. It remained at that rate until April 14, 1990, when it was lowered to 9%. On January 13, 1991, the rate was again lowered to 8%. The fee remained at that rate until it was increased to “a rate equivalent to 11.111111% of plan payments.” 2 This increase was ordered by memorandum dated May 6, 1991, signed by the Director of the Executive Office for United States Trustees, but pursuant to the memoran *797 dum, was to be applied retroactively to April 1, 1991.

It is not at all clear whether the periodic changes to the rate at which Trustee’s fees are required to be computed have been timely communicated to Chapter 12 debtors or their counsel. It is clear, however, that those changes are largely responsible for the confusion and frustration now present in this case, and in other Chapter 12 cases as well.

Minor discrepancies in debtor’s October 1989 and April 1990 payments, not related to the Trustee’s fee, were quickly rectified, and the October 1990 payment was correct. Thus, until April 1991, debtor’s “account” with the Trustee was in balance. On April 4, 1991, the Trustee received debtor’s April 1, 1991 payment, including a Trustee’s fee computed at 9%. Apparently, debtor had not been notified of the January 13, 1991 decrease of the rate to 8%. Since the Trustee then believed the 8% rate to be applicable, the 1% difference, $255.72, was refunded to debtor. 3

The Trustee did not receive, and apparently was not otherwise notified of, the May 6, 1991 memorandum directing the retroactive increase of the rate to 11.-111111%, until June 1991, and did not notify debtor of the change and that his account was $689.72 short of the amount required to make the April 1, 1991 distribution to unsecured creditors until October 1991. 4 The $689.72 was the difference between the Trustee’s fee collected on payments made by Trustee to creditors at 8% and those which would be due at $11.111111%. Debtor’ counsel advised the Trustee that debtor refused to pay the additional Trustee’s fees, and the Trustee paid himself the delinquent fees from funds in debtor’s account. No part of the scheduled April 1991 liquidation value distribution to unsecured creditors was made by the Trustee.

Debtor’s October 1991 payment was timely made, including the Trustee’s fee at 11.111111%. On April 3, 1992, Trustee received from debtor $29,103.48. This amount was $689.71 more than was required to make all April 1992 payments provided for by the plan, apparently in response to the Trustee’s October 1991 demand. Nevertheless, Trustee made only the required payments to the secured creditors, and to himself for the Trustee’s fee thereon.

In April 1992, debtor’s account showed a balance of $7,439.23. Under the confirmed plan, a liquidation value distribution to unsecured creditors, in the amount of $3,395.29, was to be made in April 1991 and April 1992. The Trustee’s fees on each such payment, at $11.111111%, would have been $377.25. Thus, debtor’s account was at that time only $105.85 short of the $7,545.08 which would have been required to pay the liquidation value distribution to unsecured creditors in full for both years and to pay the Trustee’s fee on both such payments. Nevertheless, the Trustee made no such distribution, for either year.

On April 28, 1992, Trustee received $105.86 from debtor’s counsel, with a letter stating that the tendered funds represented debtor’s final payment in connection with the case. Still, no payment was made to the unsecured creditors.

Also in April 1992, the Trustee was notified by a major secured creditor that the plan called for debtor’s obligation to that *798 institution to begin earning interest on February 29, 1992, and that debtor owed an additional $180.09 in interest. The Trustee immediately paid such amount to the creditor, and paid himself a $20.01 Trustee’s fee thereon.

Counsel for Trustee asserts that, in preparation for making the liquidation value distribution to unsecured creditors, he discovered that debtor’s counsel had been awarded an administrative claim in the amount of $5,428.90, which under the terms of the confirmed plan, was to be paid directly by debtor. Counsel asserted that under the confirmed plan, such claim was subject to the assessment of a Trustee’s fee on its payment. Payment of the claim was made in September 1989, and counsel for the Trustee contends that debtor owes a 10% Trustee’s fee on that payment, in the amount of $542.89.

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242 B.R. 685 (D. North Dakota, 1999)
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153 B.R. 64 (D. Oregon, 1993)
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151 B.R. 278 (W.D. Oklahoma, 1993)

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Bluebook (online)
150 B.R. 795, 1993 Bankr. LEXIS 279, 23 Bankr. Ct. Dec. (CRR) 1622, 1993 WL 40480, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-bdt-farms-inc-okwb-1993.