In re Castle Home Builders, Inc.

520 B.R. 98, 2014 WL 5439301
CourtUnited States Bankruptcy Court, N.D. Illinois
DecidedOctober 24, 2014
DocketNo. 11-19428
StatusPublished
Cited by7 cases

This text of 520 B.R. 98 (In re Castle Home Builders, Inc.) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Castle Home Builders, Inc., 520 B.R. 98, 2014 WL 5439301 (Ill. 2014).

Opinion

Amended Memorandum Opinion (dkt. no. 372)

JACQUELINE P. COX, Bankruptcy Judge.

This matter is before the Court for ruling on the Motion of the Reorganized Debtor to Enforce Confirmation Order and For the Imposition of Sanctions (“Motion”). The Reorganized Debtor complains that notwithstanding modified mortgage terms set forth in the Confirmed Plans, Everhome Mortgage (“Everhome”) continues to bill for a prepetition mortgage on property located at 109 W. Jones Street, Savanna, Georgia'(“Jones Property”). For the reasons noted below, the request for Sanctions is Granted in part and Denied in part.

I. Jurisdiction

This Court has jurisdiction to hear this matter pursuant to 28 U.S.C. § 1334(a) which provides that federal district courts have original and exclusive jurisdiction of all cases under the Bankruptcy Code, Title 11 of the United States Code. 28 U.S.C. § 157(a) allows the district courts to refer title 11 cases to the bankruptcy judges for their districts. The District Court for the Northern District of Illinois has promulgated Internal Operating Procedure 15(a), which refers its bankruptcy cases to this Court.

Chapter 11 cases generally involve the restructuring of debt through the proposal and confirmation of a plan of reorga[101]*101nization. The concern herein is the extent of the jurisdiction of the bankruptcy court after plan confirmation, but prior to the closing of a chapter 11 case. There are no explicit procedural or statutory rules governing a bankruptcy court’s subject matter post-confirmation jurisdiction. In re Kmart Corp., 359 B.R. 189, 195 (Bankr.N.D.Ill.2005). Following plan confirmation, the subject matter jurisdiction of a bankruptcy court is “sharply reduced.” In re Kmart Corp., 359 B.R. at 195. “This does not mean that there is no post-confirmation bankruptcy jurisdiction and the functions of the bankruptcy court are at an absolute end. Rather, the bankruptcy court retains jurisdiction to protect the confirmation order, prevent interference with the execution of the plan, and otherwise aid in the plan’s operation.” Id. at 195. See also In re Lazy Days’ RV Center, Inc., 724 F.3d 418, 423 (3d Cir.2013) (issue of validity of an anti-assignment clause was properly decided by the bankruptcy court after reopening because the bankruptcy court was well-suited to provide the best interpretation of its confirmation order; the bankruptcy court found to have jurisdiction to interpret and enforce its own orders); In re Brown’s Chicken & Pasta, Inc., 503 B.R. 86, 88-89 (Bankr.N.D.Ill.2013) (bankruptcy court has jurisdiction to determine the scope and effect of its confirmation order).

The Reorganized Debtor filed the Motion herein pursuant to 11 U.S.C. § 1142(b), “which empowers the court to direct the debtor and any other necessary party to perform acts ‘necessary for the consummation of the plan.’ ” Kmart, at 195. Section 1142(b) states:

The court may direct the debtor and any other necessary party to execute or deliver or to join in the execution or delivery of any instrument required to effect a transfer of property dealt with by a confirmed plan, and to perform any other act, including the satisfaction of any lien, that is necessary for the consummation of the plan.

11 U.S.C. § 1142(b). See also In re Emerald Casino, Inc., 334 B.R. 378, 386-87 (N.D.Ill.2005) (recognizing a bankruptcy court’s broad authority to order parties to comply with terms of a confirmed plan of reorganization).

A court’s exercise of authority under § 1142(b) is limited to ensuring that reorganization plans are implemented and protecting estate assets devoted to implementation of the confirmed plan. Kmart, at 196-97.

To determine whether a bankruptcy court has post-confirmation jurisdiction over a dispute, “the court must first determine that ‘the matter [has] a close nexus to the bankruptcy plan or proceeding ... [and] second, the plan must provide for the retention of jurisdiction over the dispute.’ ” In re Ventilex USA, Inc., 509 B.R. 140, 143 (Bankr.S.D.Ohio 2014) (internal citations omitted). “In determining whether a close nexus exists courts look to whether adjudication will require interpretation of the chapter 11 plan, whether it will affect the estate or the reorganized debtor and whether adjudication will interfere with the implementation of the chapter 11 plan.” Ventilex, 509 B.R. at 143.

The relief requested herein has a close nexus -to the Debtors’ Plans (“Plans”).1 To resolve the Motion the [102]*102Court will be required to interpret the parties’ respective rights and obligations as established by the confirmed plans. The Court’s adjudication of this dispute will assist with the implementation of the Plans by ensuring that payments made by the Reorganized Debtor will be properly applied to the principal balance due Ever-home, the respondent herein.

As to the second requirement, each Plan expressly provides for the retention of jurisdiction to enforce and interpret its terms and conditions.

Section 12.1 of the Confirmation Order states, in part:

Claims and Actions. Notwithstanding entry of the Confirmation Order, the Bankruptcy Court will retain jurisdiction of all matters arising out of: and related to, the Reorganization Case and this Plan pursuant to § [sic] 105(a) and 1142 of the Bankruptcy Code and for, among other things, the following purposes: 12.1.3 to enforce and interpret the terms and conditions of this Plan 12.1.12. to determine all controversies, suits and disputes that may arise in connection with the interpretation, enforcement or consummation of this Plan. 12.1.14. to issue such orders in aid of execution of this Plan to the extent authorized by Section 1142 of the Bankruptcy Code.

See Order Confirming Plans of Reorganization, Case No. 11-19428, dkt. no. 360, pp. 62-63.

The Court determines that it has jurisdiction to enter a final order herein.

II. Facts and Background

On May 6, 2011, Debtors Castle Home Builders, Inc. and Tammy Jo Long filed petitions for relief under Chapter 11 of the Bankruptcy Code. See Bankruptcy Case Nos. 11-19428 & 11-19484. On May 25, 2011, the Court entered an order authorizing joint administration of the cases. See Order at dkt. no. 38.

The Debtors’ prepetition business operations involved the purchasing, renovation and operation of multiple historic houses in Savannah, Georgia. The homes were rented to wealthy travelers and tourists as short to mid-term luxury accommodations. See Second Amended and Restated Chapter 11 Disclosure Statement of Tammy Jo Long, Case # 11-19428, dkt. no. 302, p. 5 of 46. The Debtors’ stated goal in these bankruptcy proceedings was to modify the mortgages that existed on various business properties and to bring serviceable debt back in line with post-recession appraised value. See Motion, dkt. no.

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Cite This Page — Counsel Stack

Bluebook (online)
520 B.R. 98, 2014 WL 5439301, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-castle-home-builders-inc-ilnb-2014.