In re Couchman

477 B.R. 807, 2012 WL 3600321, 2012 Bankr. LEXIS 3845, 56 Bankr. Ct. Dec. (CRR) 252
CourtUnited States Bankruptcy Court, D. Kansas
DecidedAugust 20, 2012
DocketNo. 07-11101
StatusPublished
Cited by1 cases

This text of 477 B.R. 807 (In re Couchman) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Couchman, 477 B.R. 807, 2012 WL 3600321, 2012 Bankr. LEXIS 3845, 56 Bankr. Ct. Dec. (CRR) 252 (Kan. 2012).

Opinion

MEMORANDUM OPINION

ROBERT E. NUGENT, Chief Judge.

Section 1229 permits a debtor to modify a confirmed chapter 12 plan to, among other things, reduce or extend the time for payments.1 This is done by filing a modified plan which, upon filing and until disapproved after notice and a hearing, “becomes the plan.”2 According to 11 U.S.C. § 1229(b)(2), the requirements of § 1222(a), describing what provisions a plan must contain, and § 1225(a), setting out the requirements for confirmation, apply to the confirmation of any modified plan. In this case, the Bucklin National Bank argues that the drop dead provision in an agreed conditional stay relief order cannot be thwarted by the debtor’s proposed plan modification that would, among other things, extend the debtor’s time to make the Bank’s payments. I concur that the stay relief order containing the drop-dead provision is final and remains enforceable, but find that it should not prevent the present version of the modified plan from being confirmed because the modification was not directed at undoing a declared default under the stay relief order. Because the modified plan meets the requirements of §§ 1222(a) and 1225(a), it must be confirmed.

Jurisdiction

The confirmation of a modified plan is a core proceeding over which this Court has subject matter jurisdiction.3

Findings of Fact

The debtor and the Bank submitted stipulations and briefs.4 After reviewing them along with the record in this case, the Court finds as follows. Mark Couchman filed this chapter 12 case in 2007. Not until December 2, 2008 was he able to confirm a chapter 12 plan. Under the order confirming the plan, the Bank was allowed two claims, one secured by personal property and one secured by real estate. The personal property claim was to be paid in annual payments due December 1, 2008 and each December 1st thereafter. The real estate claim was to be paid in annual payments that were due August 1, 2008 and each August 1st thereafter.

[809]*809The Bank’s frustration is easy to understand: Couchman has been in a state of default or cure since 2008. His first personal property payment was not made until January 21, 2009, over 50 days late. He did not pay the first real estate payment, due in August of 2008, until October 6, 2008. The August 2009 real estate payment was made in September of 2009. And the August 2010 real estate payment was paid in November of 2010. In short, the stipulations suggest that he has never made a Bank payment on time.

The present controversy began when Couchman missed the December 1, 2009 personal property payment. In late January of 2010, the Bank moved for stay relief, noticing its motion for objections that were due on March 1, 2010. Couch-man made the payment on the objection date. Then, on March 10, 2010, the Bank’s and Couchman’s counsel appeared in court to announce that the stay relief motion was “resolved pursuant to the terms of the agreed order to be submitted.”5 At that hearing, the trustee’s counsel noted that funds had been received and both Couch-man’s and the Bank’s counsel agreed that an order providing for a “drop dead clause” in the event of future missed payments would be entered. The agreed stay relief order entered on March 19, 2010 (the “Conditional Order”) provides that in the event of a future payment default, the stay would be lifted 30 days after the Bank gave the debtor a written default notice.6 The next payment due after entry of the Conditional Order was the August 1, 2010 real estate payment. Even though the debtor paid it in November of 2010 — 108 days late, the Bank did not declare a default or exercise its drop-dead rights.

Couchman next missed the December 1, 2010 personal property payment. Again the Bank did not issue a default notice. Instead, the trustee took the lead on March 9, 2011 by seeking an order to show cause why the debtor’s case should not be dismissed for payment and reporting defaults.7 Then, on May 2, Couchman filed a motion to modify his plan (“Motion to Modify”) by proposing to delay the August 1, 2011 real estate payment until December 1, 2011.8 On May 5, the Bank filed its only notice of default, invoking the 30-day default clause in connection with the missed December 2010 personal property payment.9 It also objected to the debtor’s Motion to Modify, arguing that the motion was an overt attempt to modify the Conditional Order.10 The Bank also noted that the modification was not feasible and therefore could not be confirmed under § 1225(a)(6). On May 11, 2011, the Court entered an agreed “temporary” order granting the trustee’s motion to show cause and directed that the debtor file a further modified plan to deal with the [810]*810missing December 2010 payments by May 14.11 That order did not mention the Bank’s default notice.

At a July 12, 2011 status conference on the May Motion to Modify, the Court established a discovery schedule and directed that the debtor make his August 1, 2011 real estate payment not later than August 15, 2011.12 On August 8, 2011, the Court entered an agreed final order on the trustee’s show cause motion finding that the debtor had filed his reports and that he would be given until August 1, 2011 to make the December 1, 2010 personal property payment, subject to a 15-day grace period. If the payment wasn’t made, the case would be dismissed, but the debtor could file a further motion to extend the payments on or before August 1. Bank counsel, along with debtor’s counsel and the trustee, signed this agreed order.13 In the meantime, the debtor made the December 1, 2010 personal property payment on July 29, 2011, satisfying the August 1 deadline.14

On September 14, 2011, the debtor filed the amended motion to modify (“Amended Motion”) that is before the court today.15 That motion provides for the Bank’s August 1, 2011 real estate payment to be made not later than December 1, 2012.16 The Amended Motion also seeks deferral of the personal property payment due December 1, 2011 to December 1, 2012. The Bank objected.

Analysis

If the modified plan had been presented as the original plan, could it have been confirmed? If the answer is yes, the modification should be granted.17 The Court must determine whether the modified plan meets the plan contents and confirmation requirements of §§ 1222 and 1225. There is no doubt that § 1229 allows the debtor to modify his plan post-confirmation to extend the time in which payments may be made as Couchman seeks to do here. The Bank has withdrawn its feasibility objection18 and argues that Couchman’s modification cannot be permitted because doing so would alter the Bank’s rights under the Conditional Order.

The Bank is correct that some bankruptcy courts have prohibited post-confirmation modifications that are aimed at changing agreed-upon negotiated terms as opposed to plan terms that could be imposed by a court.19

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Bluebook (online)
477 B.R. 807, 2012 WL 3600321, 2012 Bankr. LEXIS 3845, 56 Bankr. Ct. Dec. (CRR) 252, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-couchman-ksb-2012.