In re J & B Haldeman Holdings, LLC

517 B.R. 910, 2014 WL 4748612
CourtUnited States Bankruptcy Court, W.D. Wisconsin
DecidedSeptember 23, 2014
DocketNos. 11-11386-11, 11-11359-11
StatusPublished
Cited by4 cases

This text of 517 B.R. 910 (In re J & B Haldeman Holdings, LLC) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re J & B Haldeman Holdings, LLC, 517 B.R. 910, 2014 WL 4748612 (Wis. 2014).

Opinion

DECISION

CATHERINE J. FURAY, Bankruptcy Judge.

On March 24, 2014, Black River Country Bank (“BRCB”) filed a post-confirmation [913]*913motion pursuant to 11 U.S.C. § 1142(b) requesting the Court to direct transfer of real estate according to the terms of a confirmed plan. The Debtors, J & B Haldeman Holdings, LLC, and James and Barbara Haldeman,1 object to the motion. For the following reasons, BRCB’s motion is GRANTED.

FACTS AND PROCEDURAL HISTORY

The Debtors’ plan was confirmed on March 22, 2013 (the “Plan”). With respect to BRCB’s secured claim, the Plan required monthly interest payments as well as principal reductions based on an annual schedule. The schedule included a $50,000 principal payment that was due by December 31, 2013. The Debtors failed to make this payment. In addition, the Plan provides that BRCB retains its mortgages on all property until the Debtors’ obligations are satisfied in full. Likewise, the Debtors’ “personal guaranties remain in full force and effect until the obligations are paid in full.”

The Plan also addresses the consequences of defaults by the Debtors. It permits the Debtors a 60-day cure period.2 If, by the end of the 60-day period, the Debtors fail to make any payment, the Plan provides the Debtors “will deed back the remaining secured property to the Black River Country Bank.” The Debtors failed to cure the payment default within the cure period.

The Plan also provides that “[t]he Bankruptcy Court shall retain jurisdiction on [sic] this confirmed Chapter 11 proceedings as it relates to the terms, conditions and provisions of this agreement as it relates to default, conditions, and any matter relating to the contract.” Further, it states that:

The Court shall retain jurisdiction of the Chapter 11 case pursuant to and for the provisions set forth in Section 1127 and 1142 of the Bankruptcy Code as follows:
1. To determine the allowance or dis-allowance of claims and interests.
2. To fix allowance of compensation and other administrative expenses.
3. To retain and determine any disputes arising under or relating to the Plan or arising under or relating to the Chapter 11 reorganization case.
4. To enforce all discharged provisions of the Plan.
5. To make such further orders and directions pursuant to 11 U.S.C. section 1127 and 1142 as may be necessary or appropriate.

In anticipation of their inability to make the $50,000 principal payment, the Debtors filed a proposed modified plan on December 31, 2013. The proposed modification sought to extend the due date for the initial principal payment through June 30, 2014. On March 10, 2014, the Court denied approval of the modified plan. The Court found that because a significant portion of the property to be distributed under the plan had not been conveyed to claim holders, the plan had not been substantially consummated as of the date of the hearing. The Court concluded that:

Based on the facts and based on the argument that has been presented for [914]*914the purpose of this case, I will find that there has not been substantial consummation as of this date. And I will, for the purpose of this case, adopt that line of cases that says substantial consummation does require a significant portion of [the] property to be distributed or [the] payments to be made to have been distributed or paid. That does not mean for other purposes and in other circumstances the Court does not reserve its right to change its mind or apply a different definition. But based on the facts and record in front of me and the arguments of counsel, I will conclude that there has not been substantial consummation.

Excerpt of Proceedings at 11, In re J & B Haldeman Holdings, LLC, No. 11-11386-11 (Bankr.W.D.Wis. Mar. 10, 2014).

ARGUMENTS

BRCB argues the Debtors are in default under the specific provisions of the Plan addressing BRCB’s claim, and that pursuant to the default provisions the Debtors are obligated to deed certain property back to BRCB as a result of their failure to timely cure the default. BRCB contends the Plan provides that the Bankruptcy Court shall retain jurisdiction over the enforcement of the Plan. Accordingly, BRCB argues that section 1142(b) empowers the Court to order the Debtors to transfer the mortgaged property to BRCB as a result of the Debtors’ default.

The Debtors do not dispute the default or the failure to cure. Instead, they argue the Court’s post-confirmation authority is limited under 11 U.S.C. § 1142(b) to matters necessary for the consummation of the plan. They contend — mistakenly—that this Court previously concluded that their plan had been substantially consummated at the time of the March 10, 2014, hearing and that, as a result, the Court lacks jurisdiction to enter an order concerning their default under the confirmed plan.

DISCUSSION

Subject Matter Jurisdiction

Regardless of the terms of the Plan or the provisions of the Bankruptcy Code, the source of jurisdiction in cases under title 11 is 28 U.S.C. §§ 1334 and 157. U.S. Brass Corp. v. Travelers Ins. Grp., Inc. (In re U.S. Brass Corp.), 301 F.3d 296, 303 (5th Cir.2002) (citing United States Tr. v. Gryphon at the Stone Mansion, Inc., 216 B.R. 764, 769 (W.D.Pa.1997)). As a threshold matter, therefore, the Court must determine whether jurisdiction exists. Indeed, subject matter jurisdiction is “the first question in every case.” Illinois v. City of Chicago, 137 F.3d 474, 478 (7th Cir.1998). Without it, the Court “cannot proceed at all.” Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94, 118 S.Ct. 1003, 1012, 140 L.Ed.2d 210 (1998). Whether or not a confirmed plan purports to reserve jurisdiction to the bankruptcy court, the statutory requirements for subject matter jurisdiction must be met. Fed-eralpha Steel LLC Creditors’ Trust v. Fed. Pipe & Steel Corp. (In re Federalpha Steel LLC), 341 B.R. 872, 879-80 (Bankr.N.D.Ill. 2006) (citations omitted).

Pursuant to 28 U.S.C. §§ 1334 and 157, the federal district courts have “original and exclusive jurisdiction” over all cases under title 11 (“Bankruptcy Code” or “Code”) and “original but not exclusive jurisdiction” over all civil proceedings that arise under the Bankruptcy Code or that arise in or are related to cases under the Code. 28 U.S.C. §§ 1334(a)-(b).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
517 B.R. 910, 2014 WL 4748612, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-j-b-haldeman-holdings-llc-wiwb-2014.