In re: Sonia M Benitez Lajaras

• Court: United States Bankruptcy Court, D. Puerto Rico
• Decided: March 28, 2011
• Docket: 10-04613
• Status: Unknown

Opinion

1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF PUERTO RICO 2

3 IN RE: 4 5 SONIA M BENITEZ LAJARAS CASE NO. 10-04613 BKT

6 Chapter 13 7

8 XXX-XX-1868 9 10 FILED & ENTERED ON 03/28/2011

11 Debtor(s) 12

13 OPINION AND ORDER 14 This proceeding is before the Court upon the Debtor’s Response to Order and Submit 15 Memorandum of Law [sic] [Dkt. No. 33] and the trustee’s Objection to Confirmation of Plan [Dkt 16 17 No. 34]. 18 I. FACTUAL BACKGROUND 19 20 The Debtor filed a voluntary Chapter 13 petition on May 28, 2010. Part of the estate listed 21 in the Debtor’s schedules includes a usufruct interest in certain property that the Debtor received as a 22 result of an intestate inheritance. On June 29, 2010, Debtor filed a proposed Chapter 13 Plan. The 23 24 trustee objects to the confirmation of the proposed plan under 11 U.S.C. § 1325(a)(4) (the “best 25 interest of creditors test”) because it fails to include the value of the usufruct, which, he alleges, is a

quantifiable interest of the debtor in property that should be included in the estate under 11 U.S.C. § 541(a)(1). The Debtor responds that the usufruct is not an interest of the Debtor under § 541(a)(1) 1 1 since the lineal heirs of the deceased have the right to decide whether to satisfy the surviving 2 spouse’s share with a cash payment or an equitable interest in property, and thus the plan need not 3 account for it. 4 5 This Court has jurisdiction over the subject matter and the parties pursuant to 28 U.S.C. 6 §§1334 and 157(a) and the General Order of referral of Title 11 Proceedings to the United States 7 Bankruptcy Court for the District of Puerto Rico dated July 19, 1984 (Torruella, C.J.). 8 9 II. LEGAL ANALYSIS AND DISCUSSION 10 To satisfy the “best interests of creditors test” of 11 U.S.C. § 1325(a)(4), a Chapter 13 plan 11 12 must provide for payment to each allowed unsecured claim holder of no less than the amount such 13 holder would be paid on such claim if the Debtor’s estate was liquidated under Chapter 7. Thus, the 14 estate’s liquidation value must be evaluated to establish whether the proposed plan satisfies this test. 15 16 In a hypothetical Chapter 7 scenario, the Chapter 7 Trustee would collect and liquidate all non- 17 exempt property of the estate. 11 U.S.C. § 704(a)(1). It is undisputed that the Debtor’s estate in the 18 instant case encompasses her statutory share of her deceased husband’s estate. The parties do not 19 20 agree, however, on whether the Debtor’s usufruct interest in her deceased spouse’s intestate estate 21 should be included in her bankruptcy estate. 22 Under the laws of the Commonwealth of Puerto Rico, a usufruct inherited by a surviving 23 24 spouse may be conveyed should the heirs be unable to agree upon the manner in which the surviving 25 spouse’s share should be satisfied. 31 L.P.R.A. § 2415. In such situations, the value of the usufruct

may be calculated for the purposes of determining and satisfying the statutory share of a deceased spouse’s estate. Id.; Calimano Diaz v. Rovira Calimano, 113 D.P.R. 702, 704. Because the widow 2 1 || usufruct in this case is a non-exempt interest whose value may be determined under applicable stat 2 law, it must be included in the estate under 11 U.S.C. § 1325(a)(4) before a Chapter 13 plan may b 3 4 || confirmed. 5 Having found that the usufruct is a quantifiable, non-exempt interest of the Debtor 1 6 property, the Court SUSTAINS the trustee’s objection to confirmation [Dkt. No. 34]. 7 g || confirmation hearing is hereby scheduled for May 26, 2011 at 9:00a.m. The parties are ordered t inform the Court if an agreement to assign a value to the widow usufruct is reached and file a 10 informative motion ten (10) days prior to the confirmation hearing. 11 12 SO ORDERED. 13 San Juan, Puerto Rico this 28 day of March, 2011. 14 CHEE 16 . Brian K. Tester 17 U.S. Bankruptcy Judge 18 19 20 21 22 23 24 25