Tuesday, June 25, 2013

First Circuit Bankruptcy Appellate Panel Opinions May 2013

Dismissal for debtor's failure to provide financial information affirmed, with no notice or hearing required under Section 521(i)(1):
Soto and Rivera v. Doral Bank
BAP NO. PR 12-075 (1st Cir. BAP May 8, 2013)(Before Judges Haines, Feeney, and Hoffman, Opinion by Hoffman).
Dismissal of Chapter 13 case upheld for debtor's failure to provide pay advice and tax returns. An 11 U.S.C. Section 521(i)(1) dismissal may not require notice and hearing.

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Appeal dismissed as moot due to underlying bankruptcy case being dismissed:
Soto and Rivera v. Doral Bank
BAP NO. PR 12-053 (1st Cir. BAP May 8, 2013)(Before Judges Haines, Feeney, and Hoffman, Per curiam). Debtors appealed the bankruptcy court's order granting stay relief to Doral Bank, which appeal is dismissed as moot in light of the above dismissal being affirmed, as no effective relief could be granted.

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Appeal dismissed due to lack of standing: Debtor was not a person aggrieved to appeal the Ch. 7 trustee's sale of estate property and potential for surplus to the Debtor was speculative:
Gentile v. Digiacomo, Ch. 7 Trustee,
BAP NO. MB 12-071 (1st Cir. BAP May 20, 2013)(Before Judges Lamoutte, Kornreich, and Cab├ín, Opinion by Kornreich, Dissent by Lamoutte).
Standing to appeal a bankruptcy court's sale order requires a party to be a person aggrieved, per Spenlinhauer v. O'Donnell, 261 F. 3d 113, 117 (1st Cir. 2001). Since title to property of the estate no longer rest with the debtor, he normally lacks the pecuniary interest in the trustee' disposition of that property unless nullification of the sale will likely to result in an overall surplus in the chapter 7 estate to which the debtor would be entitled once the case is closed The debtors unsuccessfully asserting standing to appeal based up  a contingent, speculative pecuniary interest in an estate surplus which the application of Spenlinhauer would not allow. Debtor voluntarily filed Chapter 7 and did not seek to compel abandonment of the property at issue, nor seek a dismissal nor wait for the state court action to conclude before filing.

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Denial of confirmation affirmed regarding "hybrid" or bifurcated treatment of secured creditor's claim on residence:
Bullard v. Hyde Park Savings Bank,
BAP NO. MB 12-054 (1st Cir. BAP May 20, 2013)(Before Judges Haines, Tester and Godoy).
[NACBA submitted an amicus brief].
Debtor proposed a "hybrid" plan treatment of the bank's mortgage on his home.  Bullard asserted that since his residence included another unit in which he did not reside, the mortgage was not secured solely by the debtor's residence and subject to modification. Bullard planned to reduce the principal to the value of the home and paid over a term longer than the five-year plan; and, treat the balance as unsecured claim with pennies on the dollar.  The debtor sought to use both the "modification" provision of Section1322(b)(2) and the "cure and maintain" provision of 1322(b)(5).
The bank objected.
The BAP opined that Section 1328(a)(1) establishes that as long as a plan employs Section 1322(b)(5), it can only be confirmed over the creditor's objection via section 1325(a)(5)(B)(i)(I)(aa).  And since that section states the debt, as determined by nonbankrutpcy law, must be paid, a debtor man not use and bifurcate the applicable claim via Section 506(a).   To do so would render Section 1325(a)(5)(B)(i)(I) ineffective.

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