In re Aguirre

Decision Date18 April 2016
Docket NumberCase No. 14bk24420
Citation548 B.R. 525
Parties In re: Ramon Aguirre, Bertha Aguirre, Debtors.
CourtU.S. Bankruptcy Court — Northern District of Illinois

Attorney for Wheeler Financial, Inc.: Robert M. Fishman, Shaw Fishman Glantz & Towbin LLC, Chicago, IL

Attorney for Debtors: Paul M. Bach, Sulaiman Law Group, Ltd., Oak Brook, IL

Attorney for JPMorgan Chase Bank: Lauren Newman, Thompson Coburn LLP, Chicago, IL

MEMORANDUM DECISION

TIMOTHY A. BARNES

, Judge.

This matter comes before the court on the Motion of Wheeler Financial, Inc. for Relief from the Automatic Stay [Dkt. No. 91] (the "Motion for Relief ") filed by Wheeler Financial, Inc. ("Wheeler ") and the Debtors' Motion Pursuant to 11 U.S.C. § 1127(e)

to Modify Confirmed Chapter 11 Plan as to Class Two (Wheeler–Dealer, Ltd DBA Wheeler Financial Inc., DuPage County, Cook County and JPMorgan Chase Bank, N.A.) [Dkt. No. 99] (the "Motion to Modify Plan ") filed by Ramon Aguirre and Bertha Aguirre (together, the "Debtors "). The Motion for Relief seeks relief from the automatic stay as to 1374 West Grand Avenue, Chicago, Illinois (the "Property ") based on the Debtors' default of their obligation to pay Wheeler under their confirmed chapter 11 plan. The Motion to Modify Plan was filed after the Debtors' default under their plan and seeks to modify the plan in order to extend the deadline for payment to Wheeler. Both the Motion for Relief and the Motion to Modify Plan (collectively, the "Motions ") have been fully briefed and the parties have appeared before this court for oral argument on December 15, 2015 and January 20, 2016 (the "Hearings ").

For the reasons stated below, the Motion for Relief is granted and the Motion to Modify Plan is denied.

JURISDICTION

The federal district courts have "original and exclusive jurisdiction" of all cases under title 11 of the United States Code (the "Bankruptcy Code "). 28 U.S.C. § 1334(a)

. The federal district courts also have "original but not exclusive jurisdiction" of all civil proceedings arising under title 11 of the United States Code, or arising in or related to cases under title 11. 28 U.S.C. § 1334(b). District courts may, however, refer these cases to the bankruptcy judges for their districts. 28 U.S.C. § 157(a). In accordance with section 157(a), the District Court for the Northern District of Illinois has referred all of its bankruptcy cases to the Bankruptcy Court for the Northern District of Illinois. N.D. Ill. Internal Operating Procedure 15(a).

A bankruptcy judge to whom a case has been referred may enter final judgment on any core proceeding arising under the Bankruptcy Code or arising in a case under title 11. 28 U.S.C. § 157(b)(1)

. A motion for relief from stay arises in a case under title 11 and is specified as a core proceeding. 28 U.S.C. § 157(b)(2)(G) ; In re Mahurkar Double Lumen Hemodialysis Catheter Patent Litig., 140 B.R. 969, 976–77 (N.D.Ill.1992) ; In re Quade, 482 B.R. 217, 221 (Bankr.N.D.Ill.2012) (Barnes, J.). A motion to modify a confirmed plan may also only arise in a case under title 11 and is a core proceeding. 28 U.S.C. § 157(b)(2)(A), (L) and (O).

Accordingly, final judgment is within the scope of the court's authority.

PROCEDURAL HISTORY

In considering the Motions, the court has considered the arguments of the parties at the Hearings, has reviewed and considered the Motions themselves, the attached exhibits submitted in conjunction therewith, and has reviewed and found each of the following of particular relevance:

1. Second Amended Plan of Reorganization [Dkt. No. 69] (the "Plan ");
2. Order [Dkt. No. 84] (the "Modifying Order ");
3. Order Approving Second Amended Disclosure Statement (Dkt. No. 70) and Confirming Second Amended Plan of Reorganization (Dkt. No. 69) [Dkt. No. 85] (the "Confirmation Order ");
4. JPMorgan Chase Bank, N.A.'s Response to Motion of Wheeler Financial Inc., [sic ] For Relief from the Automatic Stay [Dkt. No. 100];
5. Debtors' Response to Motion of Wheler [sic ] Financial Inc.'s Motion for Relief from the Automatic Stay [Dkt. No. 101];
6. Objection of Wheeler Financial, Inc. to Debtors' Motion to Modify Confirmed Chapter 11 Plan [Dkt. No. 109];
7. JPMorgan Chase Bank, N.A.'s Reply to Objection of Wheeler Financial Inc., [sic ] to Debtors' Motion to Modify Plan [Dkt. No. 112, duplicate filing at Dkt. No. 114];
8. Reply of Wheeler Financial, Inc., in Support of Its Motion for Relief from the Automatic Stay [Dkt. No. 113];
9. Debtors' Reply in Supprt [sic ] of Their Motion to Modify Their Confirmed Chapter 11 Plan [Dkt. No. 115];10. JPMorgan Chase Bank, N.A.'s Supplement in Support of Debtors' Motion to Modify Plan [Dkt. No. 119];
11. Joint Supplement by JPMorgan Chase Bank, N.A. and the Debtors to Their Responses to the Motion for Relief from the Automatic Stay by Wheeler Financial Inc. [Dkt. No. 120] (the "Joint Supplement "); and
12. Response of Wheeler Financial, Inc. to Supplement and Joint Supplement [Dkt. No. 131].

Though these items together do not constitute an exhaustive list of the filings in the above-captioned bankruptcy case, the court has taken judicial notice of the contents of the docket in this matter. See Levine v. Egidi, No. 93C188, 1993 WL 69146, at *2 (N.D.Ill. Mar. 8, 1993)

(authorizing a bankruptcy court to take judicial notice of its own docket); In re Brent, 458 B.R. 444, 455 n. 5 (Bankr.N.D.Ill.2011) (Goldgar, J.) (recognizing same).

BACKGROUND

In this matter, the facts are essentially undisputed. For the purposes of determining the Motions, the court therefore finds as follows:

The Debtors petitioned for bankruptcy protection under chapter 11 on June 30, 2014 (the "Petition Date "). The Debtors' schedules did not list a debt owed to a third party purchaser of tax claims. That was incorrect. The Debtors did, in fact, owe past due taxes on the Property that resulted in the purchase of that debt by a third party tax purchaser prior to the Petition Date.

More specifically, the Debtors owed 2010 real estate taxes on the Property totaling approximately $10,592.98. The Debtors also failed to pay the first and second installments of property taxes for tax years 2011 and 2012 and the first installment of tax year 2013. On August 8, 2012, Wheeler purchased the 2010 delinquent taxes at a tax sale and subsequently paid the 2011, 2012 and first installment of the 2013 taxes. The time period within which the Debtors could pay Wheeler before title to the Property transferred pursuant to applicable state law (more fully discussed infra ), otherwise known as the redemption period, was scheduled to expire on September 8, 2014. On December 10, 2014, Wheeler filed a petition in the Circuit Court of Cook County to pursue its applicable rights with respect to the Property. Nonetheless, Wheeler subsequently extended the redemption period an additional six months to June 8, 2015 (the "Redemption Deadline ").1

Because the Debtors did not list the obligation to Wheeler on their schedules and failed to provide notice to Wheeler of its bankruptcy case prior to the claims bar date, September 26, 2014, Wheeler did not file a proof of claim in this case. After the bar date had passed, the Debtors worked in earnest with JPMorgan Chase Bank, N.A. ("JPMorgan "), on a plan of reorganization. Court notes from hearings in November 2014 indicate that those efforts include addressing the Debtors' tax issues. While the original plan and disclosure statement proposed by the Debtors did not at that time include a treatment of Wheeler, by December 16, 2014, the Debtors had amended that plan and disclosure statement to include Wheeler. See, e.g., Plan ¶ 3.2(A), p.10.

Nonetheless, it was not until March 1, 2015 that Wheeler learned of the Debtors' bankruptcy filing when it received a copy of the Debtors' proposed plan of reorganization. See Certificate of Service of Class 2 Ballots [Dkt. No. 75]. In the Plan, the Debtors estimated their liability to Wheeler as $40,000.00. Plan, ¶ 3.2(A), p.10.

JPMorgan is the holder of a cross-collateralized claim secured by a restaurant on the Property located in the West Loop of Chicago near the United Center and a separate property located at 4599 Hatch Lane in DuPage County that serves as the Debtors' residence. See Claim 4–1. As set forth in the Plan, the secured debt owed to JPMorgan far exceeds the value of those two properties combined. Plan, Preamble, p. 2. Pursuant to the Plan, the Debtors are to make monthly payments of $8,000.00 to JPMorgan, Plan, ¶ 3.2(A), p. 7, and the Debtors have made these payments since October 2014. See Agreed Adequate Protection Order [Dkt. No. 52]. In comparison, since filing for bankruptcy protection, the Debtors have made no payments to Wheeler.

The Debtors' Plan was filed on February 10, 2015. The Plan was presented by the Debtors and solicited according to the procedures provided for in the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure. Though the Debtors had not notified Wheeler when they commenced the bankruptcy case or scheduled Wheeler's claim, the Debtors included Wheeler in the solicitation. As a result, the Debtors received feedback from Wheeler and, to resolve its potential objection, through the Modifying Order amended the terms of their Plan as it related to Wheeler. At the April 15, 2015 confirmation hearing, the Debtors presented the court with the Modifying Order and requested that it be entered along with the Confirmation Order.2 The Modifying Order provides that the Debtors would "sell the property and/or payoff the entire balance owed to Wheeler–Dealer, Ltd. within six months of confirmation."3 The Debtors' Plan proposed a sale of 1307 Burlington, Lisle, Illinois (the "Sale Property ") to obtain funds to satisfy the debt owed to Wheeler and the Modifying Order set the deadline for payment to Wheeler within six months, which was October 15, 2015 (the "Deadline "). The Plan, as modified, was confirmed at the April 15, 2015 confirmation hearing, prior to the running of the extended Redemption...

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