In re Clark
Decision Date | 13 April 2016 |
Docket Number | CASE NO. 15–40434 |
Citation | 550 B.R. 429 |
Parties | In the Matter of Ross Michael Clark, Debtor |
Court | U.S. Bankruptcy Court — Northern District of Indiana |
Thomas B. O'Farrell, Noblesville, IN, for Debtor.
Robert E. Grant
This is the debtor's third chapter 12 in the last few years.1 The others were dismissed for various reasons. Co–Alliance, LLP, one of the debtor's creditors, wants that same fate to befall this one. It contends the debtor is not a family farmer because his “aggregate debts” exceed $4,031,575 and so he is not eligible for relief under chapter 12. See, 11 U.S.C. § 101(18)
( ); § 109(f) ( ). It reaches this conclusion based on the proofs of claim which have been filed in the case and total $4,141,861.74–$110,286.74 over the statutory limit. The matter is before the court on Co–Alliance's motion for summary judgment and the debtor's response thereto.
Vukadinovich v. Board of School Trustees, 278 F.3d 693, 699 (7th Cir.2002) ().
A debtor must satisfy certain debt limits to be eligible for relief under either chapter 12 or chapter 13. The characteristics of the debts that are counted toward those limits differ, however. The requirements for counting under chapter 13 are more restrictive than under chapter 12. Chapter 13 eligibility concerns itself only with debts that are “noncontingent and liquidated,” while eligibility under chapter 12 is based upon a debtor's “aggregate debts.”2 Despite these differences, both chapters have one thing in common: When there is a dispute over whether a particular debtor is within the required debt limit, where does the court begin and what should it consider?
The debtor does not dispute that the claims filed in this case total $4,141,861.74.3 Instead, he tries to raise questions concerning the accuracy of some of them and argues that the dispute over the amount due should suffice to deny both the motion for summary judgment and the motion to dismiss.4 The argument misapprehends the role disputes play in determining eligibility and assumes that attempting to create a dispute over the amount due a creditor can change the eligibility equation. It does not.5 Albano, 55 B.R. at 368
.
Eligibility for chapter 12 is determined by a debtor's aggregate or total debt. The terms debt and claim are synonymous. In re Energy Cooperative, Inc., 832 F.2d 997, 1001 (7th Cir.1987)
. This leads to a broad interpretation of the aggregate debt limit. In re Vaugh
a
n, 100 B.R. 423, 425 (Bankr.S.D.Ill.1989). In other words, eligibility is determined by all the claims against the debtor, regardless of whether the claims are secured, unsecured, liquidated, unliquidated, contingent, matured, unmatured or disputed, etc. In re Quintana, 107 B.R. 234, 237 (9th Cir. BAP 1989). See also, 11 U.S.C. § 101(5). It does not matter whether the dispute concerns liability or the amount due, a disputed claim is just that: disputed. Disputed claims are still part of the total debt the debtor seeks to deal with in the proceeding and they count for the purposes of determining eligibility. When Congress wanted to exclude disputed claims from the eligibility calculus it clearly did so. See, 11 U.S.C. § 303(b)(1) ( ). Consequently, there is no exception for disputed debts and they are considered in determining a debtor's eligibility for relief under chapter 12. In re Vaugh
a
n, 100 B.R. at 424–25 ; Quintana, 107 B.R. at 241. Accord,
In re Barcal, 213 B.R. 1008, 1012 (8th Cir. BAP 1997) ( ); Albano, 55 B.R. at 368 (same); In re Ekeke, 198 B.R. 315, 317–18 (Bankr.E.D.Mo.1996) (same).
The debtor's aggregate debts exceed the applicable statutory limit of $4,031,575, he is not a family farmer and, therefore, not eligible for relief under chapter 12. Co–Alliance's motion for summary judgment is granted and this case will be dismissed. An order doing so will be entered.
1 This count does not include the debtor's first case, case no. 13–40542, which the court dismissed sua sponte due to the failure to satisfy the minimum requirements necessary to initiate a case. See, 11 U.S.C. §§ 301
, 521 ; 28 U.S.C. § 1930(b) ; Fed. R. Bankr.P. Rules 1002, 1007. See also, N.D. Ind. L.B.R. B–1002–1.
2 The claims of creditors bringing an involuntary petition are also subject to restrictions. Only creditors holding claims that are “not contingent as to liability or the subject of a bona fide dispute as to liability or amount” qualify. 11 U.S.C. § 303(b)(1)
. Taken together, § 101(18), § 109(e), and § 303(b) make it clear that Congress knew how to make distinctions between different debts in terms of whether they are contingent or noncontingent, liquidated or unliquidated, disputed or undisputed.
3 Claims are deemed allowed unless objected to. 11 U.S.C. § 502(a)
. Except for governmental units, the claims bar date expired on January 4, 2016. Although the debtor objected to one of those claims, that objection was dismissed on February 5, 2016 as the result of the debtor's failure to prosecute. See, Order to Show Cause, dated Jan. 8, 2016. Even if the objection had been successful, the other claims...
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