In re Jewell, Bankruptcy No. 2-86-03657.
| Decision Date | 31 March 1987 |
| Docket Number | Bankruptcy No. 2-86-03657. |
| Citation | 75 BR 318 |
| Parties | In re Douglas A. (Alan) JEWELL, Sr., Virginia M. (Mae) Jewell, Debtors. |
| Court | U.S. Bankruptcy Court — Southern District of Ohio |
Stephen E. Schafer, Columbus, Ohio, for debtors.
Arthur G. Wesner, Columbus, Ohio, for Remco, Inc.
Frank M. Pees, Worthington, Ohio, trustee.
ORDER DENYING CONFIRMATION
This matter is before the Court upon the requested confirmation of the Chapter 13 plan proposed by debtors Douglas and Virginia Jewell, and upon this Court's independent obligation to find that all requirements for confirmation have been met, as set forth in § 1325(a) of Title 11 United States Code.
The debtors' plan, as proposed, calls for payments of $65.77 per week, payment in full of allowed secured and priority unsecured claims, and a payment of $1 to each holder of an allowed general unsecured claim. The plan is projected to require a period of approximately thirty-six (36) months for completion.
At the hearing on confirmation, the Chapter 13 trustee stated that he could not recommend confirmation of this plan as one proposed within the spirit of Chapter 13 or as filed in good faith. The debtors' response to those assertions was that creditors of these debtors would not receive any distribution if this case had proceeded as a Chapter 7 liquidation and that no timely objections to confirmation had been filed. In that connection, the Court notes that, or December 8, 1986, Remco, Inc. filed a Motion to Exclude Creditor, For Relief From Stay and Objection to Confirmation. That motion, however, which was withdrawn on March 3, 1987, was not timely under the terms of this Court's order of October 2, 1986, and therefore, was not considered as an objection to confirmation. The trustee's concerns, while orally entered into the record, were not formally asserted as objections pursuant to Rule 3020(b).
Despite the lack of formal objections, this Court believes it has an independent duty to determine that all tests for confirmation of a Chapter 13 plan have been met. In the Matter of Hale, 65 B.R. 893 (Bankr.S.D.Ga.1986). While that responsibility may presume certain minimal conformities with the statutory requirements unless specific deficiencies are brought to the Court's attention, the assumption that a plan has been proposed in good faith and is consistent in all other respects with the requirements of Title 11, as required by 11 U.S.C. § 1325(a)(1) and (a)(3), may be placed at issue by the Court's own observations regarding the debtors' income, the nature of their projected expenditures and property sought to be retained, the type of obligations for which the Chapter 13 "superdischarge" is sought, and the particular repayment terms of the plan. Specifically, in this case, the Court must determine if a $1 payment to each holder of an allowed unsecured claim is an appropriate good-faith invocation of the Chapter 13 remedy and is treatment which complies with other applicable provisions of Title 11.
Any statute, no matter how well-drafted, must accommodate the flexibility required to permit judicial control of a litigant's attempts to abuse the underlying purpose and spirit of its express terms. Especially in situations where economic realities do not justify substantial expenditures by parties in interest, such control is necessary to compensate for the impreciseness of language and the creativity of counsel which otherwise could undermine the system and reduce the credibility of the remedy. 11 U.S.C. § 105(a). This Court believes that the exercise of such control is appropriate in this case.
Examination of a proposed plan to ascertain its good faith, or in the alternative, to insure that it complies with both the express and the tacit requirements of the Bankruptcy Code, involves a balancing of many factors and a case by case approach. Among the factors to be reviewed are "the terms of the Chapter 13 plan including the dividend offered to creditors, whether the plan represents a sincerely intended commitment to pay back creditors, and whether the financial status of the debtors justifies the special protection offered by the provisions of Chapter 13." In re Breckenridge, 12 B.R. 159, 160 (Bankr.S.D.Ohio 1980). Consideration of the debtors' pre-petition conduct may also be relevant. Memphis Bank & Trust Co. v. Whitman (In re Whitman), 692 F.2d 427 (6th Cir.1982).
Offering repayment to creditors greater than they would receive through distributions under the provisions of Chapter 7, without more, however, does not give rise to a presumption that the plan was filed in good faith or otherwise complies with the Bankruptcy Code. Nor does a proposal to pay a small dividend compel a finding that the plan was filed in bad faith or fails to comport with the statute. In re Davis, 68 B.R. 205 (Bankr.S.D.Ohio 1986). The low dividend,...
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