In re Robinson
Decision Date | 28 December 1983 |
Docket Number | Bankruptcy No. LR 83-548,Adv. No. AP 83-450F. |
Citation | 36 BR 35 |
Parties | In re Rebecca ROBINSON, Debtor. Rebecca ROBINSON, Plaintiff, v. FORD MOTOR CREDIT COMPANY and Union Lincoln-Mercury, Inc., Defendants. |
Court | U.S. Bankruptcy Court — Eastern District of Arkansas |
Marquis Jones, Little Rock, Ark., for debtor, Rebecca Robinson.
W.R. Nixon, Jr., Little Rock, Ark., for Ford Motor Credit Co.
Mark J. Raible, Little Rock, Ark., for Union Lincoln-Mercury, Inc.
FINDINGS OF FACT
The debtor, Rebecca Robinson, filed for relief under Chapter 13 on June 13, 1983. Included with the petition was her Chapter 13 plan. The Chapter 13 plan proposes to pay $132.00 per month to the Trustee for a period of thirty-six (36) months. Out of the funds received by the Trustee the debtor proposes to pay her secured creditors in full, to pay the claim of Arkansas Social Services in full and to pay her remaining unsecured creditors 10% of their claims. After notice and without objection, the Chapter 13 plan was confirmed on August 31, 1983.
Ford Motor Credit was included in the debtor's Chapter 13 petition as a secured creditor and pursuant to the plan is proposed to be paid the full amount of its claim.
The collateral securing the debt owed Ford Credit is a 1980 Mercury Capri. The vehicle had been purchased by Japonica McCall from Union Lincoln-Mercury, Inc. on January 4, 1980. At that time, Ms. McCall executed an Arkansas Automobile Retail Installment Contract granting a security interest in the vehicle to Union Lincoln-Mercury, Inc., on that same day Union Lincoln-Mercury assigned the contract to Ford Motor Credit with recourse. The security interest was later perfected and recorded on a Certificate of Title which was retained by the creditor.
On June 10, 1981, Japonica McCall transferred her interest in the vehicle to Rebecca Robinson upon payment of $500.00 and Ms. Robinson's agreement to assume all payments on the installment contract. Thereafter Ms. Robinson made all required monthly payments beginning in July, 1981 until March, 1983.1 Ms. Robinson defaulted on the payments for April and May, 1983 which caused Ford Motor Credit to accelerate the balance and repossess the vehicle, without breach of the peace, on May 20, 1983. Subsequently on June 3, 1983, Ms. Robinson filed her bankruptcy petition and on June 9, 1983 filed pleadings with this court requesting turnover of the vehicle.
On the day that the vehicle was repossessed, Ford Motor Credit transferred the vehicle and the contract to Union Lincoln-Mercury, Inc. in good faith and pursuant to the repurchase agreement. The vehicle has not been sold and is currently in the possession of Union Lincoln-Mercury.
Witnesses for Ford Credit and Union Lincoln-Mercury testified that the balance due on the contract as of June 3, 1983 was $1,879.64 and that her liquidation value of the vehicle was between $500.00 to $700.00 as of that same date. The debtor's testimony placed a value of approximately $2,000.00 on the vehicle.
This court views the recent Supreme Court decision in United States v. Whiting Pools, Inc., (1983) ___ U.S. ___, 103 S.Ct. 2309, 76 L.Ed.2d 515 (1983), as controlling on the issue of whether a debtor in a Chapter 11 or a Chapter 13 proceeding is entitled to possession of property seized by a secured creditor prior to the filing of the bankruptcy petition.2 In Whiting Pools, the court determined that collateral seized immediately prior to the filing of a Chapter 11 petition was property of the estate and was subject to a turnover Order pursuant to Section 542(a). While the court gave no opinion as to the effect of its decision in the context of a Chapter 13, the court's interpretation of the statutory language and reasoning for giving such a broad effect to § 542(a) are equally applicable to individual reorganization under Chapter 13 as it is to business reorganization under Chapter 11.
The court in Whiting Pools summarized the applicable statutory language as follows:
The court gave a broad interpretation to this statutory language bringing within its scope property in which the debtor had no possessory interest at the time of filing and which is in the possession of a creditor having a security interest in the property. The court reasoned that this broad interpretation was supported not only by the statutory language but also by reviewing the legislative history reflecting a congressional goal of encouraging reorganization. The court also found that § 363(e) provides the secured creditor with protection which safeguards the creditors' security interest while the debtor has the collateral in his possession thereby facilitating and supporting the broad application of § 542(a).
The statutes pertinent to the Whiting Pools decision are sections 541(a)(1), 542(a) and 363(b), (c) and (e). These provisions are also applicable to cases under Chapter 13 pursuant to section 103 of the Code. Pursuant to section 1303, the debtor in Chapter 13 is given, exclusive of the trustee, the rights and powers of a trustee under sections 363(b) and (e), and where the Chapter 13 debtor is engaged in business, he has exclusive of the trustee, the rights and powers of the trustee under section 363(e). The statutory scheme of the Code provides Chapter 13 debtors with the same right to use, sell and lease property of the estate that is granted the debtor in possession under Chapter 11.
A review of the legislative history surrounding the enactment of Chapter 13 of the Bankruptcy Code reveals that Congress was responding to a major problem which existed in Chapter XIII under the Act. The House Committee on the Judiciary in its report to the House on the proposed Bankruptcy Code defined the problem facing Congress and the purpose of the Code as follows:
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