In re Van Eck
Decision Date | 16 March 2010 |
Docket Number | No. 08-32911 (LMW).,08-32911 (LMW). |
Citation | 425 B.R. 54 |
Court | U.S. Bankruptcy Court — District of Connecticut |
Parties | In re Herman Jan VAN ECK, Debtor. |
COPYRIGHT MATERIAL OMITTED
Kim L. McCabe, Esq., Assistant United States Trustee, Office of the United States Trustee, New Haven, CT, for Movant United States Trustee.
Herman Jan Van Eck, Ivoryton, CT, Respondent Chapter 11 Debtor in Possession (Pro Se).1
Linda J. St. Pierre, Esq., Benjamin T. Staskiewicz, Esq., Hunt, Leibert & Jacobson, P.C., Hartford, CT, for DLJ Mortgage Capital, Inc.
Before the court is the United States Trustee's (the "UST") motion to dismiss this chapter 11 case (Doc. I.D. No. 242, as supplemented by Doc. I.D. No. 299, the "Motion To Dismiss"). This court has jurisdiction over this matter as a core proceeding pursuant to 28 U.S.C. §§ 157(b) and 1334(b) and that certain order dated September 21, 1984 of the District Court (Daly, J.).2 This memorandum constitutes the findings of fact and conclusions of law to the extent mandated by Rule 9014 and 7052 of the Federal Rules of Bankruptcy Procedure.
On September 5, 2008 (the "Petition Date"), the Debtor commenced the instant bankruptcy case by the filing of a chapter 11 petition pro se. Subsequently, the Debtor filed his statements and schedules (see Doc. I.D. Nos. 17, 19, 20, Doc. I.D. No. 75, the "Schedules").
The UST's Motion To Dismiss came on for an evidentiary hearing (the "Hearing") on March 2, 2010. At the Hearing, the Debtor testified in opposition to the Motion To Dismiss and was cross examined by counsel for the UST and counsel for GRP Loan, LLC's ("GRP").4 The UST also introduced documents which were admitted as full exhibits at the Hearing.5 At the conclusion of the Hearing, in addition to the Motion To Dismiss, the court took the following matters (the "Matters") under advisement:
The Motion To Dismiss now is ripe for decision.8
11 U.S.C. § 1112 governs conversion and dismissal of chapter 11 cases and states in relevant part as follows:
11 U.S.C. § 1112(b) (West 2010) (emphasis added). Thus, with limited exceptions, Section 1112(b) mandates that the court dismiss or convert a chapter 11 case where "cause" exists within the purview of Section 1112(b)(1). See In re Emergystat of Sulligent, Inc., No. 07-51394, 2008 WL 597613, at *5-6 (Bankr.E.D.Tenn. Feb.29, 2008); Nester v. Gateway Access Solutions, Inc. (In re Gateway Access Solutions, Inc.), 374 B.R. 556, 560 (Bankr. M.D.Pa.2007); In re TCR of Denver, LLC, 338 B.R. 494, 498 (Bankr.D.Colo.2006).
There are two exceptions to mandatory conversion or dismissal. Those exceptions are found in Section 1112(b) and are: Section 1112(b)(1) ("unusual circumstances") and Section 1112(b)(2) ( )(see 11 U.S.C. § 1112(b)(2)).
In re Ameribuild Constr. Mgmt., Inc., 399 B.R. 129, 131-32 (Bankr.S.D.N.Y.2009) (footnotes omitted). H.Rep. No. 95-595, at 405-6 (1977), reprinted in 1978 U.S.C.C.A.N. 5963, 6362. With respect to the effect of the amendment to Section 1112 brought about by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA") on the foregoing law, "it is clear that Congress amended section 1112(b) to make it broader, more strict as to debtors, and more encompassing." TCR of Denver, 338 B.R. at 500 ( ). Accordingly, the rule that the Section 1112(b)(4) List is a non-exclusive list of examples of "cause" continues to be applicable. "Cause" outside of the Section 1112(b)(4) List hereafter is referred to as "Other Cause."
The burden is on the movant to prove Section 1112(b) "cause" by a preponderance of the evidence. In re Woodbrook Assocs., 19 F.3d 312, 317 (7th Cir.1994). Cf. In re Horan, 304 B.R. 42 (Bankr. D.Conn.2004) ( ). The UST has standing to bring a motion to dismiss or convert under Section 1112. See 2 Norton Bankr.L. & Prac.3d § 26:12 (2010); 5 Norton Bankr.L. & Prac.3d § 103:1 (2010).
According to 11 U.S.C. § 1112(b)(4)(C), a chapter 11 case should be dismissed or converted if the debtor's "failure to maintain appropriate insurance... poses a risk to the estate or to the public." When a debtor owns real property with structures, Section 1112(b)(4)(C) requires that the debtor maintain property and liability insurance to protect the estate. Gilroy v. Ameriquest Mortgage Co., et al. (In re Gilroy), No. NH 07-054, 2008 WL 4531982 (1st Cir. BAP Aug. 4, 2008) ( ).
In his Schedules, the Debtor discloses that he owns an interest in a single family home located at 24 Ebony Lane, Ivoryton, CT (the "Essex Property"). (See Doc. I.D. No. 17 (Schedule A).) The Debtor claims to own the Essex Property in some fashion jointly with his presumed wife. (See id.). At a hearing held on January 28, 2010, the UST requested that the Debtor provide proof of property and liability insurance that insures the Debtor and his bankruptcy estate for the Essex Property, including proof of continuous coverage since the Petition Date. (See Doc. I.D. No. 256 (1/28/10 Hearing Transcript) at 76-79, 85-86.) The Debtor agreed to provide such documentation and the court noted that the Debtor was required to provide such documentation by February 19, 2010. (Id.) On February 19, 2010, the Debtor filed an alleged Proof of Insurance with the court. (See Doc I.D. No. 287, the "Proof of Insurance.") The court has reviewed the Proof of Insurance and adopts the UST's analysis and conclusion to the extent set forth as follows.
The Proof of Insurance includes the following:
A. A binder issued by Liberty Mutual for homeowner insurance for the Essex Property for the period of October 29, 2009 through October 29, 2010 under which Linda A. Lounsbury (the Debtor's presumed wife) is the named insured and which bears policy number H32-218-384265-40 (the "Policy"). The Policy also reflects the Office of the United States Trustee as a notice party. Neither the Debtor nor his estate is named as an insured person.
B. A two-page declaration of the Policy which reflects property coverage for the Essex Property and liability coverage effective February 17, 2010 (the "Declaration Page"). The Declaration Page reflects that Linda A. Lounsbury is the named insured and reflects the Office of the United States Trustee as a mortgagee. Neither the Debtor nor his estate is named as an insured person.
The Proof of Insurance provided by the Debtor does not meet the requirements imposed on the Debtor at the January 28, 2010...
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