In re Wilkins, Bankruptcy No. B85-2426.
Decision Date | 24 March 1987 |
Docket Number | Bankruptcy No. B85-2426. |
Citation | 71 BR 665 |
Parties | In re Lawrence WILKINS, and Juanete Wilkins, Debtors. |
Court | U.S. Bankruptcy Court — Northern District of Ohio |
Jeffrey W. Brader, Cleveland, Ohio, for debtors.
Myron E. Wasserman, Cleveland, Ohio, Trustee.
Lee R. Kravitz, Cleveland, Ohio, for Ford Motor Credit Co.
This matter came on for hearing upon the motion of the Debtors for valuation of certain secured property. Due notice was properly made upon all parties entitled thereto. Upon review of the pleadings and argument of counsel, the following constitutes the findings of the Court pursuant to Rule 7052, Bankr. Rules:
I.
The Debtors caused to be filed their joint petition for relief under Chapter 13 on September 27, 1985. Therein, their schedules of indebtedness reflected, inter alia, a secured debt in the amount of $6,026.00 owed to the Ford Motor Credit Company (FMCC) relating to their purchase of a 1984 Ford Escort automobile. A timely proof of claim was filed by FMCC in the amount of $5,426.08, with interest at 14% per annum, regarding this purchase. Subsequently, the Debtors submitted their proposed Plan which allowed a 100% repayment to secured creditors and, without objection, such Plan was confirmed on November 1, 1985.
Following Plan confirmation, the Trustee filed a motion for the allowance of claims, which was granted by the Court on April 7, 1986. Such motion included the claim of FMCC, among others, and required any objections to be filed within thirty (30) days following Court approval. No objections were filed within the required thirty-day period. Further examination by the Trustee discerned feasibility problems, causing the Trustee to file a motion for the Court to determine the Plan's feasibility. On May 13, 1986, the Debtors filed the present Motion For Valuation Of Security respecting the FMCC claim, to which FMCC objected and giving rise to this contested matter.
II.
In support of its motion to value security, the Debtors contend (1) that the proper value of the vehicle is the wholesale value established; (2) that the proper valuation date is the confirmation date; (3) the secured portion of FMCC's debt is entitled to a discount factor; and (4) finally, that the Debtors may value the security post-confirmation. In response, FMCC's objection contends (1) the Debtors failed to value or otherwise indicate an intent to value FMCC's collateral at the time of petition filing; (2) the Plan, as confirmed, proposes to pay FMCC 100% of its claim through the Plan; (3) that the Debtors procedurally cannot value the collateral post-confirmation, pursuant to 11 U.S.C. 506; and (4) the Debtor's motion to value collateral fails to properly value as it suggests no value nor provides any supporting appraisal in support of such valuation.
III.
In view of the several aforementioned contentions of the respective parties, the principal issue for resolution is whether a debtor can seek to value collateral once a Plan has been confirmed. In addressing this issue, the following statutory provisions are relevant:
IV.
In reaching a resolution of this matter, an examination of the record is beneficial. The Plan allowed, in addition to priority payments required by § 1326, dividends to secured creditors in the amount of "100% of secured claims duly proved and allowed." Following such distribution to secured creditors, unsecured creditors whose claims are duly proved and allowed are to receive a 5% dividend.
A hearing on Plan confirmation initially was scheduled for January 30, 1986. The notice which announced such hearing and was served upon all entitled parties indicated in relevant part:
In view of the provisions stated above, no written objections were made relative to the plan.1 An order confirming the Plan was entered on November 6, 1985.
Of further relevance to a determination of this matter are certain contents of the Debtors' Chapter 13 Statement. Therein, the debt claimed by FMCC was stated by the Debtors as an undisputed $6,026.44, for a 1984 Ford Escort. In the "Personal Property" section of the Chapter 13 Statement, the subject vehicle again was listed, with no present market value stated.2 This Statement was filed with the Debtors' voluntary petition on September 27, 1985, and the record is silent to reflect where the Statement was ever amended. Subsequently, on October 10, 1985, FMCC caused to be filed its "Proof of Claim; Acceptance or Rejection of Plan." Such claim indicated a net principal amount due of $5,426.08. FMCC further indicated on its claim that "the fair market value of the property on which the claimant has a lien is $5,000.00." Following that valuation, FMCC indicated its acceptance of the Plan and stated, "We request interest at the A.P.R. rate of 14%."
A motion to allow claims was filed by the Chapter 13 Trustee on April 3, 1986. Therein, FMCC was listed as having a secured claim in the amount of $5,426.08. Thereafter, this Court granted the Trustee's oral motion for a hearing to examine the Plan's feasibility, and the instant matter ensued.
Presently, the Debtors seek to value the collateral (Ford Escort) to determine the extent of FMCC's secured interest under § 506(a). The precipitating event for this motion was the Trustee's motion to allow claims which was filed post-confirmation. Such motion to allow claims included the claim of FMCC and required all interested parties to file written objections, if any, within thirty days following court approval. No written objections were filed within the aforesaid time period.
Among its several contentions, the Debtors state (Supporting Brief at p. 2) that they learned "The claim of FMCC for contract interest at 14% was first brought to their attention by the Order allowing the Trustee's oral Motion for Re-examination of the feasibility of Debtors' Plan." Such contention is not supported by the record. The docket clearly indicates that this Court entered an order regarding a feasibility hearing on April 7, 1986. The proof of claim of FMCC, setting forth its claim of $5,426.08 and requesting interest at 14%, was filed on October 10, 1985, approximately eight months prior to this Court allowing a feasibility hearing. Contrary to the Debtors' intimation that FMCC's proof of claim had to be "provided" to them, such belief is incongruous with the requirements of Rules 3002(b) and 5005, Bank. Rules. Further, Rule 3001(f) expressly provides, "a proof of claim executed and filed in accordance with these rules shall constitute prima facie evidence of the validity and amount of the claim."
Although the Debtors cite multiple issues for the Court's resolution herein, the dispositive and principal issue is when should valuation occur in the overall scheme of a Chapter 13 case. Of significant interest, the Debtors have asserted equivocal positions in this regard (Debtors' Brief at pp. 3-4). At one point, the Debtors contend "the proper date to fix for the valuation of the collateral is the confirmation date of the Plan." However, they later state that they "may move for the valuation of security when the question arises," while averring that there exists no time limitation on...
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