497 B.R. 652
Bankr. D. Mass.2013Background
- Debtor Starr Harris seeks preliminary injunctive relief to reinstate the automatic stay and reconvert her Chapter 7 case to Chapter 13 to fund a plan under 11 U.S.C. § 1325(a)(5).
- Defendants Just-A-Start Corp. (JASC), Boston Private Bank & Trust Co., and City of Cambridge object to reinstitution of stay and reconversion.
- Harris previously filed multiple Chapter 13 cases involving the Property at 20 Upton Street, Cambridge, MA, with unresolved pre- and postpetition claims and various relief-from-stay orders.
- The Court has previously denied an emergency motion to re-convert and reinstate stay but allowed supplemental proceedings and an evidentiary hearing on August 1, 2013.
- The adversary proceeding and motions were continued to determine feasibility and likelihood of confirmation for a feasible Chapter 13 plan, considering substantial outstanding mortgage, tax, and condominium debts and past payment history.
- The Court ultimately denied the motion for a preliminary injunction, finding lack of feasibility and good faith, and declined reconversion and stay reinstatement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether reconversion to Chapter 13 and stay reinstatement are warranted | Harris argues she can confirm a feasible Chapter 13 plan and cure/arbitrate arrears | Bankruptcy lenders contend Harris cannot show feasibility or good faith given past defaults | Not warranted; reconversion and stay reinstatement denied |
| Whether Harris can demonstrate feasibility under §1325(a)(6) | Harris asserts sufficient income and plan structure to fund payments | Defendants contend income is unreliable and expenses unrealistically lean; plan unlikely to succeed | Feasibility not satisfied; plan not feasible under present projections |
| Whether Harris can satisfy §1325(a)(5) to treat secured, priority and unsecured creditors | Harris proposes to pay creditors under modified terms; seeks to protect her residence | Creditors oppose modification and claim amounts, including attorney fees, render plan unconfirmable | Plan not feasible; failure to satisfy §1325(a)(5) and lack of confirmation likelihood; injunction denied |
Key Cases Cited
- In re Noll, 491 B.R. 550 (Bankr.E.D.Wis. 2013) (reconversion may be appropriate under abuse means testing for reconversion)
- In re Povah, 455 B.R. 328 (Bankr.D.Mass. 2011) (courts may permit reconversion under appropriate circumstances; merit and feasibility required)
- In re Fantasia, 211 B.R. 420 (Bankr.1st Cir. BAP 1997) (feasibility requires present and future resources to meet plan payments)
- In re Hobbs, 2012 WL 1681981 (Bankr.C.D. Cal. 2012) (chapter 13 process often fails; feasibility depends on realistic budget (cited in discussion))
- In re Miraj and Sons, Inc., 201 B.R. 23 (Bankr.D.Mass. 1996) (preliminary injunctive standards and balancing interests in insolvency context)
- Eastern Savs. Bank v. LaFata, 483 F.3d 13 (1st Cir. 2007) (clarifies standards for likelihood of success and feasibility in Chapter 13)
- In re Burrell, 346 B.R. 561 (1st Cir. BAP 2006) (tax and sewer/water claims not automatically discharged; evidences consideration of creditor rights)