477 B.R. 807
Bankr. D. Kan.2012Background
- Couchman filed chapter 12 in 2007; plan confirmed December 2, 2008.
- Bank held two claims: personal property and real estate, with specified annual payment schedules.
- Couchman repeatedly defaulted or paid late on plan payments since 2008, including December 2009 and December 2010 defaults.
- A March 19, 2010 Conditional Order (drop-dead) conditioned relief from stay on timely cure within 30 days of written notice; no default was declared despite late payments.
- May 2011: Couchman sought to modify the plan to defer August 2011 real estate payment; Bank objected as it related to the Conditional Order.
- September 14, 2011: Couchman filed Amended Motion to modify extending August 2011 payment to December 2012 and December 2011 personal property payment to December 2012; Bank objected.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether post-confirmation plan modification extending payment terms is allowed | Couchman argues §1229 permits modification to extend payment time. | Bank contends modification would alter rights under the Conditional Order and is inappropriate. | Modification allowed; plan terms may be extended if feasible and compliant with §§1222 and 1225. |
| Effect of the Conditional Order's drop-dead clause on modification | Amended Motion does not undo the drop-dead provision and is not barred by it. | Drop-dead clause could preclude modification that defeats the stay-relief terms. | Conditional Order is not a plan and does not preclude modification; modification is not read as undoing the default. |
| Is the Amended Motion a valid modification under §1229(b)(2) and 1229(a)(2) | Amended Motion complies with plan content and confirmation requirements for a modified plan. | Modification would not be feasible or properly directed at plan terms. | Amended Motion granted; modification confirmed with respect to Bank's claim. |
| Does the Bank retain remedies under the Conditional Order if the modified plan fails | Modification should stand notwithstanding the Conditional Order terms. | Bank could still pursue stay-relief remedies under the Conditional Order if defaults occur. | Bank may invoke the Conditional Order if the debtor fails to make payments under the modified plan. |
Key Cases Cited
- In re Grogg Farms, Inc., 91 B.R. 482 (Bankr.N.D.Ind. 1988) (modification of plan vs. negotiated default provisions; default cures not always unforeseen)
- In re Gallagher, 332 B.R. 277 (Bankr. E.D. Pa. 2005) (feasibility of modified plan; plan modification denial for infeasible plan)
- In re Mader, 108 B.R. 643 (Bankr. D.N.D. 1989) (default provisions in a confirmed plan and modification considerations)
- In re Larson, 122 B.R. 417 (Bankr. D. Idaho 1991) (modification considerations in Chapter 12 context)