558 B.R. 743
Bankr. E.D. Pa.2016Background
- Debtor John N. Irwin filed an individual Chapter 11 petition on May 27, 2010 and confirmed a liquidating Chapter 11 plan (Second Amended Plan) on January 12, 2012; the Plan became effective January 27, 2012.
- The Plan appoints a liquidating agent to collect and distribute “Assets” (a defined term tied to Schedules A & B) and other sources to pay creditors.
- Debtor owned interests in two entities (DPEI and DPEI II) listed on Schedule B and not claimed as exempt; those interests were surrendered to the liquidating agent.
- The entities made distributions to the Debtor: some in 2011 (pre-confirmation, totaling $22,198) and some in 2012 (post-confirmation). Debtor turned over the post-confirmation funds; dispute concerns the 2011 pre-confirmation distributions.
- Liquidating agent moved to compel turnover of the 2011 distributions under the Plan; Debtor contends the Plan required only surrender of ownership interests as of the Effective Date and not pre-confirmation income he spent.
Issues
| Issue | Liquidating Agent's Argument | Debtor's Argument | Held |
|---|---|---|---|
| Whether pre-confirmation, post-petition distributions from nonexempt entities are "Assets" under the Plan and must be turned over | The Plan's definition of “Assets” includes all right, title and interest in nonexempt property listed on schedules, which should include distributions generated after petition but before confirmation | “Assets” means property existing as of the Effective Date; pre-confirmation distributions constitute income expended pre-Effective Date and are not collectible unless retained/traceable on the Effective Date | Plan ambiguous; construed to include such distributions if they existed and were traceable/retained on the Effective Date, but liquidating agent failed to prove the 2011 distributions remained as of the Effective Date, so turnover denied |
Key Cases Cited
- In re Shenango Group, 501 F.3d 338 (3d Cir. 2007) (confirmed plan interpretation governed by contract principles)
- Bohler-Uddeholm Am., Inc. v. Ellwood Group, 247 F.3d 79 (3d Cir. 2001) (contract terms unambiguous on their face are interpreted from the writing alone)
- Travelers Indem. Co. v. Bailey, 557 U.S. 137 (U.S. 2009) (plain terms of court orders are to be given effect)
- In re Resorts Int'l, Inc., 372 F.3d 154 (3d Cir. 2004) (bankruptcy court has jurisdiction to interpret confirmed plan)