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In Re Ted Wiest & Sons Inc.
446 B.R. 441
Bankr. D. Mont.
2011
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Background

  • consolidated Chapter 12 estates were substantively consolidated under an order granting consolidation.
  • Trustee moved to modify the confirmed plan under 11 U.S.C. § 1229 to pay unsecured creditors in all three cases.
  • Plan and attached spreadsheets omitted payments to unsecured creditors in two cases despite consolidated treatment.
  • Plan paid only four unsecured creditors in the lead case; 16 unsecured claims in the other two cases were omitted.
  • Debtors argued the plan was binding under § 1227(a) and modification was unwarranted; Trustee argued modification permissible due to unforeseen circumstances.
  • Court held Trustee failed to show an unanticipated change in circumstances and denied the modification.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether the Trustee may modify the confirmed Plan under § 1229(a). Volk contends modification is authorized for unforeseen changes. Debtors argue no unanticipated change; plan already confirmed binds all parties. Modification denied; no unanticipated change shown.
Whether the confirmed Plan binds the Trustee under § 1227(a). Trustee argues plan omission can be treated as binding via res judicata and consent. Debtors assert plan’s terms bind the parties; trustee consent does not extend beyond plan. Plan binds Trustee under § 1227(a).
Whether omission of 16 unsecured creditors constitutes a change in circumstances justifying modification. Omission affects plan administration and warrants modification. Omission was evident in plan materials; no unforeseen difficulty proven. No unanticipated change; modification not warranted.
Whether substantive consolidation requires paying all unsecured claims in all cases. All unsecured creditors should be treated as allowed claims post-consolidation. Cross-collateralization and consolidation do not mandate payment to all unsecureds absent objection to plan. Issue not reached; modification denied on other grounds.

Key Cases Cited

  • Arkison v. Plata, 958 F.2d 918 (9th Cir. 1992) (trustee bound by confirmed plan terms in certain contexts)
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Case Details

Case Name: In Re Ted Wiest & Sons Inc.
Court Name: United States Bankruptcy Court, D. Montana
Date Published: Feb 18, 2011
Citation: 446 B.R. 441
Docket Number: 19-60256
Court Abbreviation: Bankr. D. Mont.