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