John Michael Plevyak
In hоpefully the last chapter of the long battle between an employer and a former employee that has spanned over a decade in State Court and this Court, the matter now before the Court is confirmation of John Michael Plevyak‘s (“Debtor“) Third Amended Chapter 13 Plan and the Objection to Confirmation of the Plan filed by Solar Innovations, Inc. (“Solar“). For the reasons stated below, the Objection is sustained, and confirmation of the Plan is denied.
I. PROCEDURAL AND FACTUAL HISTORY
The Debtor‘s extensive prior history of bankruptcy filings and litigation with Solar, his former employer, is set forth in detail in this Court‘s Opinion dated March 8, 2023 (“2023 Opinion“) entered in the Debtor‘s prior 2016 bankruptcy case, which is incorporated herein. See In re Plevyak, 2023 WL 2413624 (Bankr. M.D. Pa. 2023).1 In the 2023 Opinion, the Court denied the Debtor a discharge under
In September 2023, Solar garnished the Debtor‘s bank accounts at First Columbia and M&T Bank. Doc. 3, Line 10. Because of this garnishment, Debtor filed the above-captioned Chapter 13 bankruptcy case, his 4th bankruptcy case, on October 6, 2023.3 Shortly thereafter, the Debtor moved to extend the automatic stay pursuant to
Solar is the only creditor that filed a Proof of Claim in this case. Solar‘s Claim is in the amount of $1,182,361.31 and is based upon a judgment entered against the Debtor on March 8, 2015 in State Court litigation between the parties. See Claim # 1-1.
On October 17, 2023, the Debtor filed his Chapter 13 Plan. Doc. 14. Solar and the Trustee objected to the Plan. Doc. 40, 41. The Debtor filed a First Amended Plan on February 15, 2024. Doc. 44. After a second round of objections by Solar and the Chapter 13 Trustee, Debtor filed a Second Amended Plan on April 18, 2024. Doc. 48. On May 3, 2024, Solar filed an Objection and an Amended Objection to the Plan. Doc. 50, 51. The Trustee did not object.
On June 20, 2024, the Court held an evidentiary hearing on the Plan and Solar‘s Objection.4 The Debtor testified at the hearing and exhibits were admitted into evidence. After the hearing, the Court held a status conference and requested Solar to supplement the record regarding the Debtor‘s financial transactions identified in certain financial records previously admitted into the
By Order and Memorandum dated September 6, 2024 the Court denied Confirmation of the Sеcond Amended Plan, which provided for payments totaling $78,700 over a live (5) year period. Doc. 61, 62. The Court found that the Plan was not confirmable under the Bankruptcy Code because Debtor acknowledged that he is a “below median income debtor” and, as such, is limited to a commitment period of three (3) years pursuant to
On September 20, 2024, the Debtor filed his Third Amended Chapter 13 Plan (“Plan“). Doc. 63. This Plan provides for the same total payment of $78,700, but now over a three (3) year period. A lump sum payment of $43,000 was to be paid upon confirmation and a $17,425 lump sum payment at the end of the Plan term in 2026.
Solar filed an Objection to the Plan on Octоber 10, 2024 (“Objection“). Doc. 64. The Trustee did not object, indicating that this is a two (2) party dispute and the Trustee is not taking a position. Counsel for the parties presented argument and it was agreed that the testimony and documents admitted at the June 20, 2024 hearing would be admissible for this Plan and Objection. This matter is now ripe for disposition.
II. JURISDICTION
This Court has jurisdiction over this matter pursuant to
III. LEGAL STANDARDS
Confirmation of a Chapter 13 Plan
To achieve confirmation, the court must find that the chapter 13 plan: was proposed in good faith; complies with the Code; is feasible; and provides certain baseline treatment for secured and unsecured creditors. Additionally, the Debtor must: have commenced the case in good faith, have paid any outstanding filing fees, have filed all tax returns required by section 1308; and be current on any postpetition domestic support obligations.
In re Roebuck, 618 B.R. 730, 732 (Bankr. W.D. Pa. 2020) (footnotes omitted).
A party objecting to confirmation of the plan bears the initial burden to come forward with evidence in support of the objection. In re Lafferty, 2019 WL 10431875, at *3 (Bankr. M.D. Pa. 2019); In re Plevyak, 599 B.R. 786, 788 (Bankr. M.D. Pa. 2019).6 If that burden is met, then the burden shifts to the debtor. As the proponent of the plan, the debtor holds the ultimate burden of proof based upon a preponderance of the evidence to establish that the plan meets all of the
IV. DISCUSSION
Solar‘s objections to the Plan are based upon
§1322(a)(1) - The Debtor has not submitted all his disposable income to the Trustee as required.§1325(a)(4) - The value of the property to be distributed under the Debtor‘s Plan to his creditors is less than the amount that would be paid if the estate were liquidated under a Chapter 7 case.§1325(a)(3) and(7) - Because the Debtor failed to account for his prior financial misrepresentations and omissions and filed this cаse “just months after he was denied a discharge“, the Plan and the Petition in this case were filed in bad faith.
A. Debtor‘s Plan
As set forth above, the Debtor‘s Second Amended Plan, Doc. 48, improperly attempted to spread his plan payments over a five (5) year period. The Plan before the Court now provides for the same total payments to the Trustee totaling $78,700 but over a three (3) year period. The only unique items in the Plan are that Debtor proposes a lump sum payment of $43,000 upon confirmation and another lump sum payment of $17,425 on November 1, 2026. Otherwise, the Plan contemplates smaller monthly payments throughout the Plan term.7 The $43,000 payment will be made from funds Debtor liquidated from his 401(k)-retirement account pre-petition that were garnished by Solar in September 2023. See Doc. 63, p. 13. The Plan also indicates that the Debtor will liquidate additional funds from his retirement accounts to fund the final $17,425 payment in 2026. Id. at pp. 3, 14. There is nothing in the record that would indicate why the Debtor could not make this payment sooner.
The Plan also attaches a Liquidation Analysis that indicates a liquidation value of the bankruptcy estate of $78,327.11. This Analysis, prepared by Debtor, identifies the assets
As the monthly paymеnts under the Plan are to be funded by Debtor‘s income, the Court must also review the Schedules filed by Debtor. On Schedule I: Your Income, Debtor lists $2,429 of social security benefits and $11.08 of “Music Royalties” as his monthly income. Doc. 2. Schedule J: Your Expense, Debtor lists $1,411.00 in total monthly expenses. Accordingly, Debtor‘s net monthly income is $1,029.08, which should presumably be available for payment to creditors.8
B. Solar‘s Objections
1. §1322(a)(1) Objection
Here, Solar has the initial burden to provide evidence that the Debtor has not submitted all of his income to the funding under the Plan. The only income identified at the hearing is $2,429 per month of social security income and approximately $200 per year in music royalties. Although Solar argues that the Debtor did not meet his obligations under
2. §1325(a)(4) Objection
Solar also objects to the Plan under
the value, as of the effective date of the plan, of property to be distributed under the plan on account of each allowed unsecured claim is not less than the amount that would be paid on such claim if the estate of the debtor were liquidated under chapter 7 of this title on such date;
This provision is often referred to as the “best interests of creditors” or “liquidation alternative test.” In re McKinney, 507 B.R. 534, 540 (Bankr. W.D. Pa. 2014). This test requires that unsecured creditors will be paid, at a minimum, the amount they would be paid if the case were a hypothetical Chapter 7 liquidation case. Hackerman v. Demeza, 576 B.R. 472, 481-82 (M.D. Pa. 2017); In re Cumba, 505 B.R. 110, 114-15 (Bankr. D.P.R. 2014).
Interestingly, in Debtor‘s 2016 bankruptcy case, retired Judge Robert N. Opel found that the Debtor‘s Fifth Amended Plan did not satisfy the best interests of creditors test under
Solar now claims that Debtor has not provided for Plan funding that would satisfy the “liquidation test.” Solar assеrts, inter alia, that the Plan fails to account for funds that were escrowed with Debtor‘s counsel in 2018 as well as funds that were withdrawn and/or that remain unaccounted for prior to the filing of the Petition. See Debtor‘s Objection, Doc. 64 at ¶¶ 5-14. At the hearing on this matter, Solar was able to identify significant funds in “cash” being deposited into Debtor‘s accounts and withdrawals of “cash” from his accounts. See Tr. at 25-34.10 Debtor testified that the source of a large deposit of cash was from a friend living out of state but had no documentation to prove any type of loan transaction. This is similar testimony from the Debtor that was found not credible in his 2016 case. For the same reasons as set forth in the 2023 Opinion, the Court again finds Mr. Plevyak to be not credible as to his assets. The Court also finds that the Debtor has not met his burden to show by a preponderance of the evidence this case was filed in good faith to meet the “liquidation test.” Accordingly, Solar‘s Objection under
Solar‘s primary Objections to the Plan relate to Debtor‘s good faith or, more accurately, his bad faith. Particularly relevant here are Solar‘s Objections under (i)
The Bankruptcy Code does not define good faith, and the Third Circuit has not articulated standards specifically for determining good faith for purposes of plan confirmation. The Court in In re Tamecki, 229 F.3d 205, 207 (3d Cir. 2000) found that:
Courts can determine good faith only on an ad hoc basis and must decide whether the petitioner has abused the provisions, purpose, or spirit of bankruptcy law. See Marks, 174 B.R. at 40. The parties agree that the decision to dismiss a petition for lack of good faith rests within the sound discretion of the bankruptcy court. See Zick, 931 F.2d at 1126, In re Atlas Supply Corp., 857 F.2d 1061, 1063 (5th Cir.1988).
Courts employ varying tests with respect to determining good faith under
the nature of the debt ...; the timing of the petition; how the debt arose; the debtor‘s motive in filing the petition; how the debtor‘s actions affected creditors; the debtor‘s treatment of creditors both before and after the pеtition was filed; and whether the debtor has been forthcoming with the bankruptcy court and the creditors.
In re Lilley, 91 F.3d 491, 496 (3d Cir. 1996) (quoting In re Love, 957 F.2d 1350, 1357 (7th Cir. 1992)). The Court must now apply these standards to the facts of this Chapter 13 case.
a. §1325(a)(3) - Has the plan been proposed in good faith?
To confirm a Chapter 13 plan,
- stated his or her debts and expenses accurately;
- made any fraudulent misrepresentation to mislead the bankruptcy court; or
- unfairly manipulated the Bankruptcy Code.
Soppick at 750-51 (quoting In re Norwood, 178 B.R. 683, 688 (Bankr.E.D.Pa.1995)).
The Seventh Circuit Court of Appeals, in discussing the good faith requirement found that:
one of the primary purposes of the good faith evaluation in both contexts is to “force [] the bankruptcy court to examine ‘whether or not under the circumstances of the case there has been an abuse of the provisions, purpose, or spirit of [the Chapter] ....’ ” See id. [Matter of Smith, 848 F.2d] at 818 (quoting Rimgale, 669 F.2d at 431). At base, this inquiry often comes down to a question of whether the filing is fundamentally fair. See Schaitz, 913 F.2d at 453 (“the most fundamental and encompassing [factor when evaluating good faith] is whether the debtor has dealt fairly with his creditors.“) In other words, the focus of the good faith inquiry under both Section 1307 and Section 1325 is often whether the filing is fundamentally fair to creditors and, more generally, is the filing fundamentally fair in a manner that complies with the spirit of the Bankruptcy Code‘s provisions.
Matter of Love, 957 F.2d 1350, 1357 (7th Cir.1992) (quoted in Soppick at 751).
Unfortunately for Debtor, this Court has thoroughly analyzed the Debtor‘s conduct as set forth in its 2023 Opinion.12 This conduct spans a period of approximately thirteen (13) years and relates solely to Debtor‘s interactions with Solar - which is the sole creditor in this case. Although the Court will discuss Debtor‘s pre-petition misconduct more fully in connection with the analysis under
In this case, and similar to Debtor‘s conduct in his prior cases, Debtor has thus far filed four (4) plans - an original and three (3) amended plans. The original plan contemplated monthly payments of $450 over five (5) years, plus a lump sum payment of $43,000 upon confirmation for a total of $70,000. Doc. 14. The First Amended Plan, Doc. 44, filed after Objections by Solar and the Trustee were sustained, increased the total payments to $78,400 based upon an increased liquidation analysis by Debtor. The Second Amended Plan, Doc. 48, filed after Objections by Solar
After an evidentiary hearing on June 20, 2024, the Court denied confirmation of the Second Amended Plan because the Debtor attempted to improperly pay Solar over a five (5) year term. Doc. 62. In its Memorandum dated September 6, 2024, Doc. 61, the Court found that pursuant to
Next, Debtor filed the Third Amended Chapter 13 Plan (“Plan“), which provides for the same total payment of $78,700, but now over a three (3) year period. Debtor proposed lump sum payments of $43,000 to be paid upon confirmation and $17,425 at the end of the Plan term in 2026. The $43,000 payment was to be made from funds that were garnished pre-petition by Solar in September 2023. See Doc. 3, at 3. Solar filed its Objection, Doc. 64, and the Court held a hearing on November 14, 2024.13
After delaying and frustrating Solar for over a decade, Debtor‘s proposal to pay $17,425 over three (3) years after the filing is not in good faith. More problematic is Debtor‘s failed attempt to pay Solar over a five (5) year term when the Bankruptcy Code clearly limits the term to three (3) years. This improper attempt to delay payments to Solar and manipulate the Bankruptcy Code, without a legal basis, is in bad faith.
Accordingly, I find that the Plan was not proposed in good faith.
b. §1325(a)(7) - Has the Petition been filed in good faith?
The Court must determine if the debtor has abused the provisions, purpose, or spirit of bankruptcy law. In re Tamecki, 229 F.3d 205, 207 (3d Cir. 2000). Once again, the Court turns to a “totality of the circumstances” analysis and consideration of the Lilley factors.
i. The Nature of the Debt and How the Debt Arose
Here, the Court must determine whether the debt to Solar resulted from bad acts or intentions of the Debtor. In re Manfredi, 434 B.R. 356, 359 (Bankr. M.D. Pa. 2010)(citing In re Myers, 491 F.3d 120, 126 (3d Cir.2007) (debt arose from an adverse judgment of a fraudulent conveyance); In re Jensen, 369 B.R. 210, 235 (Bankr. E.D. Pa. 2007). The nature of Solar‘s debt relates to Debtor‘s separation from his employment with Solar in 2011. The facts relating to Debtor‘s conduct are set fоrth in exhaustive detail in the 2023 Opinion. If Debtor had merely resigned from his employment - there would be no issue. However, prior to leaving Solar, Debtor embarked on a program of intentionally deleting his work product and other information from Plaintiff‘s computer system, while conspiring with a competitor for a new job, and committing other acts in violation of his employment agreement and a confidentiality agreement. 2023 Opinion at *1. Based on this conduct, Plaintiff sued Debtor and obtained a judgment against him
ii. Timing in the Filing of the Petition
Next, the Court must determine if the timing of the Debtor‘s Petition was in bad faith. Generally, bad faith exists “where the purpose of the bankruptcy filing is to defeat state court litigation without a reorganization purpose.” In re Myers, 491 F.3d at 125 (quoting In re Dami, 172 B.R. 6, 10 (Bankr. E.D. Pa. 1994)). This is the Debtor‘s fourth bankruptcy case. Each of the prior cases were also filed to thwart Solar‘s efforts against him. See Nos. 13-bk-03907-JJT; 13-bk-05500-JJT; and 16-bk-00158-MJC. Further, each of these cases have dockets that are littered with motions to dismiss, multiple amended plans, and adversary actions objecting to discharge. In each of these cases Debtor was unable to obtain a discharge or confirm a plan and the only material creditor was Solar.
Here, the Petition was filed only two (2) weeks after Debtor‘s 2016 case closed. It is not disputed that Debtor filed his Petition only after Solar, in attempting to collect upon its 2016 State Court judgment in the amount of $1,182,361.31, garnished his bank accounts holding over $46,000 in September 2023.16 The Court finds that the timing of this bankruptcy filing was another tactic to delay Solar from pursuing its State Court judgment with no good faith reorganization effort. Accordingly, the timing of this Petition supports a finding of bad faith.
Debtor‘s motive dovetails with the timing of the filing of the Petition. It would appear that Debtor would never have filed his Petition but for Solar‘s State Court garnishment. There was no testimony from Debtor that the garnished funds were to be paid to Solar and the Debtor provided no evidence or testimony of a rationale for filing other than to frustrate Solar‘s collection efforts.17 Accordingly, the Debtor‘s motive in filing this Petition supports a finding of bad faith.
iv. How the Debtor‘s Actions Affected Creditors
Here, the Court must determine whether the filing is fundamentally fair to creditors and in a manner that complies with the spirit of the Code. In re Hurlbutt, 2021 WL 6101682, *6 (Bankr. M.D. Pa. 2021). In this case, Solar is the sole creditor. Upon review of this case docket as well as the three (3) prior bankruptcy cases filed by Debtor in this Court, the Court finds that Debtor‘s actions do not comply with the spirit of the Code. As set forth in the Court‘s 2023 Opinion, the history of this case spans over a decade. Since the Debtor left Solar‘s employ, he has filed numerous bankruptcy cases, which were either dismissed or closed with a denial of discharge, and has continually frustrated Solar‘s efforts to collect on its State Court judgment. Solar has been forced to incur significant legal fees and costs in pursuing Debtor. The instant case was filed only after Solar‘s State Court garnishment and not because of any meaningful intention to reorganize by the Debtor. Accordingly, Debtor‘s actions have injured Solar, his only creditor, and supports a finding of bad faith.
v. The Debtor‘s Treatment of Creditors Both Before and Aftеr the Petition was Filed
In considering this factor, my colleague Chief Judge Van Eck found:
The Court next examines whether the Debtor took actions to frustrate creditors rather than to reorganize and treat creditors fairly. In re Manfredi, 434 B.R. at 361. Actions meeting this factor may include the dissipation, concealment, or other transfer of assets for the purpose of placing them beyond the reach of creditors, see In re Myers, 491 F.3d at 126; In re Kerschner, 246 B.R. at 498--499, or filing multiple bankruptcy petitions for the sole purpose of frustrating a creditor‘s efforts to exercise its state law remedy. In re LeGree, 285 B.R. 615, 619 (Bankr. E.D. Pa. 2002).
Here, Debtor has done all of the above. As set forth in the 2023 Opinion and above in this Opinion, Debtоr has clearly frustrated Solar with no good faith intention to reorganize or pay Solar. He has concealed assets and filed multiple bankruptcy cases “for the sole purpose of frustrating a creditor‘s efforts to exercise its state law remedy.” In this case, Debtor has proposed a plan that improperly delayed payment to Solar for two (2) years and the Court, again, finds Debtor not credible.
Accordingly, Debtor‘s treatment of Solar, his only creditor, supports a finding of bad faith.
vi. Whether the Debtor was forthcoming with the Bankruptcy Court and Creditors
The last Lilley factor requires a determination of whether the Debtor has been forthcoming with the Court and creditors. The overriding purpose of the Bankruptcy Code is to permit honest debtors to reorder their financial affairs with their creditors and obtain a “fresh start,” free from the weight of oppressive, preexisting debt. In re Cohn, 54 F.3d 1108, 1113 (3d Cir. 1995). “But in the same breath that we have invoked this ‘fresh start’ policy, we have been careful to explain that the Act limits the opportunity for a completely unencumbered new beginning to the ‘honest but unfortunate debtor.’ ” Grogan v. Garner, 498 U.S. 279, 286-287 (1991) (quoting Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934)). Obtaining a discharge in bankruptcy is a privilege, not a right, and is thus reserved to honest debtors who deal fairly with the Court and their creditors.
In the 2023 Opinion, the Court found that the Debtor was not an “honest but unfortunate debtor.” 2023 Opinion at *15. In denying Debtor a discharge, the Court made specific findings thаt Debtor:
- Engaged in a ten (10) year pattern of concealing substantial assets from Solar and the Court. Id. at * 8.
- Failed to keep financial records and dissipated, hid or concealed from his creditors and the Court substantially all of his money and then, after his third bankruptcy filing, intentionally concealed his receipt of additional assets. Id. at * 10-11.
- Knowingly and fraudulently made (i) a false oath or account and (ii) received money without disclosure. Id. at * 12.
- Failed to explain the withdrawal of over $250,000 prior to his first bankruptcy case. Id. at * 13.
Debtor has failed to change these findings. Given Debtor‘s lack of credibility before this Court spanning over the last decade, it is impossible to find that Debtor fully and honestly disclosed all of the required information.18 Debtor has not met his burden of proof based upon a preponderance of the evidence to establish that the plan meets all of the
As the Debtor has not met any of the Lilley factors, I find that the Debtor‘s Petition was not filed in good faith under
Once a lack of good faith is found, the Court must determine the remedy. The determination of a lack of good faith under
In what is essentially a two (2) party dispute between Debtor and Solar, Debtor, in what is now his fourth bankruptcy case, has employed every means available to delay and frustrate Solar‘s efforts to collect on the State Court Judgment.19 Based upon the clear record of a lack of good
V. CONCLUSION
I concluded the 2023 Opinion by stating:
A bankruptcy judge should always strive to permit an honest but unfortunate debtor a fair opportunity to reorganize and to obtain a discharge of his or her personal obligations. After three (3) separate bankruptcy cases, at least three (3) separate adversary actions, seven (7) proposed Plans that all failed while the case was in Chapter 13, failure to account for over $250,000 in cash withdrawn from his accounts prior to the filing of his first case and material misrepresentations and omissions disсovered in his bankruptcy papers, this Court finds that Debtor is not an honest but unfortunate debtor.
2023 Opinion at *15. Now, after the 2023 determination that the Solar debt was not dischargeable and yet another Bankruptcy filing by Debtor, this Court concludes, again, that Debtor is not an honest but unfortunate debtor. The Court finds that Debtor has not met his burden to show that he filed his case or proposed his Chapter 13 plan in good faith. Accordingly, confirmation is denied. Further, dismissal with prejudice is appropriate, and Debtor shall not be permitted to file a bankruptcy petition for a period of two (2) years.
An appropriate order shall be entered.
By the Court,
Mark J. Conway, Bankruptcy Judge
Dated: September 25, 2025