*3 KLEIN, JURY, Before PAPPAS and Judges. Bankruptcy OPINION *4 KLEIN, Bankruptcy Judge. appellant sold his Arizona home- in filing stead before case the proceeds exempt, which he claimed as but then did not reinvest in new them a re- eighteen homestead within months 33-1101(C). quired by Ariz.Rev.Stat. Instead, proceeds he lost the in mar- stock per- ket trades made without the trustee’s mission and without abandonment of in estate’s interest the fund. The bank- ruptcy court ordered turnover $144,816.96to tempo- the trustee after the rary expired, ruling that privileged manage debtor was proceeds homestead sale tem- during the porary exemption in- period in a manner consistent purposes White, the Arizona statute. In re B.R. (Bankr.D.Ariz.2007). agree We and AFFIRM.
FACTS The facts summarized here more fully set forth the bankruptcy court’s White, published opinion. at 635-40. 31, 2005, August appellant
On Damian White his Arizona sold residence and re- $165,095.98 in ceived net $150,000 protected was Ari- by the exemption. zona homestead When he filed his on 7, 2005, October White had nei- that the debtor The court concluded in a to homestead traceable intended, to use home- nor account, attempted, ther account, brokerage savings manner consistent stead investments. miscellaneous exemptions. protecting purpose with the listed his B, On Schedule the debtor’s it disbelieved Significantly, as account balances brokerage savings and (“created out of testimony testimony and de- $125,000,respectively, $22,000 and seriously credible cloth”—“not whole as, “Exempt proceeds each scribed 640) misleading” White,— of homestead.” the sale a new homestead. to obtain he was unable C, claimed the debtor Schedule On be- stipulation there was Although $147,000 in homestead $23,000 and trustee tween $150,000 exemp- exempt pursuant during sev- living expenses” used “for § 33- provided tion Aeiz.Rev.Stat. noted that en which, 1101(A), by operation Amz.Rev. he no recollection had debtor testified 33-1101(0, remain Stat. *5 for his resi- pay rent funds to using the 2007, 28, eighteen February until that was no evidence that there dence and in a If not reinvested initial sale. after the for shelter expended the funds were then, pro- the residence new homestead hence, expenses; the other critical status. exempt lose their ceeds any of to conclude that declined specifically to the claim objection no There for a shelter “provide went proceeds the exemption. White, B.R. at 377 647. family.” his his sav- initially froze bank The debtor’s grant- briefing, the court post-trial After permis- it with but released ings account compel turnover motion ed the trustee’s the trustee, not know who did the sion of proceeds sale in homestead for non- to use funds intended debtor September issued decision published in its exempt purposes. there was 28, It concluded 2007. in a new did not reinvest The debtor objected to have trustee for the need 28, 2007, February when homestead in the homestead exemption claim of expired. temporary 18-month and since proceeds sale motion for thereupon filed a The trustee estate proceeds, never abandoned proceeds of the homestead turnover contingent, reversion- have a continued 542(a), § which led to 11 pursuant U.S.C. for in the homestead ary interest 27, 2007. evidentiary hearing on June to an the sale. period 18-month evidence, con- in Account records that Arizona possibilities Admitting the testimony, revealed by the firmed debtor’s might permit law homestead using investments postpetition pre- and pur- to another to be redirected and “call” including “put” benign intent and that pose 12 ranging rate trading, at option it exemption, imperiled might rescue month. per to 302 transactions be- applied possibility that neither ruled home- “squandered” this debtor $144,816.96 in cause All but $165.91 “diametrically in a manner in stead dissipated proceeds was homestead purpose $23,000 sup- opposed” to losses, for except investment a new to reinvest any intent $9,000 negated living expenses, used posedly exempt property. inor other his vehi- interest the estate’s purchase Thus, trus- White, at 647-48. 377 B.R. cle, $5,000 family gift. tee’s granted turnover motion was Henry Mayo Newhall Hosp.), Mem’l $144,816.96. (9th sum 444, 2002). BAP Cir. filing timely After notice of appeal, the statutory The terms of exemptions, in having the succeeded case con- estate, whether is property of the Hence, verted to procedures recovering property trustee, Brown, Russell is the substitut- are questions estate of law reviewed de appellee. ed plan The debtor’s (In novo. Ford v. re Konnoff), Konnoff contemplates is on file (9th 356 B.R. 2006); BAP Cir. paid amount plan under the will depend on (In Litton Serv’g, Loan LP v. Garvida re appeal, the outcome of this the existence of Garvida), (9th 347 B.R. Cir. BAP appeal is expressly noted. 2006); Gaughan Smith), v. Smith 2006). Cir. BAP
JURISDICTION Subject-matter jurisdiction was founded DISCUSSION on 28 U.S.C. 1334 over this pro- core The bankruptcy status of the Arizona ceeding 157(b)(2)(E). under 28 U.S.C. 18-month pro- homestead sale jurisdiction We have per 28 U.S.C. ceeds exemption a festering sore. We 158(a)(1). 33-1101(0 wrestle with Aeiz.Rev.Stat. for the third time in years. two Our ISSUES Smith and decisions validated the Konnoff *6 (1) subsequent Whether the conversion estate’s interest such embol- of the case chapter chapter to trustees, dened and prompted two bank- appeal. moots this ruptcy published opinions. Before (2) Whether Arizona law restricts the tending sore, however, we explain use of why appeal has not been mooted or period their of temporary exemption. abated conversion to 13. chapter (3) must, Whether a debtor when the I exemption period ex-
pires, account to the trustee for postpeti- possibility of mootness or tion loss of homestead as abatement arises because the chapter 7 property of the estate. trustee who obtained the turnover order against the debtor upon ceased to serve
(4) Whether the trustee must have ob- to chapter conversion whereupon the jected to the claim of exemption before possession debtor took of property of the requesting turnover of net homestead sale 1306(b). § estate. 11 U.S.C. If the debt- proceeds after Arizona’s 18-month tempo- $144,816.96 or turn must over himself, to rary exemption expires. question is whether anything remains dispute. of the STANDARD OF REVIEW juris mootness Abatement The answer lies in the nature of turn- questions dictional that we sua raise over of consequence of the order sponte and determine de novo. Searles v. for purposes of chapter plan confirma- (In Riley Searles), re reversed, 373 tion. Unless the turnover order 2004), Cir. BAP aff'd, 212 Fed.Appx. $144,816.96 establishes that nonexempt is (9th Cir.2006); Comm. v. property estate, Hen of the key which is a Official ry Mayo Hosp. Newhall Mem’l factor in determining minimum amount order, necessarily of a turnover element into the paid must be ruling, is every turnover decided plan. value. 11 lease, erty that deliver prosecuted ceeding to Bankr.P. adversary proceeding adversary proceeding solving has the status of a Civil corporated Hence, Turnover 542(a), possession, outcome, however, Procedure “judgment” under or As a contested matter that the debtor to the trustee 7001(1) the trustee U.S.C. the trustee a matter of as a contested order to turn compel is custody, or of a generally governed Fed. & 9014. money judgment. 542(a).1 and, instead, because Fed.R.Civ.P. such R. is the procedure, requires Federal need matter. Fed. may exempt, control over Bankr.P. 9021. by 11 U.S.C. property has the status The status use, sell, or same as $144,816.96 not be order of prop- persons Rule bemay deliver 58, in pro re its an an R. of $144,816.96 subsumed unless under the unsecured estate. the estate amount the estate date.” that status $144,816.96 from the that amount quires chapter 7 No The status the estate. property chapter 7 of plan, “the that a 11 U.S.C. that would turn over plan on account liquidation of the debtor claim value, a determination includes quo quo nonexempt property because, property be turned Thus, stands, § plan as is that be $144,816.96 1325(a)(4). this title of on the effective paid on such debtor. So the order can be in a the effective right to be over is were the property plan less than 1325(a)(4) each [11] hypothetical necessarily distributed to recover pay confirmed liquidated property for the on such allowed long claim of up to date date re- if 542(a), available ques plan, terms of
theBy on the claims Unsecured ripen until did not distribution. of turnover tion $120,186.86. total register claims exempt the home longer court’s debtor could *7 the Accordingly, proceeds. stead sale ar- during oral Indeed, reported it was to to wait was entitled trustee chapter 7 the debtor’s confirmation that gument temporary ex the until demand turnover appeal. of this the turns on outcome plan expired. emption period in two to be plan is said proposed The to forms; up pays one alternative exemption pe Once less. $144,816.96, pays the other the homestead expired, riod 7 trus- chapter 542(a) is no though there § Even to trustee’s exposed became $144,816.96, turn over whom to tee to that request turnover to power determination underlying 11 the use, sell, or lease under can the trustee of the nonexempt property $144,816.96 is 363, in § terms of 368. Since U.S.C. both sides dispute, a live sell, is use, lease estate or turn, trustee permit are by adversaries who represented estate,” an essential only “property title, shall of this under section provision is: The turnover 1. actual for, trustee, such and account to the (c) deliver or (a) provided in subsection Except as un- property, of such section, properly or value entity, (d) other than this inconsequential val- custodian, properly is of custody, con- such possession, less case, trol, properly estate. or benefit ue sell, use, 542(a). under section may or lease trustee 11 U.S.C. title, may or that 363 of possessed standing of the $144,816.96, the incentive ing the required by the Bank- to litigate. ruptcy Code. Although we share the concern ex- While chapter trustee pressed in the dissent that it ordinarily is not be $144,816.96 entitled to enforce the inappropriate to appeals entertain regard-
turnover order
money
as a
judgment
ing plan confirmation
until after
issues
against the
chapter
debtor because the
13 bankruptcy court acts on plan confirma-
debtor has possession of property of the
tion, this
is
appeal
different.
It
signifi-
is
estate, the chapter 13 trustee has standing
cant that this appeal is from a final order
object
to confirmation of a plan that
entered after a fully-litigated trial in which
does not dedicate at
required
least
there necessarily was determined an em-
amount of nonexempt property of the es
question
bedded
$144,816.96 is
—whether
tate
to plan payments.
11 U.S.C. nonexempt property of the estate —that
1325(a)(4)
(5);
&
Andrews v. Loheit
incidentally
important
will be
to the struc-
Andrews),
49 F.3d
Cir.
ture of the plan that
proposed.
is
If one
1995); Searles,
Thus,
$150,000 identifiable that there should argument Rejecting “eighteen of the earlier until tinues Circuit the Ninth expenditures, for credit the sale of the date reverts is the amount also held that a new establishes person until the time of at the as the sum claimed the Since proceeds.”3 the homestead Its ratio- Golden, at 701. F.2d filing. homestead, a new not establish debtor did amounts credit denying nale was that February until survived exemption the pe- exemption temporary during the spent thereupon expired. of Califor- purpose riod “furthers preserve exemption nia argu- makes three debtor appeal, On home, in another for reinvestment the sale expira- consequences ments avoid for nonex- expenditures prevent First, he period. exemption tion of the Golden, at 701. 789 F.2d empt purposes.” restrict law does not Arizona argues that give homestead sale required use of the trustee Nor was exemption notice that period pre-expiration any 33-1101(C). Second, he by the trustee. be claimed proceeds would Aeiz.Rev.Stat. required to account is not Golden, he contends F.2d at 701. net homestead loss of postpetition prece- Smith, as treated Golden we In contends Finally, he proceeds. dealing with were though even we dent to his claim timely objection aof absence California, conclud- law. Arizona, We not the trustee deprived exemption temporary ex- 18-month Arizona’s ed that address We request turnover. ability to to Cali- sufficiently parallel emption was in turn. each issue that Golden exemption 6-month fornia’s Arizona for the answer the basic
supplied characterizing Hence, as well. A rever- “contingent, holding the estate inter controls Arizona law As matured when sionary interest” in the interstices one fills of how pretation home- without new expired statute, task of the Arizona denying the order stead, reversed an we how predict courts is for federal request. trustee’s turnover pre if rule Court would Supreme however, did appeal, The Smith in this law issue the Arizona sented with uses of permissible issue present appeal. *9 of the sale the date of eighteen after language statutory is: 3. The actual person establishes the property or until the exceeding exemption, not The homestead proceeds, which- the a new homestead [$150,000] in provided subsec- for the value Only homestead one per- period is shorter. A, automatically ever attaches to tion by a held proceeds be exemption at a time cash in identifiable son's interest involuntary of voluntary sale or person under this section. from the exemption in 33-1101(C). property. The homestead Ariz.Rev.Stat. for proceeds continues cash identifiable funds the exemption period. As bankruptcy Nevertheless, case. each con- the trustee sought only the balance re- currence conceded that our hands were maining expiration as of of exemption, by precedent. tied we made clear that we were deciding noth- B
ing regarding use
proceeds
under Ari-
Smith,
zona law.
703 fami protect “to described has been pe- during reversionary interest” gent, property its home sale of 645, forced ly White, against at B.R. 377 exemption. of riod related specifically not Smith, are which 700, for debts Golden, at F.2d 789 citing Young Ins. Co. v. Ozzie Nat’l to it.” Md. at 808. 342 195, P.2d Co., Ariz.App. 526 22 Drilling the bank- from followed rulings These accord, Young, v. (1974); Evans 402, 406 of Ari- exploration careful court’s ruptcy (1983); 1148, 1154 447, P.2d 661 Ariz. 135 an answer of search decisions zona 115, Winn, P.2d 131 Ariz. 638 v. Matcha homestead uses of of what question (1981). 1361, 1363-64 permissible Court Supreme Arizona only one modern some It located exemption. period of ex with the homestead dealing from the policy, decision clues, regarding mostly White, compliance strict emphasizes emption decisions. state-court reported few exemption statute an Having retraced of requirement at 643-45. exemption. authori- McLaws honoring the agree that Arizona we before steps, those 95, 317, 97 636 P.2d Ariz. Kruger, 130 v. ty sparse. (1981). There, with a homestead a debtor is that problem interpretative The basic hence, and, sub not not recorded that was em- the 18-month ARiz. version of the then-current ject 33-1101(C) was bodied in Aeiz.Rev.Stat. 33-1101(C), permitted not Rev.Stat. 1971, a that until in form until enacted not $1,971.64in of garnishment to defeat but homestead6 to recorded applied 1994 homestead, his from sale law, and by operation a homestead ain to reinvest funds he intended subject been the has not a 1925 decision Quoting new homestead. decision. Supreme Court is voluntari exempt property “[w]hen glean- can be concepts policy basic Some other money, or into ly converted Supreme Court older Arizona from ed law, gone” right is not also dat- agreement to be There seems cases. added, “[w]e Court Supreme the Arizona after state- decades the initial ing from un equally true holds this maxim believe was denom- hood, the homestead when today itas exists statutory scheme der dollars, the purpose inated in 97, McLaws, quot P.2d 636 1981].” [in funds preserve homestead 794, 116, P. Boots, Ariz. Mack v. ing family. Union provide shelter (1925). Morgan Commercial Norton v. Oil Co. is evident statutory structure (1922); 1077, 236, Co., 202 P. Ariz. Ajuz.Rev.Stat. § 33- comparison McClure, 29 Bank v. Trust & Sav. Sec. 33-1101(C) reveals 1101(A) further §with (1925); Schreiber 325, 241 P. Ariz. a homestead the owner purpose Hill, Ariz. 95 P.2d family home one to substitute Modernly, it be allowed (1939) family”). (“protect the proceeds con- cash emption in identifiable § 33- of Ariz.Rev.Stat. The 1971 version date of after the eighteen months tinues for 1101(C) provided: claim- until property or the sale of (C) under subsec- claimed If a homestead exemp- homestead claim of ant files a new duly before recorded A has been tion A, involuntary whichever sale of voluntary pursuant to subsection tions date exemption, not ex- Only homestead one homestead period property, is shorter. provided person for in subsec- exceeding by a the value held emption at a time A, automatically to the claim- attaches tion this section. provisions of cash equity 1994). in identifiable interest 33-1101(C) (repealed ant's Ariz.Rev.Stat. ex- sale. The proceeds from the *11 704
for another. Nothing in that structure ment of unfortunate, reinvestment seem suggests protected that the proceeds since without such a restriction the debtor can be used as a grubstake. may squander leaving his family Haskins, homeless.” George L. specific more guidance, how For Homestead Exemptions, 63 HaRv. L.Rev. ever, one must fall back on Arizona’s rule 1289, (1950); accord, Golden, 1311 of interpretation that when 700, F.2d at citing Thorsby, 222 P.2d at directly cases are point, on decisions from other states with similar laws be con See, sulted. e.g., Roberts, Ferguson v. sum, In predict we that the Ari 357,
Ariz.
855,
170 P.2d
(1946);
857-58
Supreme
zona
Court would not construe
Matcha,
705 (1992). But, here 280 1644, L.Ed.2d 118 exempt property “[w]hen that proposition about objectionable nothing there was or oth- money, into voluntarily converted is pro- in homestead exemption law, claim of exempt also not er property was that claim made. 97, the time McLaws, ceeds at P.2d at 636 gone.” is right 794.7 Mack, P. at 239 quoting § that Moreover, the contention 522© con- exercising the trustee precludes with inconsistent would be It leap great is too property trol over the risk to bear the trustee require to law for situations account it does not because the funds period during of loss simulta- has an interest estate in which the in a manner by the debtor being used is property that the debtor neous with trustee. approved exemption. subject to D is exemption a homestead Where debtor’s to the is merit There ($150,000in Ari terms in dollar expressed objection of an the absence that contention to sell zona), trustee is entitled affects exemption of claim debtor’s to the yield would that for amount property of turnover ability to seek the trustee’s the amount of exceeding net expiration upon estate of the property (In Hy re v. Plotkin Hyman exemption. exemption. (9th 1316, Cir. man), 1320-21 F.2d 967 1992). federal question procedural This definitively resolved was
bankruptcy law
apprecia
Moreover, postpetition
circuit with
of the
law
and is
by Golden
exemp
of an
amount
of the
tion
excess
homestead
to the
respect
Schwaber
trustee.
belongs to the
tion
“Be-
all states:
exemptions
1317,
Reed),
1323
F.2d
940
Reed
in effect
exemption remained
cause
Cir.1991).
sure,
rule could
beTo
the trus-
and
period,
during the six-month
for
incentive
economic
foster an
claim
right
to
had no
tee
market, the
rising
in a
a case
prolong
to
for
see no reason
we
period,
that
ability
in the
lies
problem
which
answer to
of a
notify the debtor
he
that
requiring
property
have
seek
of the debtor
Golden, 789
in existence.”
yet
claim not
554(b)
to 11 U.S.C.
pursuant
abandoned
F.2d at 701.
or benefit
value
inconsequential
being of
Smith,
bank-
as did the
so held
554(b);
R.
We
Fed.
U.S.C.
estate.
Smith,
in this case.
ruptcy
at
F.2d
6007(b);
Hyman,
Bankr.P.
White,
B.R. at 642.
808;
1321 n. 11.
is that
difficulty
there
rationale
The Golden
only tem-
claimed was
he
similarly
object is
nothing
Ajriz.
by operation
expired
porary
on
based
argument
debtor’s
fatal
33-1101(C)
February
on
claim
objectionable
If an
Rev.Stat.
U.S.C.
522©.
of the
the sale
eighteen
no time
there is
made and
reinvest-
subsequent
without
then the
objection,
ly
while
in another homestead
ment
&
v. Freeland
Taylor
section.
open.
remained
642-43,
S.Ct.
Kronz,
U.S.
funds would
use of
such
tion whether
apparently disbelieved
the court
7. Since
ex-
$23,000
Arizona’s
of the
not be consistent
spent
he
assertion
living ex-
purpose.
proceeds”
emption
cash
"identifiable
present
ques-
appeal does not
penses, this
claim exemption
came with all
PAPPAS,
Bankruptcy Judge, dissenting:
imposed
law,
restrictions
by Arizona
in-
The majority aptly describes this Cir-
cluding the temporal
limitation that
left
*13
cuit’s case law concerning the bankruptcy
the estate with “contingent,
a
reversionary
status
state law temporary homestead
interest.”
exemptions as “a festering
The
merely
accepted the debt-
my
sore.” In
opinion, the best salve for
or’s claim of exemption at face value.
this condition would be a reconsideration
was nothing
There
else to do until the
by the Ninth Circuit of its decision in
exemption period expired without the pro- Golden, which grants
chapter
7 bank-
ceeds having been
reinvested
a home-
ruptcy trustee what this Panel described in
stead. Upon expiration
period,
of that
Smith as
post-bankruptcy “contingent,
there was no longer
exemption,
an
and the
reversionary interest” in a
exempt
debtor’s
trustee made a
turnover,
motion for
which homestead
proceeds.
so,
Even
this
motion would have
premature
been
under
appeal is not
appropriate
an
patient for
542(a)
the terms of
until the homestead
such treatment. Because
appeal
is
longer
were no
exempt.
moot, it
dismissed,
should be
and I dissent.
CONCLUSION
A
bankruptcy
The
court correctly ruled
years
Almost
the debtor
two
was not
privileged to
the debtor
use
filed
his
petition,
homestead sale
the bankruptcy
for a
court granted
purpose
the chapter
inconsistent
with the exemption purposes
trustee’s motion compelling
law,
of Arizona
that the debtor
debtor to “turn
is
over”8
liable for
the full amount
turnover to
542(a)
trustee under
sale proceeds that he
the full
held on the
homestead sale
date the
pro-
bankruptcy case was
ceeds extant as of the time
commenced.
the bankruptcy
Unfortunately,
filed,
case was
and that
spent
had
trustee was
the funds. Realizing
any
required
object
neither
hope
for obtaining
debt relief in chapter 7
claim of exemption,
required
nor
had now
give
evaporated,
sought
debtor
the debtor notice that the trustee intended
and obtained a conversion
bankrupt-
of his
to exercise the trustee’s
cy
reversion rights
case to chapter 13 so that he could
upon expiration of the 18-month tempo- propose, and
confirm,
hopefully
a debt re-
rary exemption. AFFIRMED.
payment plan.9
fair,
8. To
-
be
majority
as
acknowledges,
sachusetts,
-, -,
U.S.
requiring
order
a debtor
to turn
1107-1112,
over to the
S.Ct.
Instead, chapter 13 a best, an academic exercise. who, Bankrupt- under the appointed been possession to Code, right re- holds a cy live issue believes majority The in assets, the propriety funds the including because for resolution the debtor’s mains result, bank- under the order issued a curious turnover While of the question. may chapter case the belongs ruptcy court in Code, now right that the position, 1306(b) chapter 13 trustee’s the impact (provid- 11 U.S.C. See debtor. con- analysis, bankruptcy court’s and the in a con- provided “Except as ing that plan satisfies the debtor’s cerning whether the plan, a confirming plan or order firmed test” of creditors “best interests the of all possession in remain debtor shall 1325(a)(4).11 disagree. I estate.”). words, In other the appeal, chapter on reality, order bankruptcy court’s the In confirmation, and plan to on position funds to turn over trustee’s directing court’s bankruptcy of the trustee, the relevance constitutes chapter 7 a nonexistent order, dependent are completely turnover anomaly. therein, replaces a trus- one who used words While the debt- order. appeal the conversion vacancy in office fills "[a] who tee speculative invest- engage in or’s decision a ”[w]hen a case” during such surely bankruptcy trustee case during his ments removed, dies, or otherwise resigns, is retrospect, given the bank- foolish seems Code Neither the decision, office....” to hold presume that ceases we must ruptcy court’s precise situa- expressly address Rule seeking pay his nor good acting in faith ishe chapter of a here: conversion tion chapter plan. a debts via chapter also decision majority a Panel cites 10. reso- whether only speculate about Klein, 11. We can Riley Judge Searles written will critical issue (9th of the Searles), Cir. lution BAP 375-76 chapter 13 case. debtor's in the context Cir. 2004), Fed.Appx. 589 aff'd, 212 chapter 13 trustee majority states 2006), Bankruptcy § 325 of along with preclusive upon issue “insist 2012(b), entitled its conclu support Rule Code and [exemption] determination” conversion, that, effect 13 trus upon sion even But bankruptcy court. by the standing’’ steps into made “automatic tee has blessing, it is doubtful the Panel's without trustee. displaced shoes position, if change its bankruptcy court However, reading Code and a careful significant becomes the issue indeed they actually address Rule reveals process. trustee," confirmation or in the of a "successor status upon plan what sort of the debtor eventu- proposed or’s plan is proper not a basis for ally attempts to confirm. If the debtor engage Panel to in theoretical specula- sponsors a plan provides for a distri- tion. bution to unsecured creditors of an amount sum, In the majority’s decision affirm- than that required by 1325(a)(4),12 less ing the bankruptcy court’s turnover order the chapter may object 13 trustee to that represents a resolution search of a con- plan, losing party and the in that contest troversy. debtor, If the trustee or some If, instead, seek review on appeal. party other proper standing disap- the debtor elects to propose plan pointed with the decision of the bankrupt- pays creditors, or more to (and if) cy court when plan is actually
whether the bankruptcy court’s ruling in confirmation, submitted for party 7 case was correct or not is may seek review. The issue raised in this truly inconsequential. is, appeal best, hypothetical, and this appreciate I currently, the debtor appeal should be dismissed as moot. proposed has plan in the *15 court, the terms of dependent which are
upon the outcome of appeal. this While B tactic, is a this clever may not Since majority merits, reaches the I thereby jurisdiction bestow on this Panel am obliged to comment further. to render an advisory opinion a concerning That there would painful, recurring moot issue. The Panel only speculate can issues concerning status of about what sort of plan the debtor will in Arizona bank- finally propose confirmation, what ob- ruptcy cases and predictable. others was jections plan may generate, what oth- The Ninth Golden, Circuit’s decision in problems er may exist respect with to together with this confirmation Panel’s various plan,13 of that decisions and what rul- it, ings applying uneasy creates an bankruptcy court tension will make to be- resolve the tween chapter issues. classic That the bankruptcy bankruptcy policy, which, court’s decision in very chapter converted exceptions, limited meas- might case have an impact upon respective the bank- ures the property rights of a ruptcy court’s decision to confirm the debt- debtor and the bankruptcy estate on the majority 12. The assuming in incorrect much pay the debtor must to creditors under 1325(a)(4), satisfy § plan the debtor’s must plan a actually presented until one is to the propose pay at least to his bankruptcy court for confirmation —some- hypothetical unsecured creditors. liqui- thing yet that has not occurred. analysis required by dation provi- this Code sion to determine if receiving creditors are as course, 1325(a)(4) § 13. Of is but many one of proposed much under a chapter plan as standards the satisfy debtor must in order they would liquidation receive in a is not achieve confirmation. See 11 U.S.C. upon liquidation based value of the debt- 1325(a)(l)-(9). Indeed, § the bankruptcy date, petition or’s assets on the or even some conceivably court could plan find that a date, later but is measured "as effective pay does not creditors the amounts he lost result, plan.As of the date a if at the time day-trading with the homestead sale plan presented the debtor's bankrupt- faith, proposed is not good in required by as cy court for appears it confirmation that the 1325(a)(3). § Again, until the debtor trustee’s shows turnover order would be uncollectible, that all plan requirements of the other conceivably satisfy could confir- 1325(a)(4) met, by paying proposed plan mation of his unsecured creditors the issue $144,816.96. is, much less than point by appeal But the raised squarely presented this is not Panel simply this anticipate can not how for our review. (even a “tem- in homestead and state bankruptcy, date interest”), consistent reversionary the debt- here, porary, law, determines as duty, prudent events upon statutory based rights with the or’s not) (or eigh- over as much to secure promptly move occurring trustee must In Ford bankruptcy. disagree strongly teen therefore asset. I such Konnoff), 356 “[b]y suggestion majority’s with the Konnoff 2006), attempted I BAP Cir. 208-210 542(a), of turn- question terms of to be challenges of the some predict until the ripen did case] over [in trustees, ultimately, debtors, faced the home- longer exempt could no debtor char- courts, by postponing bankruptcy [and, accordingly,] stead This exempt. property as acterization entitled to wait example yet another presents appeal ex- until the demand turnover bankruptcy experienced difficulties expired.” period emption Smith, Golden, implementing cases bankrupt- empowers Surely, the Code Konnoff, et al. chap- giving an order to fashion cy court provides Code Bankruptcy exclusive, concurrent, if not 7 trustee ter a debt- of all of consists bankruptcy estate both the in which over monies control interests legal equitable or’s an interest. See estate hold and the as of the commencement (“The 105(a) [bankruptcy] 11 U.S.C. whomever “wherever located order, process, or any issue 541(a)(1). Under 11 U.S.C. held.” *16 necessary appropriate or that is judgment re- 704(a)(1), chapter 7 trustee the title.”). of this provisions carry to out the money to and reduce to quired “collect ” not here, did chapter trustee But of the estate.... property pro- sale the homestead sequester to move of the es- property Exempt assets subject the estate’s ceeds were from tate, any proceeds because but stipu- interest, and instead reversionary exempt assets are distributed sale debtor. funds to the those lated to release creditors, 7 trustees debtor, not to some- trustee Because the them, possession take do not generally in- the debtor aggressive, thing less than for they cannot be sold when at least most of with advisedly speculated satisfy the than needed greater amount used the and sale homestead However, the debtor if both exemption. “living expenses.”14 of them remainder an interest estate hold bankruptcy assumption is view, import of this ambitious bankruptcy court's 14. In the means, it altogether clear. Whatever money. declined not It ''squandered” all of the litigation will $23,000 guarantees even though, it more used that the debtor accept as fact bankruptcy required before Arizona living ex- proceeds for sale of the homestead Panel, court, can Circuit and the Ninth this chapter 7 though penses, even not, is, and is what divine the contours is no did so. There stipulated that he trustee exempt” “temporarily use” of “permissible holding that a creditor case Arizona law example, in proceeds. For homestead sale against a debtor money judgment obtain a dictum, speculated that bankruptcy court pro- exempt cash homestead spends who home- to use appropriate for a debtor it is period. How- during reinvestment ceeds plan. fund a retirement proceeds to ever, majority pre- stead White, bankruptcy court and per- it But is at 645 n. 42. Supreme Court dict that Arizona pay funds to use such for debtor missible prohibit a interpret statutes its utilities, expenses or other normal for rent a manner proceeds “in debtor's use of (i.e., provide “to maintaining a household exempt pur- Arizona’s inconsistent with ex- shelter”)? it inconsistent Is poses.” that, Golden, I acknowledge under Joseph In re RYAN, not bear the Elliott does risk of Debtor.
loss for “the activities Joseph Ryan, Appellant, ” Elliott temporary exemption period.... But it is simple too to indict all dipping debtors for into otherwise exempt money to meet daily America, United States Appellee. needs. While the debtor’s decision to in- BAP No. ID-07-1316-DMkMo.
vest the proved very homestead funds un- Bankruptcy No. 03-21393. wise, this highlights practical Adversary No. 07-07002. problems when, Golden, created under trustee and bankruptcy court waits as United States Bankruptcy Appellate Panel much eighteen finally before of the Ninth Circuit. deciding whether homestead sale Argued by Telephone Conference and are, not, or are to be part administered as Submitted on Feb. 2008. Congress estate. did Filed contemplate when, June approach 522(b)(2)(A) pre-BAPCPA Code, provided it protected
the reach of a debtor’s creditors under
applicable law on the date of the bankrupt-
cy filing is exempt.
The Panel is bound to follow Golden. given
But the opportunity, the Ninth Cir-
cuit should reconsider that decision and
hold Code, under Bankruptcy which are exempt
from creditor’s claims applicable
state law on the petition are, date a is filed purposes case, of that bankruptcy ex-
empt. Such holding only is not correct Code,
under the it would avoid the recur-
ring interpretative practical challenges
presented by debtors, Golden to trustees
and bankruptcy courts. emption law for right use the debtor’s to a financial fresh start while vehicle, buy replacement settled, questions these probably by litiga- pay dependent's I, tion, for a medical treatments? nor to allow trustees one, do not believe in a play pervasive, courts such a supervisory context, Congress postpone intended role in a post-bankruptcy life.