Tuesday, November 15, 2011

FLINT BANKRUPTCY CREDITOR OBJECTION JUDGES OPINION, 810-235-1970

OPINION SUSTAINING CREDITOR’S OBJECTION TO CONFIRMATION
The matter before the Court is Evangelical Christian Credit Union’s Objection to
Debtor’s Second Amended Combined Plan and Disclosure Statement (Docket No. 66). For the
indicated reasons, the Creditor’s Objection is sustained.
I. BACKGROUND
Christian Love Fellowship Ministries, International (“Debtor”) filed its Chapter 11
bankruptcy petition on November 12, 2010. On May 25, 2011, Debtor filed its Second Amended
Combined Plan and Disclosure Statement (Docket No. 61) and on May 27, 2011, the Court
entered an Order Granting Preliminary Approval (Docket No. 63) of such. On July 5, 2011,
Evangelical Christian Credit Union (“ECCU”) filed an Amended Objection to Debtor’s proposed
Plan (Docket No. 68). The Court held a confirmation hearing on July 7, 2011, at which it heard
that objection.
Debtor’s Plan is confirmable except for ECCU’s objection, which relates to its
classification in the Plan. ECCU holds mortgages on Debtor’s properties located at 1601
Stamford Road, Ypsilanti, Michigan and 3936 Palisades Boulevard, Ypsilanti, Michigan, with
reference to which it filed a secured proof of claim for $4,139,966.49. The secured portion of
ECCU’s debt is treated in the plan in a manner that payments thereon, slightly in excess of
accruing interest, would be paid monthly for five years, at which time the entire balance will
become due and payable – it being Debtor’s expectation that it will be able to refinance at that
time, notwithstanding the fact that the principal balance of the secured debt will be fairly close to
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what it is today. The unsecured portion of ECCU’s claim, representing its deficiency claim, is
approximately $2,671,966.49.
Debtor’s Plan contemplates the availability of $250,000 to be paid to all unsecured
creditors over the five-year life of the plan. Debtor classified the unsecured creditors as follows:
(1) Class II – all unsecured creditors other than ECCU, and (2) Class III – the unsecured
deficiency claim of ECCU. As originally filed, Debtor’s Schedule F listed some 20 unsecured
creditors, most, if not all of which could be called trade creditors, whose claims total $73,462.28.
On Debtor’s Schedule F, included in that group of unsecured creditors was a single claim of JP
Morgan Chase Bank covering an unsecured line of credit of $42,400.59. The post claims filing
deadline claims register shows eight filed claims, two of which are the secured claim of ECCU
and a secured claim filed by JP Morgan Chase Bank, and the remaining six claims are unsecured
and are essentially those of trade creditors, such as a lawn service provider, phone systems, and a
pest control provider, totaling some $24,785.39 (and included in that amount is some $10,000
owed to one creditor and some $13,000 owed to another, both appearing to cover leased office
equipment). ECCU argues that it is improper for its claim to be separately classified in Class III
and that it should be classified along with the other unsecured claims in Class II, the result of
which would be that ECCU would likely receive a materially larger distribution over the life of
the plan. The issue is whether ECCU’s claim can be separately classified from the other
unsecured claims under 11 U.S.C. § 1122.
II. DISCUSSION
A plan of reorganization may be confirmed if all of the requirements of 11 U.S.C. §
1129(a) have been met. Section 1129(a)(8) requires that all impaired classes vote in favor of the
plan. That requirement can be avoided if a Debtor proposes confirmation under § 1129(b),
which imposes the same requirements as § 1129(a), except for (a)(8), but requires that the plan:
(1) “not discriminate unfairly”; and (2) be “fair and equitable, with respect to each class of
claims or interests that is impaired under, and has not accepted, the plan,” and further requires
that at least one impaired class vote in favor of the plan. In this case, Class II as proposed voted
in favor of the plan.
11 U.S.C. § 1122 provides:
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(a) Except as provided in subsection (b) of this section, a plan may place a claim
or an interest in a particular class only if such claim or interest is substantially
similar to the other claims or interests of such class.
(b) A plan may designate a separate class of claims consisting only of every
unsecured claim that is less than or reduced to an amount that the court approves
as reasonable and necessary for administrative convenience.
The parties do not disagree with the proposition that “[i]n classifying claims, the general rules
are that ‘[d]issimilar claims may not be classified together; [and] similar claims may be
separately classified only for a legitimate reason.”
(Bankr. E.D. Mich. 2009) (quoting
“The proponent of the plan must demonstrate a justification for its classification scheme and that
the classification is not motivated by the purpose of gerrymandering an affirmative vote of an
impaired class.”
warrant having a separate classification of similar claims, the debtor must advance a legitimate
reason supported by credible proof.”
Debtor argues that its proposed separate classification is justified because Class II
consists of all of its trade creditors with which, during the course the plan period and thereafter,
it expects to continue to do business. Therefore, to justify a separate classification, it argues that
those claims are of a sufficiently different nature or character than ECCU’s deficiency claim.
To appreciate the practical ramifications of the issue in this case, it is noted that, based on
originally scheduled claims (1) Class II would consist of scheduled potential claims amounting
to some $73,462.28, one half of which ($36,731.14) would be paid in sixty equal monthly
payments; and (2) the Class III deficiency claim held by ECCU of some $2,671,966.49 would
receive a 5% payment, totaling $133,598.32, which would be paid in twenty equal quarterly
payments. Debtors have indicated that there is a total of $250,000 for distribution to unsecured
creditors. A calculation of the distribution to Class II and Class III under the express terms of
the proposed plan, based on the scheduled claims, would leave an additional $79,670.54 (out of
the total distribution of $250,000) to be distributed to unsecured creditors. It is clear that, at the
time the proposed plan was drafted, Debtor anticipated a higher total of general unsecured debt
in Class II. If those two classes were combined, based on the scheduled claims, the total amount
of claims would be $2,745,428.80, of which ECCU’S portion would be about 97%. That percent
of the available $250,000 would be approximately $242,500, which is substantially more (some
In re Griswold Bldg., LLC, 420 B.R. 666, 707In re Chateaugay Corp., 89 F.3d 942, 949 (2nd Cir. 1996).Id. (quoting In re Porcelli, 319 B.R. 8, 10 (Bankr. M.D. Fla. 2004). “[T]oId. (quoting In re Chateaugay Corp., 89 F.3d at 949).
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$108,901.68) than what ECCU would receive as a member of Class III under Debtor’s proposed
Plan. The remaining 3% of the available $250,000, totaling approximately $7,500, would go to
the other members of that class, and that is a sharp decrease from what they would receive as a
member of Class II under the Debtor’s proposed Plan.
To further fully appreciate the potential ramifications based on actually filed claims
opposed to originally scheduled claims): Class II would consist of actually filed unsecured
claims amounting to $24,785.39, one half of which ($12,392.70) would be paid in sixty equal
monthly payments; and (2) as noted, the Class III deficiency claim held by ECCU of some
$2,671,966.49 would receive a 5% payment, totaling $133,598.32, which would be paid in
twenty equal quarterly payments. A calculation of the distribution to Class II and Class III under
the express terms of the proposed plan, based on the filed claims, would leave an additional
$104,008.98 (out of the total distribution of $250,000) to be distributed to unsecured creditors.
As already noted above, it is clear that, at the time the proposed plan was drafted, Debtor
anticipated a higher total of general unsecured debt in Class II.
combined, based on the filed claims, the total amount of claims would be $2,696,751.90, of
which ECCU’S portion would be about 99%. That percent of the available $250,000 would be
approximately $247,500, which is substantially more (some $113,901.68) than what ECCU
would receive as a member of Class III under Debtor’s proposed Plan. The remaining 1% of the
available $250,000, totaling approximately $2,500, would go to the other members of that class,
and that is a sharp decrease from what they would receive as a member of Class II under the
Debtor’s proposed Plan.
As this Court views the unsecured claims classification law in this circuit, it is that (a)
section 1122(a) does not demand that all similar claims be in the same class; (b) the bankruptcy
court has substantial discretion to place similar claims in different classes if there is a reason to
do so; and (c) where it appears that the classification sought is primarily to create a class of
consenting creditors to be able to assure acceptance and confirmation, separate classification is
impermissible.
Co. (In re U.S. Truck Co.)
F.3d 648 (6th Cir. 2002). One commenter has stated that:
1 (as2 If those two classes wereSee Teamsters National Freight Industry Negotiating Committee v. U.S. Truck, 800 F.2d 581, 586 (6th Cir. 1986); In re Dow Corning Corp., 280
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The claims bar date has passed.
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It is clear that these plan provisions would need to be amended to account for these differences.
the clear trend in the courts of appeals is that the unsecured mortgage deficiency
claims of an undersecured mortgage lender cannot be classified separately from
unsecured trade creditors’ claims when the sole purpose for the separate
classification is to manipulate class voting and to create an impaired class of
unsecured claims willing to accept a proposed plan. These courts have held that
the mere fact that some claims arise as a result of undersecured portions of claims
does not distinguish such undersecured claims from other unsecured claims so as
to justify separate classification.
6 Norton Bankruptcy Law and Practice 3d § 109.4 (citations omitted). In the noted
U.S. Truck
case, the separate classification of a claim arising out of a collective bargaining agreement and
the debtor’s relationship with the union involved was justified because of the “virtually unique”
interest of the union employees in their ongoing relationship with the debtor and continuing
collective bargaining process.
anticipated ongoing relationship with its indicated trade creditors over the life of the plan is
likewise to be distinguished from its relationship to ECCU, justifying a different claim treatment
and consequent separate classification.
This Court disagrees for a number of reasons. First, there are trade creditors in most
Chapter 11 cases and in many, if not most, of those same cases there are also undersecured
claims giving rise to deficiency claims. If the separate classification were to be upheld in this
case, it would be the rare case where it would not be. Second, the facts with regard to the small
number and identity and type of the unsecured creditors and the amounts of their claims lend
credence to the argument that the proposed classification in this case is primarily for the purpose
of obtaining a consenting class which approves the proposed plan. Third, with respect to the
ECCU deficiency claim and the claims of the other unsecured creditors, there is little to
differentiate them other than by their source or how they arose, and there are not the kind of
“unique” differences as, for instance, justified the separate classification in the
It appears to be the case that the Debtor’s rationale for the difference is the potential of a
continuing relationship with the other unsecured creditors over the life of the plan. In this case,
Debtor has also built a continuing relationship with ECCU, one that the plan proposes will
continue for the life of the plan. If it wants to, Debtor can continue to do business with the small
number of other unsecured creditors, whose services are not unique and are readily available in
the market place, and, if the service providers want to continue to do business with the Debtor
(neither of which is required), they free to continue or discontinue any ongoing relationship
U.S. Truck, 800 F.2d at 586. In this case, Debtor argues that itsU.S. Truck case.
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(unlike the continuing essentially mandated collective bargaining agreement relationship in
Truck
normal course of post-confirmation business and during the life of the plan militates against the
Debtor’s argument in this case, which would afford to the more certain continuing relationship
an inferior result. In any event, the differences, if any, between ECCU’s deficiency claim and
the other unsecured creditor’s claims, do not sufficiently justify either overcoming the
gerrymandering purpose (evident from the indicated claims analysis and other facts) in this case,
or the conclusion that whatever differences one can articulate are of insufficient substance and
materiality to justify distinguishing between them requiring or permitting dissimilar treatment.
U.S.). Indeed, the fact that some or all of those relationships may or could easily end during the
III. CONCLUSION
For those reasons, the Court concludes that ECCU’s objection to confirmation of
Debtor’s Second Amended Combined Plan must be sustained. In view of this result, a status
conference on the future of this case will be held on November 30, 2011 at 9:45 a.m.
.
Signed on November 09, 2011

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION – DETROIT
In re:
Case No. 10-74467
Christian Love Fellowship Chapter 11
Ministries, International, Hon. Walter Shapero
Debtor.
____________________________________/

Monday, November 7, 2011

IS CIVIL DISOBEDIENCE INEVITABLY?

Terry Bankert of “OCCUPY FLINT”11/7/11

Civil disobedience inevitable in the Occupy FLINT  Movement? Yes! What do you think?

FYI the following.


Civil disobedience is the active, professed refusal to obey certain laws, demands, and commands of a government, or of an occupying international power. Civil disobedience is commonly, though not always,[1][2] defined as being nonviolent resistance. It is one form of civil resistance. In one view (in India, known asahimsa or satyagraha) it could be said that it is compassion in the form of respectful disagreement.
http://en.wikipedia.org/wiki/Civil_disobedience

OCCUPY MOVEMENT CAN WIN WITH NON VIOLENCE

Any effort by a tiny minority to break the unity of action of our movement must be repelled. Anything short of strict nonviolence will play into the hands of the right-wingers in the police department, and into the hands of Wall Street.
There is nothing Wall Street and right-wingers at all levels of government would love more than to have today's public anger against them turn into its very opposite.

When engaging in civil disobedience, let's employ non-violent tactics that will galvanize broad unity with the people of Oakland and nation.
Tactics that will win over even misguided working people and students influenced by Fox television and other media outlets at the service of Wall Street and the far right.


http://peoplesworld.org/occupy-movement-can-win-with-nonviolence/


Atlanta (CNN) -- Occupy protesters returned to the streets of Atlanta on Sunday night, a day after a police crackdown on a gathering organized by the movement resulted in the arrests of 19 people....Those arrested Saturday included two people who refused to leave Woodruff Park after the 11 p.m. closing time and 17 others charged with obstructing traffic after the crowd poured onto nearby streets, the Atlanta Police Department said
…..The group may change gears and use other ways to convere no people protesting, if banks start failing again because of Greece, they will come back to the government for a bailout. The government needs to know people are watching.".....New York has made 555 arrests in the Occupy Wall Street movement on charges ranging from minor vioy its message, including "occupying" banking facilities and homes facing foreclosure, according to Chidi.
….."The financial services industry is not being properly regulated or overseen," said the 38-year-old consultant. "We are cruising toward another 2008 meltdown."
And the protests will send a strong message, he said.
"We have not learned a lesson from the last catastrophe. If there alations to felonies, the district attorney's office said. New York City Police said last week they charged a 26-year-old Brooklyn man with sexual abuse for inappropriately touching an 18-year-old woman at Zuccotti Park, the home base for the protests. In Oakland, California, demonstrators and police clashed last week, prompting authorities to use tear gas on protesters who defied orders to disperse.
http://www.cnn.com/2011/11/06/us/georgia-occupy-arrests/?hpt=us_c2


ATLANTA -Atlanta police said one protester draped in an American flag inside Woodruff Park was arrested after refusing to leave by a Sunday night curfew, and four other people on bicycles were arrested near the park - three for traffic violations and one for obstruction of a law enforcement officer.

http://www.nydailynews.com/news/national/lone-atlanta-occupy-wall-street-protester-arrested-refusing-leave-park-article-1.973253

HPD arresting Occupy Honolulu Protestors from sidewalk. Beretania Street
http://www.youtube.com/watch?v=wSM86ZkQI8Q
Nov 6, 2011 by Euronews
http://www.euronews.net/ At least 20 people have been arrested after scuffles broke out during an Occupy Wall Street protest in New York.
http://www.youtube.com/watch?v=SZvvcpmxNSM
DISTRICT OF COLUMBIA
Police and Occupy DC protesters are offering conflicting accounts about a weekend incident in which a motorist struck three protesters near a downtown demonstration.
....
HAWAII
Police arrested roughly a half dozen protesters after organizers of the Occupy Honolulu movement attempted to establish an encampment at a local park.
Some 20 police officers arrived late Saturday at the city’s Thomas Square. Members of Occupy Honolulu had said earlier Saturday that they planned to begin camping at the park starting at its 10 p.m. closing time. About 40 protesters were gathered at the site when authorities began telling them to leave.
…..Honolulu organizers said they also stood “in solidarity” with the homeless who are being forced from the streets and parks as the city prepares this week to host the Asia-Pacific Economic Cooperation.
OREGON
Portland Police Bureau chief Mike Reese has told members of Occupy Portland that concerns about their security in camp and on marches are warranted, but says protesters must work more closely with police......
OHIO
The Occupy Wall Street movement has spurred demonstrators in Cincinnati to form their own political party.
Spokesman Tyrone Givens tells The Associated Press that he and other Cincinnati-based protesters traveled to New York’s Occupy site to pitch the idea. He says the party is vetting six potential candidates for local office from Ohio, New York and Kentucky.
Givens says the ultimate goal is to elect members of the “Occupation Party” to Congress.
CALIFORNIA
Several hundred protesters marched through the financial district in Los Angeles to protest the banking industry as part of “Bank Transfer Day,” a grassroots movement that has been championed by the Occupy Wall Street protests.
…..The march ended with a teach-in by former labor secretary Robert Reich.
Meanwhile, a downtown Oakland branch of Wells Fargo bank closed its doors for the day Saturday as immigrant rights protesters crowded the entrance to condemn the bank’s ties to private companies that run immigrant detention centers.

More than 100 protesters marched a block from the Occupy Oakland encampment to the bank branch Saturday morning. A few protesters briefly tussled with bank security guards who stood in front of the locked entrance. Police were on the scene but made no arrests.
.
INDIANA
Dozens of anti-Wall Street protesters marched Saturday through downtown Indianapolis, chanting slogans and holding signs berating the nation’s big banks after a rally where they urged people to transfer their money to local banks and credit unions.
About 80 protesters marched from the Indiana Statehouse to Monument Circle, where they stopped outside two banks and loudly chanted “This is democracy in action!” before continuing.
IDAHO
Fifteen campers set up tents Saturday at the Old Ada County Courthouse lawn in downtown Boise with some planning to stay for as long as they can.
The Idaho Statesman reports that the protesters met with state officials earlier in the week and agreed to ground rules limiting the number of campers to 15 until more services are put in place.
___
.
BRITAIN
About 200 protesters marched to Parliament on Guy Fawkes Day, the annual commemoration of the English revolutionary who tried to blow up the building in the 17th century.
Many of Saturday’s protesters in London were wearing a grinning, somewhat sinister mask of Guy Fawkes that has become an icon of the Occupy Movement around the world. The rally was largely peaceful, but the group was kept from getting close to Parliament by a heavy police presence.
…..Many of the demonstrators had marched from St. Paul’s Cathedral in London, where the Occupy movement has set up camp for weeks to protest social inequality and the excesses of the banking industry. Two protesters were arrested for suspected criminal damage and unlawful protest, police said.

http://www.washingtonpost.com/national/latest-developments-in-the-occupy-protests-occurring-in-places-around-the-world/2011/11/06/gIQA73ujrM_story.html

Sunday, November 6, 2011

BANKRUPTCY YOUR PERSONAL BAILOUT.What do you keep?

WHAT IS BANKRUPTCY ? WHAT HAPPENS TO YOUR PROPERTY?


In your Chapter Seven Bankruptcy most credit card, medical, and legal debts are discharged. Also eliminated are  most court judgements and loans.


Presented by Flint Bankruptcy Attorney Terry Bankert 810-235-1970 , Contact Bankruptcy Lawyer Bankert at  www.attorneybankert.com



Some of your debt cannot be  discharged like:

[1] debts to pay non discharge-able taxes ,

[2] court imposed fines and resitutions to include driver responsibility fines,

[3] back child support and alimony,

[4] debts owed to an ex spouse a a result of a divorce or separation,

[5] loans owed to a retirement plan such as a 401 (k) (because you are the creditor as well as the debtor in this situation.

[6] student loans ( unless you can show that repaying the loans would be an undue hardship.)

[7]  federal and state taxes that were  first due less that three years before you filed your bankruptcy.

[8] Debt for personal injuries or death resulting from your drunk driving.


Specific debts will survive your bankruptcy if the creditor  seeks an order from the court to exclude it.


These excluded would be  debts arising from your fraudulent actions, recent credit card transactions for luxery items, and willful and malicious actions causing personal injury or property damage.


Most of your property  except  pension and retirement plans becomes  part of your bankruptcy estate when you file.

This is property you own or are entitled to own. The bad news is this include property you tried to protect by  selling to family or friends for a reduced rate in the last two years. This includes certain types of property  you have come to dis own  within 6 months before you filed.  This is also true of marital property even if only one spouse files.


When you go to your “ Meeting” the bankruptcy trustee is looking  for property when sold will generate a profit to pay the trustee and your creditors.  If you owe more on your car or house than it is worth the trustee will not be interested in it.


Yes you can keep your car  and house if:

[1] you are current on  the mortgage or auto loan.

[2] You have no  significant  equity in the house or car.


To keep after bankruptcy you must sign an affirmation agreement. You effectively remove them from the  bankruptcy and say you will pay the balance. If  your bankruptcy is completed with a discharge of debt you cannot file again for bankruptcy for 8 years.

For additional information contact Terry Bankert 810-235-1970. terry@attorneybankert.com
, http://www.attorneybankert.com .