In re Nanette Marie Sisk, No. 18-17445 (9th Cir. 2020)
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The Bankruptcy Code does not prevent debtors from proposing and confirming plans with an estimated duration. After determining that it had jurisdiction over debtors' appeal, the Ninth Circuit held on the merits that the text and structure of the Code do not mandate a fixed term requirement for all Chapter 13 plans and that the panel should not add one without clear direction from the statute.
The panel also held that none of the reasons given by the bankruptcy appellate panel justify the finding that debtors proposed their initial plans in bad faith. Finally, the panel held that the bankruptcy court did not fail to hold a confirmation hearing within the timeframe prescribed by the Code and properly exercised its discretion by deferring consideration of debtors’ estimated-duration provisions until it could adequately address them. Accordingly, the panel affirmed in part, reversed and vacated in part, and remanded for further consideration.
Court Description: Bankruptcy. The panel affirmed in part and reversed and vacated in part the Bankruptcy Appellate Panel’s decision refusing to allow confirmation of four Chapter 13 debtors’ plans with an estimated duration, and the bankruptcy court’s subsequent confirmation of plans with a fixed duration. Neither the bankruptcy trustee nor any unsecured creditor objected to debtors’ plans. The BAP affirmed the bankruptcy court’s rejection of the initial plans as in violation of the Bankruptcy Code and not proposed in good faith. On remand, the bankruptcy court confirmed plans with a fixed duration. This court then granted debtors’ certifications for direct appeal. The panel held that even though only the debtors challenged the bankruptcy court’s ruling, the panel had jurisdiction to consider their appeal because they suffered an “injury in fact” sufficient to confer standing. The panel held that, as the only parties, the debtors need not establish prudential standing. Further, the lack of an appellee did not deprive the panel of jurisdiction, and the lack of an objection by creditors did not insulate the bankruptcy court from appellate review or abrogate debtors’ rights to challenge plan provisions that could detrimentally affect their interests. 4 IN RE SISK Reversing, the panel held that when there is no objection, a bankruptcy plan need not include a fixed duration because no express provision of Chapter 13, even when viewed in the context of its broader structure, prohibits plans with estimated lengths. The panel concluded that neither 11 U.S.C. § 1322 nor § 1325 points to an express fixed or minimum duration requirement for Chapter 13 plans absent an objection, and neither provision prohibits estimated term plans. Read together, the Bankruptcy Code provides for a maximum duration for all plans and a minimum duration for objected-to plans. The panel concluded that the clear implication of this framework was that, for plans with no objection, the Code provides no minimum or fixed durations. The panel concluded that the Code’s structure also supported a debtor’s ability to include estimated terms, and allowing estimated terms would not nullify a trustee’s or creditor’s modification rights under 11 U.S.C. § 1329. The panel vacated the BAP’s ruling that the debtors’ proposed their initial plans in bad faith. Affirming in part as to the BAP’s holding regarding the bankruptcy court’s confirmation procedures, the panel held that the bankruptcy court did not fail to hold a confirmation hearing within the timeframe prescribed by the Code and properly exercised its discretion by deferring consideration of debtors’ estimated-duration provisions until it could adequately address them. The panel affirmed in part, reversed and vacated the BAP’s decision in part, and remanded for further consideration. IN RE SISK 5
The court issued a subsequent related opinion or order on September 1, 2020.
The court issued a subsequent related opinion or order on September 24, 2020.
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