Confirmation hearing May 11 2016- not done get it done
Full PDF of the transcript of May 11, 2016
Page 3- Kerkland - Your Honor wanted a, sort of a fast track to be placed on the case. If these properties were going to be sold, that they be sold, the case be paid off and, and let’s move on.
Page 4 Kirkland - But when I came in today, counsel for a creditor in the case informed me that this morning an Objection to Claim had been filed, an Amended List of Creditors had been filed, an Amended Chapter 13 Plan had been filed and the Debtor’s Pay Advices had been filed. I obviously have not had an opportunity to review those. ... Mr. Avendano still has not filed his tax returns and other than that, we had requested proof that the Debtor is current with all post-petition mortgage payments and all of the other objections to confirmation. I’m not sure, what if anything the Amendments that were filed this morning resolve. I’m requesting that the case either be reconverted to Chapter 7 or dismissed.
Page 9 - Valdejulli - The Trustee’s current with the payments. The - excuse me, they weren’t posted yet. But I have the receipts from the online. Mr. Harrison will find out that his client did, in fact receive a deposit. Ms. - my client deposited it into Mr. Austin’s account directly the funds to pay the May. So we’re current with postpetition mortgage payments from the time of conversion, once that’s acknowledged that that has been paid. Everything that we were required to do under the Chapter 13 Plan has been done.
Page 11- His income right now is, is, is generated from, from the, from the rent that the tenant is paying in the property -- THE COURT: That’s income. MR. VALLDEJULI: Judge, it’s a start, okay. I’m, I’m just telling you, yes, he has income. It, it’s not the end of the year yet.
Page 17 - THE COURT: I, I want to - tell me what - I want to know what you think the payoff is first of all. MR. HARRISON: As of February the 16th of this year it was 603,345.62. THE COURT: Okay, and, and that includes principal, interest and attorney’s fees? MR. HARRISON: That’s correct.
Page 18- THE COURT: And so what’s the principal? MR. HARRISON: Four hundred and ninety thousand, two ninety-eight thirty-one. THE COURT: And the interest? MR. HARRISON: And I misspoke. There, there’s an additional factor of late fees. THE COURT: Okay. MR. HARRISON: Interest through December the 14th, was thirty-two - which, I don’t know why we picked, that. Oh that’s the order they converting. Thirty-two thousand two-eleven ninety three. THE COURT: Okay. MR. HARRISON: Late fees in the amount of $2,138.13. Attorney fees in the amount of 78,697.25.
Page 19 THE COURT: So what’s the pre-petition arrearage? MR. HARRISON: It’s 124,692.04. THE COURT: And what is that based on? MR. HARRISON: That will be based off of monthly payments that were obligated to be paid up until the date of the conversion. Interest that was owed up until the date of the conversion, late fees up until the date of the conversion and included in that number is the attorney’s fees that was provided by the contract. THE COURT: Okay, so what’s the amount of all of those things?
Page 20 - THE COURT: Just tell me what you think the arrearage amount is. MR. VALLDEJULI: Forty-four thousand. THE COURT: Forty-four? MR. VALLDEJULI: Four-four, nine hundred point six-six. THE COURT: Okay. Thank you
Page 21 - MR. HARRISON: That - the second creditor? THE COURT: Yes. MR. HARRISON: Yes, Your Honor, it’s Lawson Realty Incorporated. THE COURT: Okay, so what’s it’s, what’s the - what’s the Lawson claim? MR. HARRISON: The total amount, I, I think that’s really what you’re looking for, is 29,568.63. THE COURT: Okay. MR. HARRISON: Included in that number is going to be $3,856.78 for attorney’s fees. THE COURT: Okay. MR. HARRISON: Do you want the late fees and the interest or do you want me -- THE COURT: No, that’s -- MR. HARRISON: -- figure out what -- THE COURT: -- that’s good. MR. HARRISON: -- what the -- THE COURT: Now what’s the, what’s the arrearage? MR. HARRISON: Fourteen thousand nine hundred and eight dollars, three cents. THE COURT: And does that include this 3856 for attorney’s fees? MR. HARRISON: It does.
Page 22 - THE COURT: -- what do you think the Lawson arrearage is? MR. VALLDEJULI: Ten thousand four twenty-five point two one. THE COURT: Okay. All right. Now so are there, are there any other creditors or is this it? MR. VALLDEJULI: There, there are tax claims in about - close to $8,000 for Douglas County.
Page 23-24 THE COURT: And what’s the timetable for these sales? MR. VALLDEJULI: Well, the timetable for the sales, there is, there’s - we’ve already - there have been ten sales of - there was 30 - 30 properties reserved. Ten have been sold. We’re going to be filing a, a report with the Court. The money is all accounted for. That money was used to pay post-petition, pay the Trustee fees and his living expenses. THE COURT: Wait a minute. Say that again. MR. VALLDEJULI: The funds, the funds -- THE COURT: How much? What’s been - properties 23 Case 15-64523-pwb Doc 82 Filed 05/31/16 Entered 05/31/16 09:27:05 Desc Main Document Page 23 of 59 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 have been sold? MR. VALLDEJULI: Yes, Judge. THE COURT: Okay. And is there an order authorizing that? MR. VALLDEJULI: There’s no order, Judge. I was going to be submitting or preparing a motion to, to ratify the sales. It, it’s a - what, what the Court doesn’t - what’s difficult to understand is that -- THE COURT: It is difficult to understand sale of estate property without a court order. I agree with you.
Page 26 THE COURT: What is it that makes it permissible to do all this without notice of a hearing? MR. VALLDEJULI: Well, I agree with Your Honor. It’s probably a, a jump in the system there. There, there should have been, I should have, I should have requested the motion to allow to sell property and then ratify it. But it all happened so quickly and it was overseas. And things just didn’t work out as orderly as the would probably here in the States where there’s a formal closing and this and that and, and the other. It was sort of a -- THE COURT: Do any of the other parties -- MR. VALLDEJULI: -- sort of like mishmash. THE COURT: -- does, does the Trustee even know about this?
Page 31 Valdejulli rambles and rambles --- And I’m put under all this pressure and they’re still, still, still keep it coming at me. We’re still not doing it right. Yeah, I messed up. I should have gotten a Court order, but the money went to them. It’s not going anywhere else. When the bigger sales come in - when - we’ve learned a lot. We can sell the property for more, we can, we can circumvent commissions that he’s been paying right now.
Page 32-33 Valdejulli - But nevertheless, this is the pressure I’m under. And I’m, and when I’m under - and he’s under pressure, I’m under pressure. I’ve got, there’s got to be performance. Yeah, I made a mistake. I made a mistake. I should have gotten a Court order. But I didn’t make a mistake in, in at least the intention was to get his clients paid. make Mr. Harrison happy. I’d love him nothing better than to send me a nice email and say I’m glad things are going okay. They will never happen. That’s just the nature of our business. But all I’ve got is you Judge. You’ve seen that there’s progress. That’s all I have. There is four against me and I got you. That’s - but not - not that you’re with me or against me. But you’re the, you’re the body whose going to
Page 39-41 THE COURT: Mr. Bargar? MR. BARGAR: Your Honor, the, the sale of the property was news to me like it was to everyone else in the courtroom. But just, you know, three quick things stood out. One, they have violated the Bankruptcy Code. I’m not sure. I, I am by no means a Chapter 13 expert and some would say I’m not even close to Chapter 7 expert. But I’m, I don’t know how this plan could be confirmable when, when the Debtor is not complying with the rules and the code. The, the second point that stood out is that payments have 39 Case 15-64523-pwb Doc 82 Filed 05/31/16 Entered 05/31/16 09:27:05 Desc Main Document Page 39 of 59 been made to post-petition creditors without Court authority. It is not just that sales occurred, but they mentioned that they hired a broker. No employment application was filed to hire the broker. No fee application was filed to pay the broker. And then also, it, as it, if, if I heard Mr. Valldejuli correctly, there were additional fees in transferring the funds and no application was filed to pay those fees. Those were administrative expense claims just like my client’s claims are. Just like the Chapter 13 Trustee’s claims are. And for yet another reason they have not complied with the code. The, the third thing that stood, stood out to me is that the, the Debtor on his own proffer that his attorney’s proffer has no income to fund the Plan. And again, I am not a Chapter 13 expert, but I would think that that would create serious issues in confirming the Chapter 13 Plan if there is no regular income to, to fund. And it calls into question the validity of being able to pay $875 a month. It would seem to me that that $875 a month is really coming from sales of the property. So I wonder if there’s some double counting going on here as far as the, the Plan goes. Again, Your Honor, with, with all that being said, I do think that it would appropriate to have this case converted to a Chapter 7 case. Our firm, Arnall Golden 40 Case 15-64523-pwb Doc 82 Filed 05/31/16 Entered 05/31/16 09:27:05 Desc Main Document Page 40 of 59 Gregory has very skilled and talented real estate brokers who sell property all over the world. I do not know whether they have sold property in Chile. But I presume that they are smart enough to figure out how to do that. How to do that efficiently. And in a way that would allow for a meaningful distribution to the general unsecured creditors in this case.
Page 43 Court- But, anyway, then there’s, there’s an issue related to that of transparency. As Mr. Harrison points out, nobody knows anything about this. We don’t know who the purchasers are. We don’t know what the - what’s been sold. And, and the lack of transparency is, is just troubling. It’s troubling. It, it’s like, you know, trust me but I’m not going to give you any of the details and it will all work out. Don’t worry about it. And apparently, accordingly to Mr. Harrison, that’s kind of been what they’ve been hearing for some time now. Which gets frustrating to a creditor. On the other hand, you know, the, the, and this is part of what’s driving my decision is if you’re right and if this can all get done this probably makes better sense then having it in a Chapter 7, despite all of these problems. But, but these problems are going torpedo this Chapter 13 if there is not transparency and if there is not, you know, some sort of, of communication. I, I’m not going get into who’s communicating with whom. That’s why I’m just going to have an evidentiary hearing and, and we’ll just figure all of this out. But, that’s, that’s troubling also.
Page 44 Arguably, there’s a surplus in this case. If the Debtor’s right, there is a surplus. That gives the Debtor an interest in the case administration.
Page 52 MR. VALLDEJULI: Yeah I got no life, Judge. With, with, with, with dying relatives and being short-staffed, I’ll be here. I’m not going anywhere.
Page 53 THE COURT: Fourteen days - by May 25th, file an Amended and Restated Chapter 13 Plan as whatever it is that combines everything that’s ever been done, so we have on piece of paper to look at. Okay. MR. VALLDEJULI: Okay.
Page 54 THE COURT: But if you’re going to add something else, or you want to clarify something, whatever it is, get it done by May 25th. MR. VALLDEJULI: Okay.
Page 56 MR. VALLDEJULI: Yes and I think the easy, the easier question to ask without having to go into all of the statutory language is that is, is this an oversecured or undersecured piece of property. Because then if it’s undersecured and we’ve all said it is, it’s not going to ever happen. As far as getting statutory attorney fees. It’s just not going to happen.
