In re Parisi, Bankr. Case No. 18-25689-ABA

RE: In re Joseph. L. Parisi

Bankr. Case No. 18-25689-ABA

UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW JERSEY

September 4, 2019

Andrew B. Altenburg, Jr. U.S. BANKRUPTCY JUDGE

Robert A. Loefflad, Esq.

Ford, Flower,

Hasbrouck & King

P.O. Box 405

Linwood, NJ 08221

Jennifer R. Gorchow, Esq.

Office of the Chapter 13

Standing Trustee

535 Route 38

Suite 580

Cherry Hill, NJ 08002

Francis J. Ballak, Esq.

Goldenberg, Mackler, Sayegh,

Mintz, Pfeffer, Bonchi & Gill

660 New Road, Suite No. 1-A

Northfield, New Jersey 08225

Dear Mr. Loefflad, Ms. Gorchow, and Mr. Ballak:

Before the court is the confirmation of the most recent chapter 13 plan filed by Joseph L. Parisi (the "Debtor") on May 17, 2019 (the "Plan"), (Doc. No. 41) and Pleasantville Investment LLC's ("PI") objection thereto. (Doc. No. 44). After a plenary hearing on July 24, 2019 (the "Plenary Hearing"), at which time the court took testimony, the court gave the parties one week to resolve the objection and if no resolution could be reached, the court instructed the parties to file post-hearing submissions. The court is disheartened that the parties were unable to amicably resolve the matter as evidenced by their filed post-hearing submissions¹ to wit: the Debtor's Certification in Support of Confirmation and a Brief (Doc. Nos. 46 and 47); the Chapter 13 Trustee's letter recommending confirmation (Doc. No. 50); and PI's continuing objection to confirmation (Doc. No. 52). Although not authorized by the court, the Debtor filed a reply to PI's objection. (Doc. No. 54). As a result of the submissions, this matter is now ripe for disposition. The following constitutes this court's findings of fact and conclusions of law as required by Federal Rule of Bankruptcy Procedure 7052. For the reasons that follow, confirmation of the Plan is GRANTED, however, with conditions.

Some background is necessary. This matter was originally brought before the court through the Debtor's original Chapter 13 plan filed August 6, 2018. (Doc. No. 2). On August 29, 2018, PI, a creditor that holds tax liens on two properties of the Debtor, filed an objection to confirmation of the plan. (Doc. No. 16). Thereafter, the Debtor filed two modified plans (Doc. Nos. 31 and 32), to which PI again filed an objection. (Doc. No. 33). The Debtor filed another plan on April 22, 2019. (Doc. No. 36). A confirmation hearing was held on April 24, 2019 (the "Original Confirmation Hearing") at which time the court took admissible testimony. Ultimately, the court denied confirmation. (Doc. No. 38).

Then, the Debtor filed his current Plan to which PI again filed an objection. (Doc. No. 44). The Debtor's Plan proposes to fund his bankruptcy by paying $3,000 a month for 60 months. Additionally, because the monthly payments are not sufficient to satisfy all the claims under the Plan, the Debtor proposes a lump sum payment of $300,000 on or before December 31, 2019, through the sale of either a vacant lot, located at 6800 Washington Ave, Egg Harbor Township, New Jersey (the "Vacant Lot"), or the Debtor's residence, located at 280 Steelmanville Road, Egg Harbor Township, New Jersey (the "Residence"). The Plenary Hearing was held with the Debtor, PI, the Chapter 13 Trustee and witnesses participating.

PI's objection centers on the feasibility of the Plan. In addition to the Residence and the Vacant Lot, Debtor owns two other properties, a gas station, located at 900 N. Main St., Pleasantville, New Jersey (the "Gas Station"), and a motor vehicle repair shop, located at 910 N. Main St., Pleasantville, New Jersey (the "Repair Shop"). These are the properties that PI holds tax liens against. The Debtor is motivated to sell either the Vacant Lot or the Residence to satisfy PI's liens on the properties because the Gas Station and the Repair Shop are the Debtor's livelihood. Thus, if PI were to foreclose on those properties, the Debtor would lose his businesses in addition to the properties themselves.

The proof of claim deadline in this case has long since passed. PI filed Claim #1-1 in the total amount of $132,782.94 which claim is secured by its tax lien against the Gas Station property. PI also filed Claim #2-1 in the total amount of $133,223.99² which claim is secured by its tax lien against the Repair Shop property.

In his post-Plenary Hearing submission, the Debtor consented to a dismissal of his case if the Residence is not sold by the "drop-dead" sale date of December 31, 2019 and/or if the Debtor fails to timely pay any real estate tax payment or other municipal charge within 15 days of the due date for the Residence, the Gas Station and/or the Repair Shop. (Doc. No. 46, ¶¶ 42 and 43). Of course, the Debtor must understand that his Plan actually provides for a lump sum payment of $300,000 by December 31, 2019. While a proposed drop-dead for a sale is fine, and obviously will go hand-in-hand with the Plan requirement, the Debtor cannot ignore and must understand that an actual payment is required by that date - not just a "sale".

The issue before the court is whether the Debtor's Plan is feasible under 11 U.S.C. § 1325. "Chapter 13 in the Bankruptcy Code specifically requires feasibility as a precondition to plan confirmation." In re Buccolo, 397 B.R. 527, 530 (Bankr. D.N.J. 2008) (citing 11 U.S.C.§ 1325(a)(6)). Indeed, section 1325(a)(6) provides that the court may only confirm a plan if, among other requirements, a debtor shows they "will be able to make all payments under the plan and to comply with the plan." The "Chapter 13 debtor bears the burden of persuasion on whether a proposed plan meets the elements required for confirmation pursuant to § 1325." In re Eckert, 485 B.R. 77, 80 (Bankr. M.D. Pa. 2013). "Feasibility is a question of fact." In re Bernardes, 267 B.R. 690, 695 (Bankr. D.N.J. 2001). However, "[t]he Debtor does not need to prove that the Plan is guaranteed to be successful." In re Drago, No. 15-15615 (JNP), 2015 WL 9777745, at *2 (Bankr. D.N.J. Dec. 18, 2015). Instead, the court "must make a factual determination as to whether the plan has a 'reasonable likelihood of success.'" Id. (citing In re Buccolo, 397 B.R. at 530). In reality:

All Chapter 13 plans involve some degree of speculation; [so] debtors need not be able to guarantee success to satisfy the feasibility requirement. [In re Hult, 04.1 I.B.C.R. 18, 20 (Bankr. D. Idaho 2004);] See also First Nat'l Bank of Boston v. Fantasia (In re Fantasia), 211 B.R. 420, 423 (B.A.P. 1st Cir. 1997) ("To satisfy feasibility, a debtor's plan must have a reasonable likelihood of success, i.e., that it is likely that the debtor will have the necessary resources to make all payments as directed by the plan.").

In re Parker, No. 04-40037, 2005 WL 4705288, at *3 (Bankr. D. Idaho Feb. 9, 2005).

Are the monthly Plan payments of $3,000 feasible? At the Plenary Hearing, the court heard testimony from the Debtor's certified public accountant that, based on the Debtor's income and expenses from January to July of 2019, the Debtor is comfortably able to afford the $3,000 per month plan payments.³ The Debtor also testified at the Plenary Hearing and confirmed his ability to make monthly Plan payments. The court also found the Debtor to be extremely motivated to make his plan succeed. Based on the testimony of the Debtor, the testimony of the accountant, and the Trustee's acceptance of the plan, the court finds the Debtor met his burden that the monthly Plan payments of $3,000 are feasible.

However, because the proposed Plan payments alone will not satisfy all claims provided for under the Plan, the Debtor's Plan also provides for a lump-sum payment of $300,000 by December 31, 2019 through the sale of the various properties. Indeed, section 1322(b)(8) allows a debtor's plan to "provide for the payment of all or part of a claim against the debtor from property of the estate or property of the debtor." 11 U.S.C. §1322(b)(8). Thus, "Section 1322(b)(8) permits a debtor to convey or liquidate and pay over the proceeds of sale of any property of the estate or property of the debtor, such as exempt property, to the holder of a claim against the debtor in complete or partial satisfaction of the claim." 8 Collier on Bankruptcy, ¶ 1322.12 (16th ed. 2019) (emphasis added). Moreover, chapter 13 plans are routinely confirmed where a "debtor proposes to pay off that claim within a reasonable amount of time through the sale of the real property". In re Crawford, No. BR 11-24158-SBB, 2012 WL 930281, at *7 (Bankr. D. Colo. Mar. 19, 2012); see also In re Valdez, No. 13-06-12431 MA, 2007 WL 1464439, at *3 (Bankr. D.N.M. May 17, 2007).

Is a lump-sum payment of $300,000 by December 31, 2019 through the sale of the various properties feasible? At the Plenary Hearing, Debtor's counsel failed to move any exhibits into evidence making it more difficult to render this decision. Nevertheless, in making this decision about the Debtor's current Plan, the court is not precluded from considering evidence presented at the hearing. See e.g. In re Acequia, Inc., 787 F.2d 1352, 1358-59 (9th Cir. 1986); In re Blumer, 95 B.R. 143, 146 (B.A.P. 9th Cir. 1988); In re Gulfstar Indus., Inc., 236 B.R. 75, 78 (M.D. Fla. 1999). In re Am. Capital Equip., LLC, 688 F.3d 145, 155 (3d Cir. 2012); In re Derosa-Grund, 567 B.R. 773, 780 n.2 (Bankr. S.D. Tex. 2017). During the Original Confirmation Hearing, the Debtor presented testimony that the combined value of the Gas Station and Repair Shop properties was at least $725,000. And while the Debtor initially proffered incorrect information about the equity in the Residence, after the court itself questioned the Debtor, and further testimony, the court concludes that there is enough equity in the Residence to assist the Debtor in achieving the lump-sum payment of $300,000 by December 31, 2019.⁴ In fact, it appears that all of the Debtor's secured creditors have significant equity cushions in all properties—including PI with the Gas Station and Repair Shop. The Debtor's values were not...