.jpg)
Means test in chapter 11
First of all, I'd like to thank you for clarifying this hyphen thing and
the confusion, for me at least, did stem from my word processor not liking
postpetition or prepetition. That being said (my gmail editor sucks),
*CASE 1*
In the Friedman dissent, Judge Jury says,
"Other *bankruptcy* courts, in equally well-reasoned decisions, have
narrowly interpreted 1115 to supplement 541 by adding only the debtor's
postpetition earnings and other property acquired after the commencement of
the case. *See **In re Tucker,* 2011 WL 5926757 (Bankr.D.Or.
The post was migrated from Yahoo.
Michael:
I asked for a cite because you say, "Under both "views" postpetition income/property is exempt."
How can you say that without a cite? Just to make the statement you have to be able to cite cases from each "view".
Regarding prefixes, they are all affixed, with few exceptions.
postpetition and prepetition are correct.
A hyphen is added when a prefix is placed before a proper noun, i.e. pre-Christian era.
A hyphen is added when the last letter of the prefix is the same as the first letter to which it is attached, i.e. "post-traumatic stress"
A hyphen is added for clarity in pronunciation, e.g co-worker. (keeps people from saying cow.)
I am older than most of you and began reading before word perfect and word wrote their spell checkers. The proliferation of unnecessary hyphens began when spell checkers started requiring the hyphen to stop marking a prefixed word as misspelled. (note, unnecessary and misspelled are exceptions to the last letter first letter matching rule, due to the short length of the prefixes.)
here is the list from webster: The only one with a hyphen is pre-Christmas. Since petition is not a proper noun, prepetition should never by hyphenated.
preadmission
preadult
preagricultural
preanesthetic
preannounce
preapprove
prearrange
prearrangement
preassembled
preassign
prebake
prebattle
prebiblical
prebook
prebreakfast
precapitalist
prechill
preChristmas
preclear
preclearance
precode
precoital
precollege
precollegiate
precolonial
precombustion
precommitment
precompute
precomputer
preconcert
preconciliar
preconquest
preconsonantal
preconstructed
preconvention
preconviction
precool
precopulatory
precrash
precrease
precrisis
precut
predawn
predefine
predelivery
predeparture
predesignate
predevaluation
predevelopment
predinner
predischarge
prediscovery
predive
predraft
predrill
predynastic
preelection
preelectric
preelectronic
preembargo
preemployment
preenrollment
preerect
preestablish
preethical
preexperiment
prefade
prefascist
prefeminist
prefeudal
prefight
prefile
prefilled
prefinance
prefire
preflame
preformat
preformulate
prefreshman
prefrozen
pregame
pregenital
preharvest
preheadache
prehiring
preholiday
preinaugural
preincorporation
preinduction
preindustrial
preinterview
preinvasion
prekindergarten
prelaunch
prelife
preliterary
prelogical
prelunch
preluncheon
premade
premanufacture
premarital
premaritally
premarketing
premarriage
premeal
premeasure
premedieval
premeet
premeiotic
premenopausal
premerger
premigration
premodern
premodification
premodify
premoisten
premold
premolt
premoral
premycotic
prenoon
prenotification
prenotify
prenumber
preopening
preoperational
preorder
prepaste
preperformance
prepill
preplan
preportion
preprepared
prepresidential
prepress
preprice
preprimary
preproduction
preprogram
prepsychedelic
prepublication
prepunch
prepupal
prepurchase
prequalification
prequalify
prerace
prerecession
prerecorded
prerehearsal
prerelease
prerequire
preretirement
prereturn
prereview
prerevisionist
prerevolution
prerevolutionary
prerinse
preriot
prerock
preromantic
presale
preschedule
prescreen
preseason
presentence
presentencing
preservice
presettlement
preshow
preslaughter
presleep
preslice
presong
prespecify
presplit
prestamp
presterilize
prestorage
prestrike
prestructure
presummit
presurgery
presweeten
presymptomatic
pretape
pretax
pretechnological
pretelevision
pretermination
pretheater
pretournament
pretrain
pretravel
pretreat
pretreatment
pretrial
pretrimmed
pretype
preunification
preuniversity
previable
prewar
prewarn
prewash
preweaning
prework
prewrap
On May 22, 2013, at 11:30 PM, Michael Avanesian wrote:
> I know you asked Jason for a cite for his assertion that under both views, postpetition income in not subject to the absolute priority rule. I think you won't find it because the question is whether 1129(b)(2)(B)(ii) exempts, from the absolute priority rule, ONLY those things included by 1115 (postpetition income and postpetition property) or if it exempts postpetition property, income AND pre-petition income/property.
>
> Under both "views" postpetition income/property is exempt.
>
> Put another way, the way I see it, those that apply the absolute priority rule to individuals think that the exception articulated in 1129(b)(2)(B)(ii) applies only to postpetition income/property while those that don't apply the absolute priority rule to individuals think that the exception articulated in 1129(b)(2)(B)(ii) not only applies to postpetition income/property but pre-petition as well.
>
> So as I understand it, we write pospetition and pre-petition. Is that correct!?
>
>
> Sincerely,
> Michael Avanesian
> Attorney and Counselor at Law
> 818-817-1725
>
>
> On Wed, May 22, 2013 at 8:58 PM, cdcbaa wrote:
>>
>> Jason:
>>
>> Do you have any case sites for your point 3?
>>
>> d
>>
>> Sent from my iPad
>>
>> On May 22, 2013, at 10:59 AM, Jason Wallach wrote:
>>
>>>
>>> Having just gone through a recent budget motion (WB) in an individual chapter 11, I have the following comments:
>>>
>>> 1. Means test has nothing to do with it.
>>> 2. Use the LBR form motion, which includes copies of schedules I and J.
>>> 3. Point out that under both the broad and the narrow view of 1115, debtor's post petition income is not subject to the absolute priority rule, even if it is included in the Chapter 11 Estate, so creditors have no right to any part of it.
>>> 4. You will deal with future income at the plan stage. You might have to devote some future income to paying the old and new unsecured creditors, etc.
>>> Jason
>>> Jason Wallach
>>> jwallach@gladstonemichel.com
>>>
>>>
>>>
>>> On May 22, 2013, at 8:53 AM, Michael Avanesian wrote:
>>>
>>>>
>>>>
>>>> Alik,
>>>>
>>>> All I do is Chapter 11 work and some of that is for individuals. I have never used the means test (I don't even know how to compute it) for anything. If the Court wants a projected budget, then project his budget and present it. If there is some speculation or some projection that is not based on historical income/expenditures then make that clear.
>>>>
>>>> I always thought the means test was used to determine whether or not one qualifies for Chapter 7 so maybe I am misunderstanding.
>>>>
>>>> Sincerely,
>>>> Michael Avanesian
>>>>
>>>>
>>>> On Wed, May 22, 2013 at 1:46 AM, Alik Segal wrote:
>>>>>
>>>>>
>>>>> Please help me analyze this situation:
>>>>>
>>>>> Chapter 11 Debtor needs to present his projected budget for a status conference. This question concerns with whether the means test applies and the amount of the claim. The so-called problem is that debtor's income has increase substantially postpetition.
>>>>>
>>>>> Debtor moved out of his residence before filing the petition. After filing the petition, he rented out his former residence, which has become an income property. Debtor's goal is to bifurcate the mortgage balance per 506(b).
>>>>>
>>>>> Prepetition Debtor was barely making ends meet, but not that we filed (post-petition), his business income improved substantially and we may be facing the means test.
>>>>>
>>>>> 1. The first question is whether a postpetition increase in income could trigger a means test. I am not sure if the statute authorizes this explicitly, but my gut feeling is that under Lanning, an argument might be made that ignoring a post petition increase in income is wrong.
>>>>>
>>>>> 2. The second question is whether the debts are primarily consumer debts. The mortgage is $450K. Unsecured business debts are $200K while unsecured consumer debts are $50K. Since the mortgage is the 1,000 lb gorilla in this scenario, how the mortgage is characterized will determine whether the debts are primarily consumer debts or not. The original purpose of the mortgage was to finance a purchase of a residence so originally the debt was a consumer debt. However, currently the debt is secured by collateral that is used to produce income. What is the determinative time period--1) when the debts were incurred or 2) now? Does the change in the use of the collateral affect the character of the debt?
>>>>>
>>>>> 3. Assuming post-petition change in income applies and the mortgage counts as counts as consumer debt because is was originally incurred to acquire a personal residence, how will the cumulative dividend or the monthly payment be determined? Will there be a budget battle with the UST?
>>>>>
>>>>> 4. Let's say that based on the deals currently in the works, Debtor is projecting $5K of disposable income (after business expenses and living expenses) for the next six month. However, this number is based on expected contracts and it may not materialize. In fact, Debtor did not make a dime for the year and a half immediately before filing. Should the $5K projection be presented in the status conference report? Should speculative income be presented in the status conference projections?
>>>>>
>>>>>
>>>>> Alik Segal
>>>>> Alik.Segal@gmail.com
>>>>> 310-362-6157
>>>>> California Central District
>
>
Michael: I asked for a cite because you say, "Under both "views" postpetition income/property is exempt."How can you say that without a cite? Just to make the statement you have to be able to cite cases from each "view".Regarding prefixes, they are all affixed, with few exceptions.postpetition and prepetition are correct. A hyphen is added when a prefix is placed before a proper noun, i.e. pre-Christian era.A hyphen is added when the last letter of the prefix is the same as the first letter to which it is attached, i.e. "post-traumatic stress"A hyphen is added for clarity in pronunciation, e.g co-worker. (keeps people from saying cow.)I am older than most of you and began reading before word perfect and word wrote their spell checkers. The proliferation of unnecessary hyphens began when spell checkers started requiring the hyphen to stop marking a prefixed word as misspelled. (note, unnecessary and misspelled are exceptions to the last letter first letter matching rule, due to the short length of the prefixes.)preanne; margin: 0px; padding: 0px; ">preapproveprearrangeprecollee; margin: 0px; padding: 0px; ">precolonialprecombustionprecommitmentprecomputepreconcil none; margin: 0px; padding: 0px; ">preconquestpreconsonantalpreconstructedpreconventionpreconvictionprecoolprecopt-style-type: none; margin: 0px; padding: 0px; ">precrashprecreasepredevelpe: none; margin: 0px; padding: 0px; ">predinnerpredischargeprediscoverypredivepredraftpredrillpredynasticpreelectionpreelec; margin: 0px; padding: 0px; ">preelectronicpreembargopreemploymentpreenrollmentpreerectprees: none; margin: 0px; padding: 0px; ">preethirgin: 0px; padding: 0px; ">preexperimentprefadeprefinanceprefirepregenitalpreharvestpreincorpo none; margin: 0px; padding: 0px; ">preinducargin: 0px; padding: 0px; ">preindustrigin: 0px; padding: 0px; ">preinterviewpreinvasionprekindergartenprelaunchprelifepreliteraryprelogicalprelunchpreluncheonpremadepremanufacturepremaritalpremaritallypremarketingpremarriagepreargin: 0px; padding: 0px; ">premeasurepremedievalpremeetpretyle-type: none; margin: 0px; padding: 0px; ">prementyle-type: none; margin: 0px; padding: 0px; ">premergmargin: 0px; padding: 0px; ">premigrationpremodernpremodificationpremodifypremoistenpreargin: 0px; padding: 0px; ">premoltpremoralpremycoticprenoonprenotificaargin: 0px; padding: 0px; ">prenotifyprenumberpreplanpreportionprepreparedprepresidentialprepresspree; margin: 0px; padding: 0px; ">preprimarypreproductionpreprogramprepsychedelicprepublicationprepunchprepurgin: 0px; padding: 0px; ">prepurchaseprequalificationprequalifypreracepre-style-type: none; margin: 0px; padding: 0px; ">prerepe: none; margin: 0px; padding: 0px; ">prerehearsalprereleaseprerequirepreretirementprerevisionrgin: 0px; padding: 0px; ">prerevolutionprerevolutionaryprerinsepreriotpresalepreschedulepre; margin: 0px; padding: 0px; ">pretaxpretechnologicalpretelevisionpreterminationpretheaterpretournamentpretrainpretravelpretreatpretreatmentpretrialpretrimmedpretypepreunificationpreuniversityprevi: none; margin: 0px; padding: 0px; ">prewarprewarnprewashpreweaningpreworkprewrapOn May 22, 2013, at 11:30 PM, Michael Avanesian <michael@avanesianlaw.com> wrote:
I know you asked Jason for a cite for his assertion that under both views, postpetition income in not subject to the absolute priority rule. I think you won't find it because the question is whether 1129(b)(2)(B)(ii) exempts, from the absolute priority rule, ONLY those things included by 1115 (postpetition income and postpetition property) or if it exempts postpetition property, income AND pre-petition income/property.
Under both "views" postpetition income/property is exempt. Put another way, the way I see it, those that apply the absolute priority rule to individuals think that the exception articulated in 1129(b)(2)(B)(ii) applies only to postpetition income/property while those that don't apply the absolute priority rule to individuals think that the exception articulated in 1129(b)(2)(B)(ii) not only applies to postpetition income/property but pre-petition as well.
So as I understand it, we write pospetition and pre-petition. Is that correct!?Sincerely, Michael Avanesian
Attorney and Counselor at Law818-817-1725
On Wed, May 22, 2013 at 8:58 PM, cdcbaa <cdcbaamailbox@gmail.com> wrote:
The post was migrated from Yahoo.
I know you asked Jason for a cite for his assertion that under both views,
postpetition income in not subject to the absolute priority rule. I think
you won't find it because the question is whether 1129(b)(2)(B)(ii)
exempts, from the absolute priority rule, ONLY those things included by
1115 (postpetition income and postpetition property) or if it exempts
postpetition property, income AND pre-petition income/property.
Under both "views" postpetition income/property is exempt.
Put another way, the way I see it, those that apply the absolute priority
rule to individuals think that the exception articulated in
1129(b)(2)(B)(ii) applies only to postpetition income/property while those
that don't apply the absolute priority rule to individuals think that the
exception articulated in 1129(b)(2)(B)(ii) not only applies to postpetition
income/property but pre-petition as well.
So as I understand it, we write pospetition and pre-petition. Is that
correct!?
Sincerely,
Michael Avanesian
Attorney and Counselor at Law
818-817-1725
On Wed, May 22, 2013 at 8:58 PM, cdcbaa wrote:
> **
>
>
> Jason:
>
> Do you have any case sites for your point 3?
>
> d
>
> Sent from my iPad
>
> On May 22, 2013, at 10:59 AM, Jason Wallach
> wrote:
>
>
>
> Having just gone through a recent budget motion (WB) in an individual
> chapter 11, I have the following comments:
> 1. Means test has nothing to do with it.
> 2. Use the LBR form motion, which includes copies of schedules I and J.
> 3. Point out that under both the broad and the narrow view of 1115,
> debtor's post petition income is not subject to the absolute priority rule,
> even if it is included in the Chapter 11 Estate, so creditors have no right
> to any part of it.
> 4. You will deal with future income at the plan stage. You might have to
> devote some future income to paying the old and new unsecured creditors,
> etc.
> Jason
> Jason Wallach
> jwallach@gladstonemichel.com
>
>
>
> On May 22, 2013, at 8:53 AM, Michael Avanesian wrote:
>
>
>
> Alik,
>
> All I do is Chapter 11 work and some of that is for individuals. I have
> never used the means test (I don't even know how to compute it) for
> anything. If the Court wants a projected budget, then project his budget
> and present it. If there is some speculation or some projection that is not
> based on historical income/expenditures then make that clear.
>
> I always thought the means test was used to determine whether or not one
> qualifies for Chapter 7 so maybe I am misunderstanding.
>
> Sincerely,
> Michael Avanesian
>
>
> On Wed, May 22, 2013 at 1:46 AM, Alik Segal wrote:
>
>> **
>>
>>
>> Please help me analyze this situation:
>>
>> Chapter 11 Debtor needs to present his projected budget for a status
>> conference. This question concerns with whether the means test applies and
>> the amount of the claim. The so-called problem is that debtor's income has
>> increase substantially postpetition.
>>
>> Debtor moved out of his residence before filing the petition. After
>> filing the petition, he rented out his former residence, which has become
>> an income property. Debtor's goal is to bifurcate the mortgage balance per
>> 506(b).
>>
>> Prepetition Debtor was barely making ends meet, but not that we filed
>> (post-petition), his business income improved substantially and we may be
>> facing the means test.
>>
>> 1. The first question is whether a postpetition increase in income
>> could trigger a means test. I am not sure if the statute authorizes this
>> explicitly, but my gut feeling is that under Lanning, an argument might be
>> made that ignoring a post petition increase in income is wrong.
>>
>> 2. The second question is whether the debts are primarily consumer
>> debts. The mortgage is $450K. Unsecured business debts are $200K while
>> unsecured consumer debts are $50K. Since the mortgage is the 1,000 lb
>> gorilla in this scenario, how the mortgage is characterized will determine
>> whether the debts are primarily consumer debts or not. The original
>> purpose of the mortgage was to finance a purchase of a residence so
>> originally the debt was a consumer debt. However, currently the debt is
>> secured by collateral that is used to produce income. What is the
>> determinative time period--1) when the debts were incurred or 2) now? Does
>> the change in the use of the collateral affect the character of the debt?
>>
>> 3. Assuming post-petition change in income applies and the mortgage
>> counts as counts as consumer debt because is was originally incurred to
>> acquire a personal residence, how will the cumulative dividend or the
>> monthly payment be determined? Will there be a budget battle with the
>> UST?
>>
>> 4. Let's say that based on the deals currently in the works, Debtor is
>> projecting $5K of disposable income (after business expenses and living
>> expenses) for the next six month. However, this number is based on
>> expected contracts and it may not materialize. In fact, Debtor did not
>> make a dime for the year and a half immediately before filing. Should the
>> $5K projection be presented in the status conference report? Should
>> speculative income be presented in the status conference projections?
>>
>>
>> Alik Segal
>> Alik.Segal@gmail.com
>> 310-362-6157
>> California Central District
>>
>>
>>
>
>
>
>
I know you asked Jason for a cite for his assertion that under both views, postpetition income in not subject to the absolute priority rule. I think you won't find it because the question is whether 1129(b)(2)(B)(ii) exempts, from the absolute priority rule, ONLY those things included by 1115 (postpetition income and postpetition property) or if it exempts postpetition property, income AND pre-petition income/property.
Under both "views" postpetition income/property is exempt.Put another way, the way I see it, those that apply the absolute priority rule to individuals think that the exception articulated in 1129(b)(2)(B)(ii) applies only to postpetition income/property while those that don't apply the absolute priority rule to individuals think that the exception articulated in 1129(b)(2)(B)(ii) not only applies to postpetition income/property but pre-petition as well.
So as I understand it, we write pospetition and pre-petition. Is that correct!?Sincerely, Michael Avanesian
Attorney and Counselor at Law818-817-1725
On Wed, May 22, 2013 at 8:58 PM, cdcbaa <cdcbaamailbox@gmail.com> wrote:
The post was migrated from Yahoo.
charsetndows-1252
Good point but in this hypothetical, the debtor's income increased post petition.
Please correct me if I'm wrong but 1129(a)(15) invokes the average pre-petition income and the part real/part IRS expenses, right?
Jason
Jason Wallach
Gladstone Michel Weisberg Willner & Sloane, ALC
4551 Glencoe Avenue, Suite 300
Marina del Rey CA 90292
(310) 821-9000
www.gladstonemichel.com
jwallach@gladstonemichel.com
On May 22, 2013, at 8:59 PM, cdcbaa wrote:
Please read 1129a15
Sent from my iPad
On May 22, 2013, at 8:53 AM, Michael Avanesian wrote:
>
>
> Alik,
>
> All I do is Chapter 11 work and some of that is for individuals. I have never used the means test (I don't even know how to compute it) for anything. If the Court wants a projected budget, then project his budget and present it. If there is some speculation or some projection that is not based on historical income/expenditures then make that clear.
>
> I always thought the means test was used to determine whether or not one qualifies for Chapter 7 so maybe I am misunderstanding.
>
> Sincerely,
> Michael Avanesian
>
>
> On Wed, May 22, 2013 at 1:46 AM, Alik Segal wrote:
>
>
> Please help me analyze this situation:
>
> Chapter 11 Debtor needs to present his projected budget for a status conference. This question concerns with whether the means test applies and the amount of the claim. The so-called problem is that debtor's income has increase substantially postpetition.
>
> Debtor moved out of his residence before filing the petition. After filing the petition, he rented out his former residence, which has become an income property. Debtor's goal is to bifurcate the mortgage balance per 506(b).
>
> Prepetition Debtor was barely making ends meet, but not that we filed (post-petition), his business income improved substantially and we may be facing the means test.
>
> 1. The first question is whether a postpetition increase in income could trigger a means test. I am not sure if the statute authorizes this explicitly, but my gut feeling is that under Lanning, an argument might be made that ignoring a post petition increase in income is wrong.
>
> 2. The second question is whether the debts are primarily consumer debts. The mortgage is $450K. Unsecured business debts are $200K while unsecured consumer debts are $50K. Since the mortgage is the 1,000 lb gorilla in this scenario, how the mortgage is characterized will determine whether the debts are primarily consumer debts or not. The original purpose of the mortgage was to finance a purchase of a residence so originally the debt was a consumer debt. However, currently the debt is secured by collateral that is used to produce income. What is the determinative time period--1) when the debts were incurred or 2) now? Does the change in the use of the collateral affect the character of the debt?
>
> 3. Assuming post-petition change in income applies and the mortgage counts as counts as consumer debt because is was originally incurred to acquire a personal residence, how will the cumulative dividend or the monthly payment be determined? Will there be a budget battle with the UST?
>
> 4. Let's say that based on the deals currently in the works, Debtor is projecting $5K of disposable income (after business expenses and living expenses) for the next six month. However, this number is based on expected contracts and it may not materialize. In fact, Debtor did not make a dime for the year and a half immediately before filing. Should the $5K projection be presented in the status conference report? Should speculative income be presented in the status conference projections?
>
>
> Alik Segal
> Alik.Segal@gmail.com
> 310-362-6157
> California Central District
>
>
>
>
charsetndows-1252
Good point but in this hypothetical, the debtor's income increased post petition. Please correct me if I'm wrong but 1129(a)(15) invokes the average pre-petition income and the part real/part IRS expenses, right?Jason
Jason WallachGladstone Michel Weisberg Willner & Sloane, ALC4551 Glencoe Avenue, Suite 300Marina del Rey CA 90292(310) 821-9000www.gladstonemichel.com
On May 22, 2013, at 8:59 PM, cdcbaa wrote:
Please read 1129a15Sent from my iPadOn May 22, 2013, at 8:53 AM, Michael Avanesian <michael@avanesianlaw.com> wrote:
Alik, All I do is Chapter 11 work and some of that is for individuals. I have never used the means test (I don't even know how to compute it) for anything. If the Court wants a projected budget, then project his budget and present it. If there is some speculation or some projection that is not based on historical income/expenditures then make that clear.
I always thought the means test was used to determine whether or not one qualifies for Chapter 7 so maybe I am misunderstanding. Sincerely, Michael Avanesian
On Wed, May 22, 2013 at 1:46 AM, Alik Segal <listserv.inbox@gmail.com> wrote:
The post was migrated from Yahoo.
Please read 1129a15
Sent from my iPad
On May 22, 2013, at 8:53 AM, Michael Avanesian wrote:
> Alik,
>
> All I do is Chapter 11 work and some of that is for individuals. I have never used the means test (I don't even know how to compute it) for anything. If the Court wants a projected budget, then project his budget and present it. If there is some speculation or some projection that is not based on historical income/expenditures then make that clear.
>
> I always thought the means test was used to determine whether or not one qualifies for Chapter 7 so maybe I am misunderstanding.
>
> Sincerely,
> Michael Avanesian
>
>
> On Wed, May 22, 2013 at 1:46 AM, Alik Segal wrote:
>>
>> Please help me analyze this situation:
>>
>> Chapter 11 Debtor needs to present his projected budget for a status conference. This question concerns with whether the means test applies and the amount of the claim. The so-called problem is that debtor's income has increase substantially postpetition.
>>
>> Debtor moved out of his residence before filing the petition. After filing the petition, he rented out his former residence, which has become an income property. Debtor's goal is to bifurcate the mortgage balance per 506(b).
>>
>> Prepetition Debtor was barely making ends meet, but not that we filed (post-petition), his business income improved substantially and we may be facing the means test.
>>
>> 1. The first question is whether a postpetition increase in income could trigger a means test. I am not sure if the statute authorizes this explicitly, but my gut feeling is that under Lanning, an argument might be made that ignoring a post petition increase in income is wrong.
>>
>> 2. The second question is whether the debts are primarily consumer debts. The mortgage is $450K. Unsecured business debts are $200K while unsecured consumer debts are $50K. Since the mortgage is the 1,000 lb gorilla in this scenario, how the mortgage is characterized will determine whether the debts are primarily consumer debts or not. The original purpose of the mortgage was to finance a purchase of a residence so originally the debt was a consumer debt. However, currently the debt is secured by collateral that is used to produce income. What is the determinative time period--1) when the debts were incurred or 2) now? Does the change in the use of the collateral affect the character of the debt?
>>
>> 3. Assuming post-petition change in income applies and the mortgage counts as counts as consumer debt because is was originally incurred to acquire a personal residence, how will the cumulative dividend or the monthly payment be determined? Will there be a budget battle with the UST?
>>
>> 4. Let's say that based on the deals currently in the works, Debtor is projecting $5K of disposable income (after business expenses and living expenses) for the next six month. However, this number is based on expected contracts and it may not materialize. In fact, Debtor did not make a dime for the year and a half immediately before filing. Should the $5K projection be presented in the status conference report? Should speculative income be presented in the status conference projections?
>>
>>
>> Alik Segal
>> Alik.Segal@gmail.com
>> 310-362-6157
>> California Central District
>
>
The post was migrated from Yahoo.
Jason:
Do you have any case sites for your point 3?
d
Sent from my iPad
On May 22, 2013, at 10:59 AM, Jason Wallach wrote:
> Having just gone through a recent budget motion (WB) in an individual chapter 11, I have the following comments:
>
> 1. Means test has nothing to do with it.
> 2. Use the LBR form motion, which includes copies of schedules I and J.
> 3. Point out that under both the broad and the narrow view of 1115, debtor's post petition income is not subject to the absolute priority rule, even if it is included in the Chapter 11 Estate, so creditors have no right to any part of it.
> 4. You will deal with future income at the plan stage. You might have to devote some future income to paying the old and new unsecured creditors, etc.
> Jason
> Jason Wallach
> jwallach@gladstonemichel.com
>
>
>
> On May 22, 2013, at 8:53 AM, Michael Avanesian wrote:
>
>>
>>
>> Alik,
>>
>> All I do is Chapter 11 work and some of that is for individuals. I have never used the means test (I don't even know how to compute it) for anything. If the Court wants a projected budget, then project his budget and present it. If there is some speculation or some projection that is not based on historical income/expenditures then make that clear.
>>
>> I always thought the means test was used to determine whether or not one qualifies for Chapter 7 so maybe I am misunderstanding.
>>
>> Sincerely,
>> Michael Avanesian
>>
>>
>> On Wed, May 22, 2013 at 1:46 AM, Alik Segal wrote:
>>>
>>>
>>> Please help me analyze this situation:
>>>
>>> Chapter 11 Debtor needs to present his projected budget for a status conference. This question concerns with whether the means test applies and the amount of the claim. The so-called problem is that debtor's income has increase substantially postpetition.
>>>
>>> Debtor moved out of his residence before filing the petition. After filing the petition, he rented out his former residence, which has become an income property. Debtor's goal is to bifurcate the mortgage balance per 506(b).
>>>
>>> Prepetition Debtor was barely making ends meet, but not that we filed (post-petition), his business income improved substantially and we may be facing the means test.
>>>
>>> 1. The first question is whether a postpetition increase in income could trigger a means test. I am not sure if the statute authorizes this explicitly, but my gut feeling is that under Lanning, an argument might be made that ignoring a post petition increase in income is wrong.
>>>
>>> 2. The second question is whether the debts are primarily consumer debts. The mortgage is $450K. Unsecured business debts are $200K while unsecured consumer debts are $50K. Since the mortgage is the 1,000 lb gorilla in this scenario, how the mortgage is characterized will determine whether the debts are primarily consumer debts or not. The original purpose of the mortgage was to finance a purchase of a residence so originally the debt was a consumer debt. However, currently the debt is secured by collateral that is used to produce income. What is the determinative time period--1) when the debts were incurred or 2) now? Does the change in the use of the collateral affect the character of the debt?
>>>
>>> 3. Assuming post-petition change in income applies and the mortgage counts as counts as consumer debt because is was originally incurred to acquire a personal residence, how will the cumulative dividend or the monthly payment be determined? Will there be a budget battle with the UST?
>>>
>>> 4. Let's say that based on the deals currently in the works, Debtor is projecting $5K of disposable income (after business expenses and living expenses) for the next six month. However, this number is based on expected contracts and it may not materialize. In fact, Debtor did not make a dime for the year and a half immediately before filing. Should the $5K projection be presented in the status conference report? Should speculative income be presented in the status conference projections?
>>>
>>>
>>> Alik Segal
>>> Alik.Segal@gmail.com
>>> 310-362-6157
>>> California Central District
>>>
>>>
>>
>>
>
>
The post was migrated from Yahoo.
What judge is going into the budget so much? Judge Clarkson does not
believe it is necessary, nor do I (my position is that the debtor is using
estate assets in the ordinary course of business, which business is to lead
a normal life just like you do if you are in a 13 and nobody requires a
budget motion in a 13 even though the law is analogous). Judge Bluebond
also does not believe it necessary. In the end, if you're in front of a
judge who might possibly think it necessary, like Judge Zurzolo who may
require the motion only because he contributed to the creation of the form
11 plan and disclosure statements and I assume the accompanying motions,
you simply follow the from motion and file it timely and the hearing is
usually uneventful. Be exhaustive (as to the expenses) but conservative
(especially as to projected income) in your budgeting and it is not a
motion that ever causes me worry.
On the other hand, do comply with the U.S.T.'s requirements. One of them
is to do the notice of setting/increasing insider compensation, which is
required and has some of the same entries in common with a budget. The
disposable income issues and the absolute priority rule come into play as
part of plan drafting and confirmation.
On Wed, May 22, 2013 at 1:46 AM, Alik Segal wrote:
> **
>
>
> Please help me analyze this situation:
>
> Chapter 11 Debtor needs to present his projected budget for a status
> conference. This question concerns with whether the means test applies and
> the amount of the claim. The so-called problem is that debtor's income has
> increase substantially postpetition.
>
> Debtor moved out of his residence before filing the petition. After
> filing the petition, he rented out his former residence, which has become
> an income property. Debtor's goal is to bifurcate the mortgage balance per
> 506(b).
>
> Prepetition Debtor was barely making ends meet, but not that we filed
> (post-petition), his business income improved substantially and we may be
> facing the means test.
>
> 1. The first question is whether a postpetition increase in income could
> trigger a means test. I am not sure if the statute authorizes this
> explicitly, but my gut feeling is that under Lanning, an argument might be
> made that ignoring a post petition increase in income is wrong.
>
> 2. The second question is whether the debts are primarily consumer
> debts. The mortgage is $450K. Unsecured business debts are $200K while
> unsecured consumer debts are $50K. Since the mortgage is the 1,000 lb
> gorilla in this scenario, how the mortgage is characterized will determine
> whether the debts are primarily consumer debts or not. The original
> purpose of the mortgage was to finance a purchase of a residence so
> originally the debt was a consumer debt. However, currently the debt is
> secured by collateral that is used to produce income. What is the
> determinative time period--1) when the debts were incurred or 2) now? Does
> the change in the use of the collateral affect the character of the debt?
>
> 3. Assuming post-petition change in income applies and the mortgage
> counts as counts as consumer debt because is was originally incurred to
> acquire a personal residence, how will the cumulative dividend or the
> monthly payment be determined? Will there be a budget battle with the
> UST?
>
> 4. Let's say that based on the deals currently in the works, Debtor is
> projecting $5K of disposable income (after business expenses and living
> expenses) for the next six month. However, this number is based on
> expected contracts and it may not materialize. In fact, Debtor did not
> make a dime for the year and a half immediately before filing. Should the
> $5K projection be presented in the status conference report? Should
> speculative income be presented in the status conference projections?
>
>
> Alik Segal
> Alik.Segal@gmail.com
> 310-362-6157
> California Central District
>
>
>
Giovanni Orantes, Esq.
Certified Bankruptcy Specialist*
Orantes Law Firm, P.C.
3435 Wilshire Blvd. Suite 2920
Los Angeles, CA 90010
Tel: (213) 389-4362
Fax: (877) 789-5776
e-mail: go@gobklaw.com
website: www.gobklaw.com
*Board Certified - Business Bankruptcy Law - American Board of Certification
*Board Certified - Consumer Bankruptcy Law - American Board of Certification
WE ARE A "DEBT RELIEF AGENCY" AS DEFINED BY FEDERAL LAW.
SERVING BAKERSFIELD, LOS ANGELES, ORANGE COUNTY, RIVERSIDE, SAN BERNARDINO
AND SANTA BARBARA AND THE WORLD FOR CHAPTER 11 AND 15 CASES.
Note: The information contained in this e-mail message is confidential
information intended only for the use of the individual or entity named. If
the reader of this message is not the intended recipient or an agent
responsible for delivering it to the intended recipient, you are hereby
notified that any dissemination, distribution or copy of this communication
is strictly prohibited. If you have received this communication in error,
please immediately notify us by telephone or e-mail and delete the original
e-mail at (213) 389-4362 or (888) 619-8222.
IRS Circular 230 Disclosure: In order to comply with requirements imposed
by the Internal Revenue Service, we inform you that any U.S. tax advice
contained in this communication (including any attachments) is not intended
to be used, and cannot be used, for the purpose of (i) avoiding penalties
under the Internal Revenue Code or (ii) promoting, marketing, or
recommending to another party any transaction or matter addressed herein.
What judge is going into the budget so much? Judge Clarkson does not believe it is necessary, nor do I (my position is that the debtor is using estate assets in the ordinary course of business, which business is to lead a normal life just like you do if you are in a 13 and nobody requires a budget motion in a 13 even though the law is analogous). 're in front of a judge who might possibly think it necessary, like Judge Zurzolo who may require the motion only because he contributed to the creation of the form 11 plan and disclosure statements and I assume the accompanying motions, you simply follow the from motion and file it timely and the hearing is usually uneventful. Be exhaustive (as to the expenses) but conservative (especially as to projected income) in your budgeting and it is not a motion that ever causes me worry.
On the other hand, do comply with the U.S.T.'s requirements. One of them is to do the notice of setting/increasing insider compensation, which is required and has some of the same entries in common with a budget. The disposable income issues and the absolute priority rule come into play as part of plan drafting and confirmation.
On Wed, May 22, 2013 at 1:46 AM, Alik Segal <listserv.inbox@gmail.com> wrote:
Please help me analyze this situation:Chapter 11 Debtor needs to present his projected budget for a status conference. This question concerns with whether the means test applies and the amount of the claim. The so-called problem is that debtor's income has increase substantially postpetition.
Debtor moved out of his residence before filing the petition. After filing the petition, he rented out his former residence, which has become an income property. Debtor's goal is to bifurcate the mortgage balance per 506(b).
Prepetition Debtor was barely making ends meet, but not that we filed (post-petition), his business income improved substantially and we may be facing the means test.1. The first question is whether a postpetition increase in income could trigger a means test.ling is that under Lanning, an argument might be made that ignoring a post petition increase in income is wrong.
2. The second question is whether the debts are primarily consumer debts. The mortgage is $450K. Unsecured business debts are $200K while unsecured consumer debts are $50K. Since the mortgage is the 1,000 lb gorilla in this scenario, how the mortgage is characterized will determine whether the debts are primarily consumer debts or not. The original purpose of the mortgage was to finance a purchase of a residence so originally the debt was a consumer debt. However, currently the debt is secured by collateral that is used to produce income. What is the determinative time period--1) when the debts were incurred or 2) now? Does the change in the use of the collateral affect the character of the debt?
3. Assuming post-petition change in income applies and the mortgage counts as counts as consumer debt because is was originally incurred to acquire a personal residence, how will the cumulative dividend or the monthly payment be determined? Will there be a budget battle with the UST?
4. Let's say that based on the deals currently in the works, Debtor is projecting $5K of disposable income (after business expenses and living expenses) for the next six month. However, this number is based on expected contracts and it may not materialize. In fact, Debtor did not make a dime for the year and a half immediately before filing. Should the $5K projection be presented in the status conference report? Should speculative income be presented in the status conference projections?
Alik SegalAlik.Segal@gmail.com310-362-6157California Central District
-- Giovanni Orantes, Esq.Certified Bankruptcy Specialist* Orantes Law Firm, P.C.3435 Wilshire Blvd. Suite 2920Los Angeles, CA 90010
Tel: (213) 389-4362Fax: (877) 789-5776e-mail: go@gobklaw.comwebsite: www.gobklaw.com*Board Certified - Business Bankruptcy Law - American Board of Certification
*Board Certified - Consumer Bankruptcy Law - American Board of CertificationWE ARE A "DEBT RELIEF AGENCY" AS DEFINED BY FEDERAL LAW.SERVING BAKERSFIELD, LOS ANGELES, ORANGE COUNTY, RIVERSIDE, SAN BERNARDINO AND SANTA BARBARA AND THE WORLD FOR CHAPTER 11 AND 15 CASES.
Note: The information contained in this e-mail message is confidential information intended only for the use of the individual or entity named. If the reader of this message is not the intended recipient or an agent responsible for delivering it to the intended recipient, you are hereby notified that any dissemination, distribution or copy of this communication is strictly prohibited. If you have received this communication in error, please immediately notify us by telephone or e-mail and delete the original e-mail IRS Circular 230 Disclosure: In order to comply with requirements imposed by the Internal Revenue Service, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
The post was migrated from Yahoo.
charsetndows-1252
Having just gone through a recent budget motion (WB) in an individual chapter 11, I have the following comments:
1. Means test has nothing to do with it.
2. Use the LBR form motion, which includes copies of schedules I and J.
3. Point out that under both the broad and the narrow view of 1115, debtor's post petition income is not subject to the absolute priority rule, even if it is included in the Chapter 11 Estate, so creditors have no right to any part of it.
4. You will deal with future income at the plan stage. You might have to devote some future income to paying the old and new unsecured creditors, etc.
Jason
Jason Wallach
jwallach@gladstonemichel.com
On May 22, 2013, at 8:53 AM, Michael Avanesian wrote:
>
> Alik,
>
> All I do is Chapter 11 work and some of that is for individuals. I have never used the means test (I don't even know how to compute it) for anything. If the Court wants a projected budget, then project his budget and present it. If there is some speculation or some projection that is not based on historical income/expenditures then make that clear.
>
> I always thought the means test was used to determine whether or not one qualifies for Chapter 7 so maybe I am misunderstanding.
>
> Sincerely,
> Michael Avanesian
>
>
> On Wed, May 22, 2013 at 1:46 AM, Alik Segal wrote:
>
>
> Please help me analyze this situation:
>
> Chapter 11 Debtor needs to present his projected budget for a status conference. This question concerns with whether the means test applies and the amount of the claim. The so-called problem is that debtor's income has increase substantially postpetition.
>
> Debtor moved out of his residence before filing the petition. After filing the petition, he rented out his former residence, which has become an income property. Debtor's goal is to bifurcate the mortgage balance per 506(b).
>
> Prepetition Debtor was barely making ends meet, but not that we filed (post-petition), his business income improved substantially and we may be facing the means test.
>
> 1. The first question is whether a postpetition increase in income could trigger a means test. I am not sure if the statute authorizes this explicitly, but my gut feeling is that under Lanning, an argument might be made that ignoring a post petition increase in income is wrong.
>
> 2. The second question is whether the debts are primarily consumer debts. The mortgage is $450K. Unsecured business debts are $200K while unsecured consumer debts are $50K. Since the mortgage is the 1,000 lb gorilla in this scenario, how the mortgage is characterized will determine whether the debts are primarily consumer debts or not. The original purpose of the mortgage was to finance a purchase of a residence so originally the debt was a consumer debt. However, currently the debt is secured by collateral that is used to produce income. What is the determinative time period--1) when the debts were incurred or 2) now? Does the change in the use of the collateral affect the character of the debt?
>
> 3. Assuming post-petition change in income applies and the mortgage counts as counts as consumer debt because is was originally incurred to acquire a personal residence, how will the cumulative dividend or the monthly payment be determined? Will there be a budget battle with the UST?
>
> 4. Let's say that based on the deals currently in the works, Debtor is projecting $5K of disposable income (after business expenses and living expenses) for the next six month. However, this number is based on expected contracts and it may not materialize. In fact, Debtor did not make a dime for the year and a half immediately before filing. Should the $5K projection be presented in the status conference report? Should speculative income be presented in the status conference projections?
>
>
> Alik Segal
> Alik.Segal@gmail.com
> 310-362-6157
> California Central District
>
>
>
>
>
charsetndows-1252
Having just gone through a recent budget motion (WB) in an individual chapter 11, I have the following comments:1. Means test has nothing to do with it.2. Use the LBR form motion, which includes copies of schedules I and J.3. Point out that under both the broad and the narrow view of 1115, debtor's post petition income is not subject to the absolute priority rule, even if it is included in the Chapter 11 Estate, so creditors have no right to any part of it.4. You will deal with future income at the plan stage. You might have to devote some future income to paying the old and new unsecured creditors, etc.Jason
Jason Wallach
The post was migrated from Yahoo.
Alik,
All I do is Chapter 11 work and some of that is for individuals. I have
never used the means test (I don't even know how to compute it) for
anything. If the Court wants a projected budget, then project his budget
and present it. If there is some speculation or some projection that is not
based on historical income/expenditures then make that clear.
I always thought the means test was used to determine whether or not one
qualifies for Chapter 7 so maybe I am misunderstanding.
Sincerely,
Michael Avanesian
On Wed, May 22, 2013 at 1:46 AM, Alik Segal wrote:
> **
>
>
> Please help me analyze this situation:
>
> Chapter 11 Debtor needs to present his projected budget for a status
> conference. This question concerns with whether the means test applies and
> the amount of the claim. The so-called problem is that debtor's income has
> increase substantially postpetition.
>
> Debtor moved out of his residence before filing the petition. After
> filing the petition, he rented out his former residence, which has become
> an income property. Debtor's goal is to bifurcate the mortgage balance per
> 506(b).
>
> Prepetition Debtor was barely making ends meet, but not that we filed
> (post-petition), his business income improved substantially and we may be
> facing the means test.
>
> 1. The first question is whether a postpetition increase in income could
> trigger a means test. I am not sure if the statute authorizes this
> explicitly, but my gut feeling is that under Lanning, an argument might be
> made that ignoring a post petition increase in income is wrong.
>
> 2. The second question is whether the debts are primarily consumer
> debts. The mortgage is $450K. Unsecured business debts are $200K while
> unsecured consumer debts are $50K. Since the mortgage is the 1,000 lb
> gorilla in this scenario, how the mortgage is characterized will determine
> whether the debts are primarily consumer debts or not. The original
> purpose of the mortgage was to finance a purchase of a residence so
> originally the debt was a consumer debt. However, currently the debt is
> secured by collateral that is used to produce income. What is the
> determinative time period--1) when the debts were incurred or 2) now? Does
> the change in the use of the collateral affect the character of the debt?
>
> 3. Assuming post-petition change in income applies and the mortgage
> counts as counts as consumer debt because is was originally incurred to
> acquire a personal residence, how will the cumulative dividend or the
> monthly payment be determined? Will there be a budget battle with the
> UST?
>
> 4. Let's say that based on the deals currently in the works, Debtor is
> projecting $5K of disposable income (after business expenses and living
> expenses) for the next six month. However, this number is based on
> expected contracts and it may not materialize. In fact, Debtor did not
> make a dime for the year and a half immediately before filing. Should the
> $5K projection be presented in the status conference report? Should
> speculative income be presented in the status conference projections?
>
>
> Alik Segal
> Alik.Segal@gmail.com
> 310-362-6157
> California Central District
>
>
>
Alik,All I do is Chapter 11 work and some of that is for individuals. I have never used the means test (I don't even know how to compute it) for anything. If the Court wants a projected budget, then project his budget and present it. If there is some speculation or some projection that is not based on historical income/expenditures then make that clear.
I always thought the means test was used to determine whether or not one qualifies for Chapter 7 so maybe I am misunderstanding. Sincerely, Michael Avanesian
On Wed, May 22, 2013 at 1:46 AM, Alik Segal <listserv.inbox@gmail.com> wrote:
Please help me analyze this situation:Chapter 11 Debtor needs to present his projected budget for a status conference. This question concerns with whether the means test applies and the amount of the claim. The so-called problem is that debtor's income has increase substantially postpetition.
Debtor moved out of his residence before filing the petition. After filing the petition, he rented out his former residence, which has become an income property. Debtor's goal is to bifurcate the mortgage balance per 506(b).
Prepetition Debtor was barely making ends meet, but not that we filed (post-petition), his business income improved substantially and we may be facing the means test.1. The first question is whether a postpetition increase in income could trigger a means test.ling is that under Lanning, an argument might be made that ignoring a post petition increase in income is wrong.
2. The second question is whether the debts are primarily consumer debts. The mortgage is $450K. Unsecured business debts are $200K while unsecured consumer debts are $50K. Since the mortgage is the 1,000 lb gorilla in this scenario, how the mortgage is characterized will determine whether the debts are primarily consumer debts or not. The original purpose of the mortgage was to finance a purchase of a residence so originally the debt was a consumer debt. However, currently the debt is secured by collateral that is used to produce income. What is the determinative time period--1) when the debts were incurred or 2) now? Does the change in the use of the collateral affect the character of the debt?
3. Assuming post-petition change in income applies and the mortgage counts as counts as consumer debt because is was originally incurred to acquire a personal residence, how will the cumulative dividend or the monthly payment be determined? Will there be a budget battle with the UST?
4. Let's say that based on the deals currently in the works, Debtor is projecting $5K of disposable income (after business expenses and living expenses) for the next six month. However, this number is based on expected contracts and it may not materialize. In fact, Debtor did not make a dime for the year and a half immediately before filing. Should the $5K projection be presented in the status conference report? Should speculative income be presented in the status conference projections?
Alik SegalAlik.Segal@gmail.com310-362-6157California Central District
The post was migrated from Yahoo.
1129a15 incorporates 1325b2, which used the term "current monthly income".
so seems to require, per 101(10)A, a look at income 6 months before filing.
No best efforts provision in ch 11, like there is in 13.
But, 1129a3 requires good faith.
So, no real answer in the code. Lanning will probably apply on a good faith standard.
Deeds of trust often have language int them saying how long the house had to be the debtor's residence. Look for the language. If the period is past, use that against the dot holder.
I would project enough to fund a plan, nothing more, when the contracts are speculative. Cannot project less than what is factual, but when speculative, don't over project, or creditors will demand too much in the plan.
Postpetition has no hyphen. When ""post" is used as a prefix, cannot stand alone as a separate word.
d
Sent from my iPad
On May 22, 2013, at 1:46 AM, Alik Segal wrote:
> Please help me analyze this situation:
>
> Chapter 11 Debtor needs to present his projected budget for a status conference. This question concerns with whether the means test applies and the amount of the claim. The so-called problem is that debtor's income has increase substantially postpetition.
>
> Debtor moved out of his residence before filing the petition. After filing the petition, he rented out his former residence, which has become an income property. Debtor's goal is to bifurcate the mortgage balance per 506(b).
>
> Prepetition Debtor was barely making ends meet, but not that we filed (post-petition), his business income improved substantially and we may be facing the means test.
>
> 1. The first question is whether a postpetition increase in income could trigger a means test. I am not sure if the statute authorizes this explicitly, but my gut feeling is that under Lanning, an argument might be made that ignoring a post petition increase in income is wrong.
>
> 2. The second question is whether the debts are primarily consumer debts. The mortgage is $450K. Unsecured business debts are $200K while unsecured consumer debts are $50K. Since the mortgage is the 1,000 lb gorilla in this scenario, how the mortgage is characterized will determine whether the debts are primarily consumer debts or not. The original purpose of the mortgage was to finance a purchase of a residence so originally the debt was a consumer debt. However, currently the debt is secured by collateral that is used to produce income. What is the determinative time period--1) when the debts were incurred or 2) now? Does the change in the use of the collateral affect the character of the debt?
>
> 3. Assuming post-petition change in income applies and the mortgage counts as counts as consumer debt because is was originally incurred to acquire a personal residence, how will the cumulative dividend or the monthly payment be determined? Will there be a budget battle with the UST?
>
> 4. Let's say that based on the deals currently in the works, Debtor is projecting $5K of disposable income (after business expenses and living expenses) for the next six month. However, this number is based on expected contracts and it may not materialize. In fact, Debtor did not make a dime for the year and a half immediately before filing. Should the $5K projection be presented in the status conference report? Should speculative income be presented in the status conference projections?
>
>
> Alik Segal
> Alik.Segal@gmail.com
> 310-362-6157
> California Central District
>
The post was migrated from Yahoo.