Motion for priority administrative expense on auto lease in Chapter 13 consumer case
Posted: Tue Sep 21, 2004 4:01 pm
I have an issue in front of Greenwald that may have future repercussions for a number of my Chapter 13 matters. The matter was heard today and continued to Ootober 19 with supplemental evidence required by October 1. Need possible ideas on getting this matter approved.
MOTION FOR ADMINISTRATIVE EXPENSE filed by creditor Toyota -
My debtor - employed nurse, single mother of 2 minors. Plan confirmed with payments of $100 over 36 months, only 16 payments to go ($1,600). At the time she filed the petition she had two autos, one paid in full, the other was a Toyota lease assumed in her plan. Lease payments were current at time of petition.
Two years into the plan, last April 2004 she defaulted post-petition, creditor filed and was granted relief from stay, no opposition from debtor. on May, debtor surrendered auto.
Creditor filed motion for Administrative Expense claiming priority for post-petition defaults based on assumed lease. Debtor opposed on the basis the auto was not "necessary" to the estate as debtor is a consumer, not in business, has two autos, leased auto used "mainly" for family. Only case creditor raised was a Chapter 11 business reorg case with a commercial real estate lease that was assumed and rejected. Can't find any 9th circuit cases on point.
Greenwald has asked for more evidence as to "necessity" of the auto to prove benefit to the estate. But I am planning on filing supplemental points and authorities.
If the creditor is granted priority administrative expense this renders the plan infeasible and the Chapter 13 dies after two years. Additionally, this is a windfall and benefits only one creditor (I understand adminitrative expense is incurred to benefit all creditors).
Obviously Toyota and other auto lease creditors will use this for similar situated debtors, and in effect will force a chill on assuming any auto leases in a Chapter 13 plan. Better to reject the lease and just stay current on payments, instead of assume and run the risk of a priority administrative expense in the future.
Has anyone addressed this issue? Any suggestions?
CH
I have an issue in front of Greenwald that may have future repercussions for a number of my Chapter 13 matters. The matter was heard today and continued to Ootober 19 with supplemental evidence required by October 1. Need possible ideas on getting this matter approved.
MOTION FOR ADMINISTRATIVE EXPENSE filed by creditor Toyota -
My debtor - employed nurse, single mother of 2 minors. Plan confirmed with payments of $100 over 36 months, only 16 payments to go ($1,600). At the time she filed the petition she had two autos, one paid in full, the other was a Toyota lease assumed in her plan. Lease payments were current at time of petition.
Two years into the plan, last April 2004 she defaulted post-petition, creditor filed and was granted relief from stay, no opposition from debtor. on May, debtor surrendered auto.
Creditor filed motion for Administrative Expense claiming priority for post-petition defaults based on assumed lease. Debtor opposed on the basis the auto was not "necessary" to the estate as debtor is a consumer, not in business, has two autos, leased auto used "mainly" for family. Only case creditor raised was a Chapter 11 business reorg case with a commercial real estate lease that was assumed and rejected. Can't find any 9th circuit cases on point.
Greenwald has asked for more evidence as to "necessity" of the auto to prove benefit to the estate. But I am planning on filing supplemental points and authorities.
If the creditor is granted priority administrative expense this renders the plan infeasible and the Chapter 13 dies after two years. Additionally, this is a windfall and benefits only one creditor (I understand adminitrative expense is incurred to benefit all creditors).
Obviously Toyota and other auto lease creditors will use this for similar situated debtors, and in effect will force a chill on assuming any auto leases in a Chapter 13 plan. Better to reject the lease and just stay current on payments, instead of assume and run the risk of a priority administrative expense in the future.
Has anyone addressed this issue? Any suggestions?
CH
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