Phyllis M. Jones, United States Bankruptcy Judge.
Before the Court is the Objection to Confirmation of Plan as Amended Pre-Confirmation (the "
The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334 and 157. This is a core proceeding under 28 U.S.C. § 157(b)(2)(A), (L) and (O). The following shall constitute the Court's findings of fact and conclusions of law under Federal Rule of Bankruptcy Procedure 7052, made applicable to this proceeding by Federal Rules of Bankruptcy Procedure 3015(f) and 9014.
On April 18, 2014, the Debtor filed a voluntary petition for relief under the provisions of Chapter 13 of the United States Bankruptcy Code. (Joint Ex. 1 at 1). The following twelve creditors were listed on the Debtor's creditor matrix: Arkansas Urology, Baptist Health, Baptist Health-Little Rock, Baptist Health-N. Little Rock, Capital One Bank, Carl Johnson, M.D., Money Tree Motors, Pathology Labs of AR, Pulaski County Sanitation, Radiology Consultants, St. Vincent Health Systems, and U.S. Bank Home Mortgage. (Joint Ex. 1 at 4-5).
Also on April 18, 2014, the Debtor filed her original Chapter 13 plan (the "
On April 23, 2014, the bankruptcy clerk's office served a Notice of Chapter 13 Bankruptcy Case, Meeting of Creditors, and Deadlines ("
(Debtor's Ex. 1 at 2). The 341 Meeting Notice was mailed by the bankruptcy clerk to the twelve creditors listed on the creditor matrix as well as to the Debtor, the United States Trustee, the Trustee, and the Debtor's attorney. (Debtor's Ex. 1 at 1).
On December 17, 2014, the Debtor filed the Modified Plan.
(Joint Ex. 3 at 3).
(Joint Ex. 3 at 4). The Certificate of Mailing was signed by the Debtor's attorney. (Joint Ex. 3 at 4). As shown by the notice of electronic filing for the Modified Plan and NOTO ("
(Joint Ex. 4) (email addresses omitted).
On December 29, 2014, the Trustee objected to confirmation of the Modified Plan citing 11 U.S.C. § 1325(a)(1) and stating "the plan does not comply with the provisions of Chapter 13 and with other applicable provisions of the Bankruptcy Code. The debtor has failed to notice all creditors pursuant to FRBP 2002." (Joint Ex. 8).
At the hearing on the Objection, the parties introduced the Administrative Procedures for Electronically Filed Cases and Related Documents for the Bankruptcy Court for the Eastern and Western Districts of Arkansas ("
(Joint Ex. 7 at 13-14).
The Trustee argues that the Modified Plan was not properly noticed and cannot be confirmed because Federal Rules of Bankruptcy Procedure 2002(a)(5) and 2002(b)(2) require
The Debtor argues that proper notice of the Modified Plan and NOTO was given pursuant to Rule 2002 when the bankruptcy clerk mailed the 341 Meeting Notice to all creditors, which gave creditors fourteen days from the conclusion of the first meeting to object to the Original Plan. The Debtor argues that because no creditors objected to the Original Plan, and because the provisions of the Modified Plan do not substantially change the treatment of any creditor's claim from that proposed in the Original Plan, no notice of the Modified Plan needed to be given because no creditor would have standing to file an objection.
Alternatively, the Debtor argues that all creditors received constructive notice of the Modified Plan and NOTO through the ECF noticing system.
Finally, alternatively, the Debtor argues that even if the Court finds both the 341 Meeting Notice and the ECF Notice insufficient, the Modified Plan should nevertheless be confirmed because the Debtor has complied with the plan confirmation requirements under Sections 1322 and 1325 of the Bankruptcy Code, notwithstanding the Trustee's objections related to the notice requirements.
Rule 2002(a)(5) provides in relevant part that "the clerk, or some other person as the court may direct, shall give the debtor, the trustee,
A "creditor" under the Bankruptcy Code includes an "entity that has a claim against the debtor that arose at the time of or before the order for relief concerning the debtor." 11 U.S.C. § 101(10)(A) (2012). The Debtor has the burden of proving that creditors have received appropriate notice as required by Rule 2002. United States v. Hairopoulos (In re Hairopoulos), 118 F.3d 1240, 1244 (8th Cir. 1997) ("Rule 2002 ... specifies that the clerk of the bankruptcy court shall give notice to all creditors of ... the time for modification of a plan.... The burden of
The first issue to be decided is whether the Trustee is correct that both Rule 2002(a)(5) and Rule 2002(b)(2) apply to pre-confirmation modifications. The Court finds that both do apply for the following reasons. First, the overwhelming majority of cases deciding this issue have ruled that both subsections apply. In a case with facts similar to the facts in this case, the bankruptcy court concluded that both Rule 2002(a)(5) and Rule 2002(b)(2) apply to modified plans filed prior to confirmation. In re Franklin, 459 B.R. 463, 468 (Bankr.D.Nev.2011). There, the court found that Rule 2002(a)(5) requires at least twenty-one days' notice of the time fixed to accept or reject a modified plan, and to the extent the modification results in a new plan, the twenty-eight day notice of Rule 2002(b)(2) "still applies." Id. at 465. The court in Franklin also found that the "cases almost unanimously support this reading of Rule 2002." Id. at 466; see also KEITH M. LUNDIN, CHAPTER 13 BANKRUPTCY § 209.1 (3d ed. 2000 & Supp.2004) ("A preconfirmation modification of a Chapter 13 plan would have to satisfy both [Rule 2002(a)(5) and Rule 2002(b)] notice requirements. The courts have strictly enforced the requirement that preconfirmation amendments be noticed to creditors with adequate opportunity to object.").
Second, the plain language of the rules supports the conclusion that both subsections apply to pre-confirmation modifications. Rule 2002(a)(5) plainly requires that twenty-one days' notice be given of a proposed plan modification, and it is not disputed that the Modified Plan is a modification to the Original Plan. Likewise, the plain language of Rule 2002(b)(2) requires twenty-eight days' notice to be given for the time for filing objections and the hearing to consider confirmation of the plan, and because no plan has yet been confirmed in this case, the twenty-eight day notice requirement also applies to the pre-confirmation modification.
For the foregoing reasons, this Court finds that the noticing requirements of both Rule 2002(a)(5) and Rule 2002(b)(2) apply to pre-confirmation modifications, and the debtor, the trustee,
The second issue to be decided is whether there has been compliance with Rules 2002(a)(5) and 2002(b)(2). The Debtor advances two arguments in support of her position that proper notice of the Modified Plan was given pursuant to Rule 2002. The first argument is that proper notice was given when the bankruptcy clerk mailed all creditors the 341 Meeting Notice containing the deadline for objecting to confirmation of the Original Plan.
The Court finds, contrary to the Debtor's argument, that the 341 Meeting Notice served by the bankruptcy clerk did not provide notice of the Modified Plan required by Rules 2002(a)(5) and 2002(b)(2). First, under the facts of this case, the deadline to object to confirmation as provided in the 341 Meeting Notice was fourteen days after the conclusion of the first meeting of creditors. The docket sheet reflects that the meeting was held and concluded on June 5, 2014. (Doc. No. 23). Therefore, the deadline to object to confirmation was June 19, 2014. The Modified Plan was not filed until December 17, 2014. It is illogical to hold that the 341 Meeting Notice deadline applied to the Modified Plan when the Modified Plan was filed almost six months after the deadline passed. Second, such a holding would be contrary to case law. "The authorities are in general agreement that any modification resets the time for objection, and thus the modified plan must be renoticed." In re Franklin, 459 B.R. at 465.
As to the second argument, the Debtor's reliance on General Order 20, Section 1323(c) of the Bankruptcy Code, and In re Dorn is misplaced. This Court's General Order 20, as amended by General Order 34, provides that objections to confirmation of Chapter 13 plans must be filed on or before fourteen days after the first meeting of creditors is concluded. Gen. Orders 20 & 34, Bankr. E. & W. Dist. of Ark. Section 1323(c) of the Bankruptcy Code provides that "[a]ny holder of a secured claim that has accepted or rejected the plan is deemed to have accepted or rejected ... the plan as modified, unless the modification provides for a change in the rights of such holder from what such rights were under the plan before modification, and such holder changes such holder's previous acceptance or rejection." 11 U.S.C. § 1323(c) (2012). In Dorn, the issue before the court was whether General Order 20 impermissibly shortened the time to object to confirmation in contravention of Federal Rules of Bankruptcy Procedure 3015(f) and 9006(c). In re Dorn, 295 B.R. at 873. The bankruptcy court, affirmed by the district court, held that the general order did not impermissibly shorten the time to object and overruled the creditor's untimely objection. Id. at 875-76. Notice was not at issue and, in fact, the preconfirmation modification in Dorn was "noticed... for 25 days."
Finally, in a Chapter 13 case, only the debtor has the privilege of proposing plans pre-confirmation. 11 U.S.C. § 1321 (2012); In re Franklin, 459 B.R. at 465. The notices required by Rule 2002(a)(5) and Rule 2002(b)(2) provide the means by which a creditor is informed of a potential revival of its right to accept or reject modified plan provisions. The effect of the procedures advanced by the Debtor would be to ignore the notice requirements of Rule 2002(a)(5) and Rule 2002(b)(2) and allow the Debtor to decide unilaterally whether her own modification affects the rights of a creditor. Even under Rule 3015(g), it is the court that determines if such notice may be limited, not the debtor. Furthermore, Rules 2002(a)(5) and 2002(b)(2) require notice to all creditors regardless of the materiality of the modification. In re Franklin, 459 B.R. at 468. For all these reasons, the Court finds that neither the 341 Meeting Notice nor the notice given by the Debtor complied with the notice requirements of Rule 2002(a)(5) and Rule 2002(b)(2) for the Modified Plan.
The third issue for the Court to decide is whether constructive notice of the Modified Plan was given under Rules 2002(a)(5) and 2002(b)(2) through the ECF noticing system. The Debtor argues, in the alternative to her previous arguments, that constructive notice of the Modified Plan was given to all creditors through the ECF noticing system. (Tr. at 8, 26-28). The Trustee disagrees stating that all creditors did not receive notice through the ECF noticing system. (Tr. at 15-16, 31).
The Debtor's argument is inconsistent with the ECF Procedures and the facts in this case. The creditor matrix indicates the existence of twelve creditors. (Joint Ex. 1 at 4-5). The ECF Notice reflects service of the Modified Plan by electronic notice on the Debtor, the Trustee, the United States Trustee, and only one of the twelve creditors: U.S. Bank, N.A. (Joint Ex. 4). This electronic notice summary is consistent with the ECF Procedures, which anticipate sub-classes of filing users, such as attorneys, trustees, and creditor filers. (Joint Ex. 7). When a document is filed with the ECF, a Notice of Electronic Filing "is automatically generated and sent via email to all registered attorneys and trustees assigned to the case at the time of docketing." (Joint Ex. 7 at 13) (emphasis added). As a result, all creditors were not given notice, constructive or otherwise, of the filing of the Modified Plan, time to accept or reject the Modified Plan, time to object to confirmation of the Modified Plan, or the date for the confirmation hearing required by Rules 2002(a)(5) and 2002(b)(2). For these reasons, the Debtor's constructive notice argument must fail.
For the reasons stated above, the Court finds that pre-confirmation modifications of Chapter 13 plans must be noticed pursuant to both Rule 2002(a)(5) and Rule 2002(b)(2). The Debtor has failed to meet her burden of proving that proper notice of the Modified Plan was given. Therefore, for the reasons stated above, the Trustee's objection to confirmation is sustained. The Debtor shall have twenty-one days from the date of entry of this order to file a modification containing any changes in the plan from the Original Plan she seeks to have confirmed and serve notice of the modification and opportunity to object consistent with this order.
IT IS SO ORDERED.
