judge theodor albert calendar for 29 feb 2012

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Judge Theodor Albert, Presiding Courtroom 5B Calendar United States Bankruptcy Court Central District of California Santa Ana Wednesday, February 29, 2012 Hearing Room 5B 10:00 am 11 Chapter Drew Pennington Maconachy 8:11-27587 STATUS CONFERENCE re: Chapter 11 Voluntary Petition #1.00 Docket #: 1 The Court is not persuaded that a filing deadline should not be set. The Court will hear argument as to an appropriate period of time. Tentative Ruling: Party Information Debtor(s): Drew Pennington Maconachy Represented By Michael N Nicastro Movant(s): Drew Pennington Maconachy Represented By Michael N Nicastro 2/28/2012 1:37:31PM Page 1 of 32

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This is U.S. Bankruptcy Judge Theodor Albert's Calendar for February 29, 2012, showing cases and his minute entires for the calendared hearings. Within the entries for In Re Mike and Tomi Nerhus, Case No. 8:11-bk-20432, is a mention of a Declaration by expert witness Maher Soliman. The debtors were represented by attorney Catherine Christiansen.

TRANSCRIPT

Page 1: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterDrew Pennington Maconachy8:11-27587

STATUS CONFERENCE re: Chapter 11 Voluntary Petition#1.00

Docket #: 1

The Court is not persuaded that a filing deadline should not be set. The Court will hear

argument as to an appropriate period of time.

Tentative Ruling:

Party Information

Debtor(s):

Drew Pennington Maconachy Represented By

Michael N Nicastro

Movant(s):

Drew Pennington Maconachy Represented By

Michael N Nicastro

2/28/2012 1:37:31PM Page 1 of 32

Page 2: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterVahid Tavokoli Farsoni8:12-10002

STATUS CONFERENCE re: Chapter 11 Voluntary Petition#2.00

Docket #: 1

Deadline for filing plan and disclosure statement: June 1, 2012

Claims bar: 60 days after dispatch of notice to creditors advising of bar date.

Tentative Ruling:

Party Information

Debtor(s):

Vahid Tavokoli Farsoni Represented By

Rebekah L. Parker

Movant(s):

Vahid Tavokoli Farsoni Represented By

Rebekah L. Parker

2/28/2012 1:37:31PM Page 2 of 32

Page 3: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterKent Douglas Brush and Catherine Elizabeth Brush8:12-10028

STATUS CONFERENCE re: Chapter 11 Voluntary Petition#3.00

Docket #: 1

Deadline for filing plan and disclosure statement: June 29,2012

Claims bar: 60 days after dispatch of notice to creditors advising of bar date.

Tentative Ruling:

Party Information

Debtor(s):

Kent Douglas Brush Represented By

Bert Briones

Joint Debtor(s):

Catherine Elizabeth Brush Represented By

Bert Briones

Movant(s):

Catherine Elizabeth Brush Represented By

Bert Briones

Kent Douglas Brush Represented By

Bert Briones

2/28/2012 1:37:31PM Page 3 of 32

Page 4: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterT Muthu Kumar8:09-18043

Motion for relief from the automatic stay REAL PROPERTY

THE BANK OF NEW YORK MELLON

Vs.

DEBTOR

(cont'd from 10-26-11 per stip. & order)

(cont'd from 12-21-11 per stip. & order)

#4.00

Docket #: 56

*** VACATED *** REASON: CONTINUED TO MAY 9, 2012 AT 10:00 A.M.

PER STIP/ORDER SIGNED 2-23-12

Tentative for 9/21/10

No Tentative - see # 13

-------------------------------------------------------------------------------------------------------

The movant offers no evidence of value except the $50,000 listed on the schedules.

How this value could ever have been thought correct, evan as vacant land, is not

explained. The only alternative valuation is from debtor himself at $207,000, which still

shows no equity. However, there is at least some showing of a reorganization "in

prospect" and the need of this property for that reorganization. See section 362(d)(2).

Since there is no equity cushion, the only viable means of adequate protection would be

monthly payments. This needs to be at least equal to the rate of decline in value (if any)

but no evidence appears of this in either brief.

The matter will be denied at this time, conditioned on payments of $1,000 per month

to the movant. The motion may be renewed in 90 days, at which time the expected

showing of a reorganization "in prospect" will be considerable higher.

Tentative Ruling:

Party Information

Debtor(s):

2/28/2012 1:37:31PM Page 4 of 32

Page 5: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterT Muthu KumarCont....

Debtor(s):

T Muthu Kumar Represented By

Jeffrey S Benice

Dennis E Mcgoldrick

Movant(s):

The Bank of New York Mellon Represented By

David F Makkabi

2/28/2012 1:37:31PM Page 5 of 32

Page 6: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterT Muthu Kumar8:09-18043

Motion for relief from the automatic stay REAL PROPERTY

JPMORGAN CHASE BANK

Vs.

DEBTOR

(cont'd from 10-26-11 per stip. & order)

(cont'd from 12-21-11 per stip. & order)

#5.00

Docket #: 57

*** VACATED *** REASON: CONTINUED TO MAY 9, 2012 AT 10:00 A.M.

PER STIP/ORDER SIGNED 2-23-12

Tentative for 9/21/10

No Tentative - see # 13

-----------------------------------------------------

Tentative for 7/6/10:

Status?

------------------------------------------------------

Tentative for 6/8/10:

Has this been resolved by settlement?

______________________________________________________

Tentative for 4/6/10:

Now debtor asserts the value is $2,200,000. Even if true that is just a sliver above the

$2,148,691 in reported liens which, by now, probably exceed $2.2 million. Debtor's

showing that the property is necessary to a reorganization is unconvincing. Grant.

-------------------------------------------------------------

Tentative for 3/2/10:

Neither side has presented a convincing case. The burden of proving lack of debtor

equity falls upon movant. Here, movant has relied entirely upon schedules, which is a

Tentative Ruling:

2/28/2012 1:37:31PM Page 6 of 32

Page 7: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterT Muthu KumarCont....

hazardous practice when, as here, debtor now disclaims this value in favor of a higher

value, allegedly to be supported by an appraisal. Since we have no other evidence, yet,

movant carries its burden but just barely. Adequate protection even without equity can be

provided by periodic payments, which are offered here in the amount of $3,500 per

month. The alternative basis for relief is section 362(d)(2), upon which the debtor bears

the burden of proving that the property is necessary to a reorganization. Beyond Mr.

Kumar's generic assertions, we do not see much of an showing that such a reorganization

is "in prospect." If the reorganization is nothing more than an eventual sale, a lot will

depend on whether there is, in fact, any realizable equity.

Continue for final hearing in 30 (or with stip 60 days ) conditioned on monthly tender of

proposed adequate protection payments compliant with section 363(c).

Party Information

Debtor(s):

T Muthu Kumar Represented By

Jeffrey S Benice

Dennis E Mcgoldrick

Movant(s):

JPMORGAN CHASE BANK, Represented By

Christopher M McDermott

Joseph C Delmotte

2/28/2012 1:37:31PM Page 7 of 32

Page 8: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterT Muthu Kumar8:09-18043

Motion for relief from the automatic stay REAL PROPERTY

BANK OF AMERICA, NATIONAL ASSOCIATION

Vs.

DEBTOR

(cont'd from 10-26-11 per stip. & order)

(cont'd from 12-21-11 per stip. & order)

#6.00

Docket #: 215

*** VACATED *** REASON: CONTINUED TO MAY 9, 2012 AT 10:00 A.M.

PER STIP/ORDER SIGNED 2-23-12

Current status?

Tentative Ruling:

Party Information

Debtor(s):

T Muthu Kumar Represented By

Michael G Spector

Vicki L Schennum

Movant(s):

Bank of America, National Represented By

Eric J Testan

2/28/2012 1:37:31PM Page 8 of 32

Page 9: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterT Muthu Kumar8:09-18043

Motion for relief from the automatic stay REAL PROPERTY

JPMORGAN CHASE BANK, NA

Vs.

DEBTOR

(cont'd from 10-26-11 per stip. & order)

(cont'd from 12-21-11 per stip. & order)

#7.00

Docket #: 183

*** VACATED *** REASON: CONTINUED TO MAY 9, 2012 AT 10:00 A.M.

PER STIP/ORDER SIGNED 2-23-12

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

T Muthu Kumar Represented By

Michael G Spector

Vicki L Schennum

Movant(s):

JPMorgan Chase Bank, National Represented By

Eric J Testan

2/28/2012 1:37:31PM Page 9 of 32

Page 10: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterT Muthu Kumar8:09-18043

Confirmation on Amended Chapter 11 Plan of Reorganization

(cont'd from 10-26-11 per stip. & order)

(cont'd from 12-21-11 per stip. & order)

#8.00

Docket #: 156

*** VACATED *** REASON: CONTINUED TO MAY 9, 2012 AT 10:00 A.M.

PER STIP/ORDER SIGNED 2-23-12

In re T. Muthu Kumar, #13 @ 10:00 a.m. Sept. 22, 2010

This is the debtor’s motion to confirm his Chapter 11 Plan, as modified. The plan provides for

ten classes of impaired claims. Except for Class 10, the class of general unsecured creditors, there

are no consenting classes of impaired claims. No ballots were received for the other nine impaired

classes and indeed written objections were received from WAMU/Chase [Classes 1,2,4,5,6,7] and

Bank of New York [Classes 3 and 8]. So, debtor attempts to obtain confirmation over these

objections (i.e. cramdown) under the provisions of 11 U.S.C. §1129(b)(2)(A) as to each of these

classes of secured claims.

The plan cannot be confirmed in its current form for several reasons, as explained below:

1. Fair and equitable

A plan can be crammed down over the objection of a dissenting class of secured claims if the

plan can be shown to be “fair and equitable.” In this plan, debtor offers the approach to “fair and

equitable” found at §1129(b)(2)(A)(i), which, paraphrasing, allows confirmation if the creditor

retains its lien and is paid future payments which, when reduced to present value, coveys a value

not less than the value of the creditor’s collateral. “Present value” is, in this context, the mirror

image of interest rate. So, in other words, the payments must include interest at a rate sufficient

that, when reduced to present value, is not less than the value of the collateral.

With the possible exception of Classes 6 and 7 (“Cress property”), it does not appear that there

is any equity in any of the various properties. So, each must be evaluated as the equivalent of a

100% loan to value transaction. Even the Cress property is heavily encumbered and there may be

little or no realizable equity. Interest rates must reflect risk, risk both as to non-payment and as to

Tentative Ruling:

2/28/2012 1:37:31PM Page 10 of 32

Page 11: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterT Muthu KumarCont....

changes in the market rate generally if the rate is fixed. Because these are likely all 100% loan to

value loans, there is no margin of equity that might ameliorate risk. By definition, the debtor is not

creditworthy given his chapter 11 status. Courts post-Till have adopted a “formula” approach to

identifying a rate that would compensate for all detectable elements of risk such that the court can

determine that the proposed confirmation rate adequately compensates the dissenting secured

creditor. Very little analysis is offered on these points by either side. Creditors merely complain that

the rate is too low, but do not explain why. Debtor offers the testimony of Mr. Henry Fok, but it is

unpersuasive. Mr. Fok does not offer any market surveys or analysis, and even makes some

astounding (and dubious) comments, such as:

“Keeping in mind the current residential real estate financing market, with the continuing

fluctuation in values and the extensive accommodations and compromises made in the

marketplace by mortgage lenders, fairness and equitability of the compensation to the secured

creditor and the Debtor’s ability to comply with the Plan should be of major consideration in

determining interest rates provide [sic] for in the Plan. Risk factors should be relegated to be of

lesser import as secured lenders have been shown to be elastic in their ability to assume the risks

in the residential mortgage loan arena, as demonstrated by their loan modification activities.”

Mr. Fok seems to be saying that because some lenders are known to entertain modifications on

a voluntary basis, this can be translated somehow into the formulation of a cramdown rate as

against unwilling lenders. Why, and if so, by what amount? How is this evaluated in a principled

way? NO clue is offered. To say that identification of risk is no longer the primary issue is to miss

the teaching of virtually every recent case in this area starting with Till. Even more disturbing is the

suggestion that the primary issue is what debtor can afford, not what is the amount necessary to

render “present value.” This is exactly opposite. The court must first determine what, under

economic principles, renders present value, and only then determine whether the debtor can feasibly

afford to pay this amount. The rate is not shaped to fit within ability to pay. Lastly, Mr. Fok

concludes by offering the opinion at his ¶14 that the original contract rate should be sufficient to

provide “present value” in the “post bankruptcy world.” But the loans were made in an entirely

different environment and presumably against collateral with at least some margin of equity at that

time; now they represent forced loans to a debtor in Chapter 11 with no equity at all in the

collateral. It is the present facts that must be evaluated in assessing whether promised payments

yield present value, not what might have prevailed years ago when these loans were made. To say

2/28/2012 1:37:31PM Page 11 of 32

Page 12: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterT Muthu KumarCont....

these are equivalent situations and the same in risk level, is obviously wrong, ignores fundamentals

of economics and, frankly, calls into question the competency of Mr. Fok’s opinion at any level.

Mr. Fok does offer his analysis of the Supreme Court’s opinion in Till v. SCS Credit Corp., 541

U.S. 465,124 S. Ct. 1951 (2004). As this court held in In re North Valley Mall, LLC, 432 B.R. 825,

831-32 (Bankr. C.D.Cal. 2010), Till can only be cited for the general precept that a formula

approach is best for determining a cramdown rate. To the extent Till has any applicability in

Chapter 11, the “scale for the risk adjustment” necessary to render present value is left to the unique

evidence in each case. Commercial real estate cases are very different from Chapter 13s involving

used trucks. Till cannot be properly read for the proposition that a debtor gets away with an

unreasonable discount just because some courts, as noted in Till, have used a 1-3% adjustment over

prime rate. North Valley Mall, 432 B.R. at 831. Instead, in the commercial real estate context the

court favors the approach used in Pacific First Bank v. Boulders on the River, Inc. (In re Boulders

on the River, Inc.), 164 B.R. 99, 105 (9th Cir BAP 1994). As explained in the North Valley Mall

opinion, a cramdown rate can be imputed by reference to market data and then “built up” or

“blended.” One starts by survey comparison to a “market” rate representing what real lenders in

the loan markets are doing on similar properties for similar terms. Usually this represents only say

65% of the value of the collateral, as seldom will new loans be made at 100% of value. The

remaining 35% is then blended from mezzanine rates and hypothetical equity return rates to yield

an overall blended rate that more nearly represents compensation for the degrees of risk inherent in

the transaction.

Debtor’s analysis contains none of these elements, nor, frankly, do creditors’. But the court is

quite certain that 2.25% -2.97% over Index, [which is around 2.5%-3% if .26%, the current one

year treasury average, is used as the Index] interest only, for a period of five years, and then

reverting to a rate of 4.57% per annum fixed for a thirty year term [as is suggested in the plan] is

way too low, probably on the order of 300-350 basis points too low. It should be noted that even in

this environment of historically low (probably artificially low) interest rates, 4.57% without points

would be somewhat low even for a conforming loan, much less an extremely leveraged and risky

transaction as is proposed here. Cramdown at such a low rate in effect shifts uncompensated risk to

the dissenting lenders and results in a “present value” well less than the value of the

collateral/secured claim. This is not permitted under §1129(b)(2)(A).

2/28/2012 1:37:31PM Page 12 of 32

Page 13: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterT Muthu KumarCont....

2. Feasibility

Debtor must also prove that confirmation will not be followed by unplanned need for further

reorganization or liquidation, or in common parlance, feasibility. §1129(a)(11) Here the debtor

offers the curious declaration of the debtor. He says the projections are reasonable but the court has

only Exhibit 2 to the Disclosure Statement as projections. Normally, one would expect some kind

of Excel spreadsheet with rents less reasonable operating expenses and debt service deducted,

showing positive bottom-line numbers for each property. If any such projections were prepared the

court has not seen them. Instead we have an abbreviated spreadsheet with expenses not broken

down and apparently reflecting only debtor’s personal family expenses, and not separately for each

of the rental properties. If adjusted for any reasonable debt service it appears that expenditures

would exceed revenue by a rather large margin. Even as is, the revenue just about barely matches

expenses each month with very little room for error.

3. Modification of Residential Loan

The plan is left very vague regarding treatment of Class 8, which reportedly is the debtor’s

residence commonly known as 226 Finca, San Clemente. There are reportedly $26,064 in

arrearages on this $571,184 loan. The plan in its modified form provides that these arrearages will

be paid over 5 years in equal semi-annual installments. This is supposed to be a “cure” of the

defaults under this loan which might qualify it for being “unimpaired” as described at §1124(2)(A)-

(D). Objecting creditor contends, instead, that this is an impermissible “modification” of the loan

within the meaning of §1123(b)(5). Since no interest upon the arrearages is discussed for the 5-year

term of this “cure,” it is manifestly insufficient to compensate the creditor for damages incurred as

required under §1124(2)(C). See Great W. Bank & Trust v. Entz-White Lumber & Supply (In re

Entz-White Lumber & Supply), 850 F. 2d 1338, 1340 (9th Cir 1988). Nor can payments spread out

over five years without interest be the equivalent of immediate payment, and therefore must be

regarded as economically less than equivalent. It is therefore not necessary to deal with the more

troublesome issue of whether impairment or no, this would represent an impermissible

“modification” of the loan since Chapter 11 has no precise analog of §1322(b)(5) and the proposed

cure is well beyond the effective date of the plan which was the date of “cure” allowed in

Entz-White.

2/28/2012 1:37:31PM Page 13 of 32

Page 14: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterT Muthu KumarCont....

4. Conclusion

The plan as modified is still a long way from being confirmable. The court is unclear as to

whether debtor will be able to amend it to be confirmable within debtor’s available means. The

court will therefore hear argument as to whether debtor should be given another opportunity to

come up with something that might pass muster as an alternative to conversion, and/or whether

leave should be granted for the lenders to obtain their own appraisals of value.

Party Information

Debtor(s):

T Muthu Kumar Represented By

Michael G Spector

Vicki L Schennum

Movant(s):

T Muthu Kumar Represented By

Michael G Spector

Vicki L Schennum

2/28/2012 1:37:31PM Page 14 of 32

Page 15: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterSandra A Robbie8:11-11268

Approval of Debtor's Disclosure Statement#9.00

Docket #: 51

The Court is skeptical about this plan. As the UST observes, it appears to be all about

litigation against the two secured claims with the single, small unscured creditor merely a

sideshow. This raises profound good faith issues and prompts the Court to consider

abstention or dismissal. If everything is a function of litigation, why not determine this in

the Superior Court or in Federal District Court.

Continue to coincide with hearing on motion to dismiss on April 26, 2012.

Tentative Ruling:

Party Information

Debtor(s):

Sandra A Robbie Represented By

Catherine Christiansen

Alexandria C. Phillips

2/28/2012 1:37:31PM Page 15 of 32

Page 16: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterGPS Painting & Wallcovering, Inc.8:11-12662

Confirmation of Chapter 11 Small Business Plan

(cont'd from 12-14-11)

#10.00

Docket #: 117

Tentative for 2/29/12:

Has any of objection, temporary allowance or cramdown evaluation occurred? Absolute

priority rule?

-----------------------------------------------------

Tentative for 12/14/11:

Creditor Southern California Painting & Drywall Industries Trust Funds (“Funds”) has a

priority claim in Class 2.1 and a general unsecured claim in Class 3. One ballot was apparently cast

for both classes. Debtor states that it intends to file an objection to Funds’ claim prior to the plan

confirmation hearing, so that Funds will have to get its claim temporarily allowed for voting

purposes for the vote to count. In the event a section 507(a)(5) claim is allowed in Class 2.1,

Debtor states that the claim will be paid in full on the effective date or when the objection is

determined by a final order. Thus, the only issue is the general unsecured claim. If Funds’ claim is

counted for confirmation purposes, then there will be an absolute priority issue because unsecured

creditors are not being paid in full and the equity holder is retaining his interest. Debtor states that

the equity holder will tender new value if necessary. A separate analysis of that offer will become

necessary.

Everything seems to be in order except for the cram down analysis. An objection to the

Funds’ claim has not been filed as of 12/9/11. Additional analysis of the absolute priority rule issue

may become necessary.

Continue for purposes of claim objection, temporary allowance motion and cramdown

evaluation.

Tentative Ruling:

Party Information

2/28/2012 1:37:31PM Page 16 of 32

Page 17: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterGPS Painting & Wallcovering, Inc.Cont....

Debtor(s):

GPS Painting & Wallcovering, Inc. Represented By

R G Pagter

Misty A Perry Isaacson

Movant(s):

GPS Painting & Wallcovering, Inc. Represented By

R G Pagter

Misty A Perry Isaacson

2/28/2012 1:37:31PM Page 17 of 32

Page 18: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterPatrick Merritt and Heidi Merritt8:11-19154

Motion to Approve Second Amended Disclosure Statement filed 1-23-12,

document number 50

#11.00

Docket #: 48

This is the debtors’ motion for approval of their Disclosure Statement. It has drawn limited

objection by the holder of the first mortgage, The Bank of New York Mellon. The plan described

in this disclosure statement is problematic on several issues. First, the bank argues that the

proposed cram down interest rate of 4.25% per annum is too low, citing this court’s opinion in In re

North Valley Mall, 432 B.R. 825 (Bankr. C.D.Cal. 2010). The bank is correct. While commercial

properties as in North Valley Mall are not necessarily the exact analog of residential properties, as

in this case, it is abundantly clear that 4.25% on a property without any equity, is way too low to

yield “present value” equal to the secured claim under §1129(b)(2)(A)(i). The debtor should do

some analysis as to what a suitable cram down interest rate might be. This will involve evidence as

to the percentage of equity available behind the complaining creditor, market conditions generally

of both conforming and non-conforming loans, and some analysis of what a blended rate analysis as

in North Valley Mall might yield for those portions outside what a willing lender might do.

Although it seems to be the case, no analysis is offered as to whether this is the debtor’s principal

residence. If so, the additional problem of §1123(b)(5) is presented. How can the debtors modify

the rights of such a lender? The problem appears more acute respecting the rights of the junior loan

of Bank of America. To the extent that any portion of this loan is secured by the residence (and

apparently it is), no modification of the loan is permitted. See Nobleman v. American Savings Bank

(In re Nobleman), 508 U.S. 324, 113 S. Ct. 2106, 2109-10 (1993). The debtor also makes an

oblique reference to the absolute priority rule at the end of the disclosure statement but dismisses it

as “complicated.” In the event of objection by any affected creditor, this plan is not confirmable as

written without an injection of “new value.” See 11 U.S.C. §1129(b)(2)(B)(ii); In re Kamell, 451

B.R. 505 (Bankr. C.D.Cal. 2011). NO mention of this can be found anywhere in this plan or

disclosure. Normally, the court reserves confirmation issues for a confirmation hearing; but the

issues here are so profound as to invoke that line of cases that instructs courts to deny approval of

disclosure on a plan that is unconfirmable on its face. The court will hear argument as to whether

this is such a case.

Tentative Ruling:

2/28/2012 1:37:31PM Page 18 of 32

Page 19: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterPatrick Merritt and Heidi MerrittCont....

No tentative.

Party Information

Debtor(s):

Patrick Merritt Represented By

Matthew E Faler

Joint Debtor(s):

Heidi Merritt Represented By

Matthew E Faler

Movant(s):

Heidi Merritt Represented By

Matthew E Faler

Patrick Merritt Represented By

Matthew E Faler

2/28/2012 1:37:31PM Page 19 of 32

Page 20: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterBert Briones and Robin Lynn Briones8:11-20818

Application for Order Extending Date for Filing Chapter 11 Plan#12.00

Docket #: 50

Debtor does not make a compelling case as to why the original deadline should be

moved. As an insolvency lawyer, debtor is in a better position than most to understand the

issues and propose solutions with a minimum of delay. Even giving some credibility to the

reasons offered, six months is too long. Chapter 11 is not an indefinite respite, it is only a

temporary opportunity to propose a solution if one is reasonably available. Debtors are

expected to make best use of the time given, and afterwhile further delay begins to look

like an end in itself, which is not tolerated.

Grant 30 day extension to April 1.

Tentative Ruling:

Party Information

Debtor(s):

Bert Briones

Joint Debtor(s):

Robin Lynn Briones Represented By

Bert Briones

Movant(s):

Bert Briones

Robin Lynn Briones Represented By

Bert Briones

2/28/2012 1:37:31PM Page 20 of 32

Page 21: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterBert Briones and Robin Lynn Briones8:11-20818

Motion of Debtors for Order Disallowing Claim Numbered 9.#13.00

Docket #: 52

Sustain. Appearance is optional.

Tentative Ruling:

Party Information

Debtor(s):

Bert Briones

Joint Debtor(s):

Robin Lynn Briones Represented By

Bert Briones

2/28/2012 1:37:31PM Page 21 of 32

Page 22: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterMike E Nerhus and Tomi A Nerhus8:11-20432

Debtor's Objection to Proof Of Claim #10 Filed by Creditor Bank of New

York Mellon as Trustee

#14.00

Docket #: 66

This is an objection to claim filed by the debtors. The claim in question is the proof filed

10/11/2011 by The Bank of New York Mellon as trustee for certain certificate holders in the

amount of $501,473.02 plus $17,124.75 in arrearages, and secured by the debtors’’ property

commonly known as 4892 Kermath Street, Placentia, CA. The objection is some 29 pages long and

is supported by a declaration of one Maher Soliman of another 47 pages. The objection is virtually

unintelligible and filled with numerous undefined acronyms, all purporting to raise some kind of an

issue about the veracity of the debt or the validity of the claimant as current holder of the debt. This

is not dissimilar to other challenges the court has recently seen by debtors to the efficacy of their

mortgages arising out of the real estate finance meltdown. The reply by debtors seems to distill the

argument into something about the debt being written off or written down by reason of actions of

various prior holders, or the fact that certificates may have traded at a steep discount. Of course,

even if true none of this is an issue respecting the obligation of the borrowers to repay. But debtor

seems to aim all of this somehow at the standing of the claimant to collect the debt. The court also

observes that there is no dispute that the debtors actually borrowed the money, and there does not

appear to have been for some years now any rival claimant to repayment as indeed the debtor even

acknowledged the name and address of the creditor, and the approximate amount owing, in their

schedules. How all of this can now amount to getting a home “free and clear” is not explained, of

course, but nevertheless debtor unleashes a barrage of legalistic arguments.

But the court is not inclined to attempt unraveling this dispute in a summary proceeding such as

a claims objection hearing. If this question is to be pursued it must be in the context of an

adversary proceeding, with complaint and then answer or Rule 12(b) motion. Discovery may be

needed and maybe a trial as well. But it cannot reasonably be done in a summary proceeding like

this. If it gets that far, debtor will need to refine their explanation into something concise and

intelligible.

Deny without prejudice to renewal as an adversary proceeding.

Tentative Ruling:

2/28/2012 1:37:31PM Page 22 of 32

waroper
Highlight
Page 23: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterMike E Nerhus and Tomi A NerhusCont....

Party Information

Debtor(s):

Mike E Nerhus Represented By

Catherine Christiansen

Joint Debtor(s):

Tomi A Nerhus Represented By

Catherine Christiansen

2/28/2012 1:37:31PM Page 23 of 32

Page 24: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterMike E Nerhus and Tomi A Nerhus8:11-20432

Debtor's Objection to Proof of Claim #9 Filed by Creditor U.S. Bank as

Trustee

#15.00

Docket #: 64

This is an objection to claim filed by the debtors. The claim in question is the proof filed

10/11/2011 by The Bank of New York Mellon as trustee for certain certificate holders in the

amount of $501,473.02 plus $17,124.75 in arrearages, and secured by the debtors’’ property

commonly known as 4892 Kermath Street, Placentia, CA. The objection is some 29 pages long and

is supported by a declaration of one Maher Soliman of another 47 pages. The objection is virtually

unintelligible and filled with numerous undefined acronyms, all purporting to raise some kind of an

issue about the veracity of the debt or the validity of the claimant as current holder of the debt. This

is not dissimilar to other challenges the court has recently seen by debtors to the efficacy of their

mortgages arising out of the real estate finance meltdown. The reply by debtors seems to distill the

argument into something about the debt being written off or written down by reason of actions of

various prior holders, or the fact that certificates may have traded at a steep discount. Of course,

even if true none of this is an issue respecting the obligation of the borrowers to repay. But debtor

seems to aim all of this somehow at the standing of the claimant to collect the debt. The court also

observes that there is no dispute that the debtors actually borrowed the money, and there does not

appear to have been for some years now any rival claimant to repayment as indeed the debtor even

acknowledged the name and address of the creditor, and the approximate amount owing, in their

schedules. How all of this can now amount to getting a home “free and clear” is not explained, of

course, but nevertheless debtor unleashes a barrage of legalistic arguments.

But the court is not inclined to attempt unraveling this dispute in a summary proceeding such as

a claims objection hearing. If this question is to be pursued it must be in the context of an

adversary proceeding, with complaint and then answer or Rule 12(b) motion. Discovery may be

needed and maybe a trial as well. But it cannot reasonably be done in a summary proceeding like

this. If it gets that far, debtor will need to refine their explanation into something concise and

intelligible.

Deny without prejudice to renewal as an adversary proceeding.

Tentative Ruling:

2/28/2012 1:37:31PM Page 24 of 32

waroper
Highlight
Page 25: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterMike E Nerhus and Tomi A NerhusCont....

Party Information

Debtor(s):

Mike E Nerhus Represented By

Catherine Christiansen

Joint Debtor(s):

Tomi A Nerhus Represented By

Catherine Christiansen

2/28/2012 1:37:31PM Page 25 of 32

Page 26: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterMike E Nerhus and Tomi A Nerhus8:11-20432

Debtor's Objection to Proof Of Claim #2 Filed by Creditor PNC Bank#16.00

Docket #: 62

This is an objection to claim filed by the debtors. The claim in question is the proof filed

10/11/2011 by The Bank of New York Mellon as trustee for certain certificate holders in the

amount of $501,473.02 plus $17,124.75 in arrearages, and secured by the debtors’’ property

commonly known as 4892 Kermath Street, Placentia, CA. The objection is some 29 pages long and

is supported by a declaration of one Maher Soliman of another 47 pages. The objection is virtually

unintelligible and filled with numerous undefined acronyms, all purporting to raise some kind of an

issue about the veracity of the debt or the validity of the claimant as current holder of the debt. This

is not dissimilar to other challenges the court has recently seen by debtors to the efficacy of their

mortgages arising out of the real estate finance meltdown. The reply by debtors seems to distill the

argument into something about the debt being written off or written down by reason of actions of

various prior holders, or the fact that certificates may have traded at a steep discount. Of course,

even if true none of this is an issue respecting the obligation of the borrowers to repay. But debtor

seems to aim all of this somehow at the standing of the claimant to collect the debt. The court also

observes that there is no dispute that the debtors actually borrowed the money, and there does not

appear to have been for some years now any rival claimant to repayment as indeed the debtor even

acknowledged the name and address of the creditor, and the approximate amount owing, in their

schedules. How all of this can now amount to getting a home “free and clear” is not explained, of

course, but nevertheless debtor unleashes a barrage of legalistic arguments.

But the court is not inclined to attempt unraveling this dispute in a summary proceeding such as

a claims objection hearing. If this question is to be pursued it must be in the context of an

adversary proceeding, with complaint and then answer or Rule 12(b) motion. Discovery may be

needed and maybe a trial as well. But it cannot reasonably be done in a summary proceeding like

this. If it gets that far, debtor will need to refine their explanation into something concise and

intelligible.

Deny without prejudice to renewal as an adversary proceeding.

Tentative Ruling:

2/28/2012 1:37:31PM Page 26 of 32

waroper
Highlight
Page 27: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterMike E Nerhus and Tomi A NerhusCont....

Party Information

Debtor(s):

Mike E Nerhus Represented By

Catherine Christiansen

Joint Debtor(s):

Tomi A Nerhus Represented By

Catherine Christiansen

2/28/2012 1:37:31PM Page 27 of 32

Page 28: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterBobby J Hamby8:11-12676

Debtor's Motion for approval of chapter 11 disclosure statement

(cont'd from 12-7-11)

#17.00

Docket #: 112

Tentative for 2/29/12:

It appears that most if not all of the objections of the UST have been addressed. The

two additional objections of Sykes and Yorba Linda Group seem to deal with settlements

that are finalized, or close to being finalized. Consequently, some discussion of these

terms and an explicit reference that the settlement terms govern over any different that

might otherwise apply, would be appropriate. Lastly, the disclosure statement should

clarify that Class 2(a) repayment of arrearages over time is without interest, and so is

impaired.

Approve with these clarifications.

-----------------------------------------------------------------

Tentative for 12/7/11:

Each of the U.S. Trustee's objections is well taken and should be addressed in an

amended disclosure statement. While many of the Sykes Family Trust comments are

either confirmation issues, or the relevancy to disclosure is not clear, one point is clear.

There is an absolute priority rule issue implicit here if debtor proposes to keep his

chiropractor practice. See In re Kamell, 451 B.R. 505 (Bankr. C.D. Cal. 2011).

Tentative Ruling:

Party Information

Debtor(s):

Bobby J Hamby Represented By

James D Zhou

Movant(s):

Bobby J Hamby Represented By

James D Zhou

2/28/2012 1:37:31PM Page 28 of 32

Page 29: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterBobby J HambyCont....

2/28/2012 1:37:31PM Page 29 of 32

Page 30: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterBobby J Hamby8:11-12676

Debtor's Motion RE: Objection to Claim Number 10,24 by Claimant Sykes

Family Trust.

#18.00

Docket #: 146

Has this been resolved by settlement?

Tentative Ruling:

Party Information

Debtor(s):

Bobby J Hamby Represented By

James D Zhou

Movant(s):

Bobby J Hamby Represented By

James D Zhou

2/28/2012 1:37:31PM Page 30 of 32

Page 31: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterBobby J Hamby8:11-12676

Adv#: 8:11-01260 Yorba Linda Group Limited Partnership, Donald A. B v. Hamby

PRE-TRIAL CONFERENCE re: Complaint to determine

nondischargeability of debt.

(cont'd from 12-8-11)

#19.00

Docket #: 1

Tentative for 2/29/12:

Has this matter been settled?

-------------------------------------------------

Tentative for 12/8/11:

Settled?

--------------------------------------------------

Tentative for 8/25/11:

Deadline for completing discovery: November 1, 2011

Last date for filing pre-trial motions: November 21, 2011

Pre-trial conference on: December 8, 2011 at 10:00 a.m.

Joint pre-trial order due per local rules.

Refer to mediation. Order appointing mediator to be lodged by plaintiff within 10 days.

One day of mediation to be completed by December 1.

Tentative Ruling:

Party Information

Debtor(s):

Bobby J Hamby Represented By

James D Zhou

Defendant(s):

2/28/2012 1:37:31PM Page 31 of 32

Page 32: Judge Theodor Albert Calendar for 29 Feb 2012

Judge Theodor Albert, Presiding

Courtroom 5B Calendar

United States Bankruptcy Court

Central District of California

Santa Ana

Wednesday, February 29, 2012 Hearing Room 5B

10:00 am

11ChapterBobby J HambyCont....

Defendant(s):

Bobby J Hamby Represented By

James D Zhou

Plaintiff(s):

Yorba Linda Group Limited Represented By

Brandon R Creel

U.S. Trustee(s):

United States Trustee (SA)

2/28/2012 1:37:31PM Page 32 of 32