“Cause” existed under § 1112(b) to dismiss or convert individual debtor’s chapter 11 case because debtor’s plan, filed more than two and a half years after debtor commenced the bankruptcy case, did not comply with the Code’s requirements for treatment of a claim secured only by debtor’s principal residence. To determine whether a plan violates the anti-modification prohibition in § 1123(b)(5) applicable to claims secured only by a debtor’s principal residence, the Court must look to the impairment provisions in § 1124. To “unimpair” a claim under § 1124(2), a debtor must cure all pre- and post-petition, pre-confirmation arrearages by the plan effective date. Consequently, a chapter 11 individual debtor may not cure arrearages on a claim secured only by the debtor’s principal residence by making installment payments over time. Such treatment impermissibly modifies the secured creditor’s claim in violation of § 1123(b)(5). Debtor’s plan did not provide for a cure of all arrearages by the plan effective date in violation of  § 1123(b)(5)’s anti-modification prohibition, and Debtor did not rebut the showing of “cause” by demonstrating unusual circumstances or a likelihood that he would be able to confirm a plan within a reasonable time. The Court determined that dismissal was in the best interest of creditors and the estate and dismissed the case.

Debtor sought to strike an amended proof of claim filed after the claims bar date which substituted the named creditor. The Court denied the motion, determining that the claim was properly amended to substitute the name of the correct creditor and related back to the date of the filing of the original claim where 1) the original claim gave Debtor adequate notice of the existence, nature, and amount of  the claim, 2) except for the name of the creditor, the amended claim did not materially change the original claim, 3) the creditor filing the amended claim bore a substantial relationship to the original claimant inasmuch as both creditors where wholly owned by the same two individuals, and the same counsel represented both creditors and filed the proof of claim and the amended claim, 4) the mistaken identity of the claimant in the original claim should have been obvious to the Debtor for a variety of reasons; and 5) the amendment did not prejudice the Debtor or other creditors.

Bank asserted a secured claim against equipment Debtor acquired post-petition under the theory that 1) the equipment was proceeds of encumbered LLC membership interests initially pledged by Debtor’s individual members to secure payment to acquire their membership interests in the Debtor; 2) the pledged membership interests would be transferred to a new investor upon confirmation of debtor’s plan in exchange for the investor’s prior contribution to the purchase of the equipment; and 3) the after-acquired equipment became property of the debtor’s bankruptcy estate. Creditor who held the initial security interest in the pledged membership interests had assigned  his security interest to the Bank. The Court sustained Debtor’s objection to the Bank’s claim, in part, because the evidence before the Court did  not establish that pledged membership interests would be transferred to the new investor. Consequently, the Bank did not establish under the Uniform Commercial Code that the after-acquired equipment was proceeds of the security interest in the pledged membership interests. The Court sustained Debtor’s objection to Creditor’s claim because his secured claim was premised on the same theory as the Bank’s and because his unsecured claim was not a claim against the Debtor, but rather, a claim against the non-debtor individual members of the Debtor. 

Creditor filed a motion to dismiss debtor’s chapter 13 bankruptcy case on eligibility grounds. Debtors determined not to contest chapter 13 eligibility and filed a motion to convert their chapter 13 case to a subchapter V case under chapter 11. Creditor responded by filing a motion to convert Debtors’ chapter 13 case to chapter 7 premised on Debtors’ bad faith filing and prosecution of their chapter 13 case and certain pre-petition transfers. Debtors later asked to convert to a non-subchapter V chapter 11 case in the alternative. The opinion discusses what a debtor must show to convert a case to chapter 11. It also discusses when a debt is unliquidated for purposes of chapter 13 eligibility. The Court determined that Debtors were not eligible to be Debtors under subchapter V, could not convert to a non-subchapter V case under chapter 11, and did not file or prosecute their chapter 13 case in bad faith. Because the Debtors conceded for purposes of the pending motions that they were not eligible for chapter 13 relief, the only remaining possible outcomes were conversion to another chapter or dismissal. Because Debtors had an absolute right to voluntarily dismiss their chapter 13 case that had not previously been converted, the Court granted Debtors an opportunity to elect voluntary dismissal under § 1307(b). If the Debtors do not elect voluntary dismissal, the Court will convert the case to chapter 7.