PHIL HART'S CHAPTER 13 BANKRUPTCY IS DISMISSED
On August 15, 2012, Phil Hart moved for a voluntary dismissal of his Chapter 13 bankruptcy case.
On August 27, 2012, the Court issued an order dismissing the case. Docket entry 38,
In re Philip Lewis Hart, case no. 12-20648-TLM, U.S. Bankruptcy Court for the District of Idaho (Coeur d'Alene Div.).
This came about after the United States filed the objection (noted earlier in this thread) to the proposed confirmation of Hart's Chapter 13 plan. The objection was filed on August 9th, and here are some excerpts:
The Plan should not be confirmed for four reasons. First, Hart’s refusal to answer questions at the § 341(a) meeting of creditors makes it impossible to evaluate whether the value of the distributions he proposes in his Plan exceed the amount that would be paid if his estate were to be liquidated. Second, Hart’s proposed Plan fails to make adequate provision for the United States’ undisputed priority tax debts. Third, Hart’s proposed Plan is not feasible because it relies on an income source that Hart admits will disappear at the end of the year. Finally, Hart is ineligible for a Chapter 13 bankruptcy; he has too much unsecured debt. If the United States’ Claim is treated as secured, the Plan still should not be confirmed because it does not properly account for the United States’ secured claim.
[ . . . ]
Creditors cannot reasonably determine whether these requirements are met: Hart refused to answer numerous questions about his assets during the § 341(a) meeting.
Many of the questions Hart refused to answer pertain directly to assets he arguably owns. For instance, Hart was affiliated with a business called Alpine Northwest III Trust. (See 341(a) Hrg. Tr. 12:12-22, Ex. A to Strait Decl.; Certificate of Assumed Business Name, Ex. B to Strait Decl.) However, he refused to say whether he owned any portion of that business (341(a) Hrg. Tr. at 15:1-5, Ex. A to Strait Decl.) or whether it had any assets when it went out of business (id. at 16:23-17:10). Similarly, Hart admitted that he resided at the East Sarah Loop address listed on his bankruptcy petition. (See id. at 29:22-24; Petition 3 (ECF No. 1).) However, Hart refused to answer who owns that real property; when he started to reside there; who made the improvements on the property; and even whether his signature appeared on a deed purportedly transferring the property. (See 341(a) Hrg. Tr. 29:25-34:24, Ex. A to Strait Decl.)
It is particularly appropriate to permit further inquiry into these assets given that Hart admitted to using a holding company for an Audi. The entity called “White Snow LLC,” listed by Hart on his bankruptcy schedules (Sched. B, Schedules at 4 (ECF No. 19)), has never done any business or filed any tax returns. (341(a) Hrg. Tr. 22:22-23:21.) Nevertheless, it owns a car of which Hart is virtually the exclusive driver. (Id. at 23:22-24:18.) The creditors in this case should, at minimum, have additional time to seek a Rule 2004 examination of Hart in order to make a full inquiry into his assets.
[ . . . ]
The Court should also consider the reason Hart declined to answer questions. For certain questions, Hart refused to answer unless another attorney – not his bankruptcy attorney – was present.
[ . . .]
The Court should not confirm Hart’s Chapter 13 Plan because it fails to make adequate provision for paying the United States’ priority income tax debts. A chapter 13 plan must provide for the full cash payment of priority claims. 11 U.S.C. § 1322(a)(2). Income taxes are entitled to priority if the return was due, including extensions, less than three years prior to the date the petition was filed. Id. § 507(a)(8). Hart filed his petition on May 29, 2012. (Petition (ECF No. 1).) Therefore, income taxes shown on any return due after May 29, 2009, are entitled to priority status.
[ . . .]
Hart owes approximately $564,000 in federal income taxes, interest, and penalties. (U.S. Proof of Claim (Claim No. 3-1).) Hart and the United States take different positions as to whether the debt is secured. The real property where Hart resides is nominally held by an entity called the Sarah Elizabeth Hart Trust. The United States contends that the trust is a sham entity acting as Hart’s nominee and that Hart’s transfer of the property to the trust was fraudulent as to the United States. Accordingly, the United States takes the position that its entire claim is secured, at least until the value of the property is shown to be less than the amount of the claim. Hart has listed the United States’ claim as unsecured.
Regardless of whether the United States’ claim is secured or unsecured, the Court should not confirm Hart’s Chapter 13 Plan. If the United States’ claim is properly treated as unsecured at this point, Hart is not eligible for Chapter 13 relief. The limit for unsecured debt in a Chapter 13 is $360,475. 11 U.S.C. § 109(e). When calculating limits on Chapter 13 eligibility, it is irrelevant if the debtor disputes liability as long as the amount of the liability is readily ascertainable. See In re Slack, 187 F.3d 1070, 1074-75 (9th Cir. 1999). Hart is well above the unsecured debt limit.
----From UNITED STATES’ OBJECTION TO CONFIRMATION OF DEBTOR’S PROPOSED CHAPTER 13 PLAN, docket entry 34, Aug. 9, 2012
In re Philip Lewis Hart, case no. 12-20648-TLM, U.S. Bankruptcy Court for the District of Idaho (Coeur d'Alene Div.) (footnotes omitted).
"My greatest fear is that the audience will beat me to the punch line." -- David Mamet
