Three court decisions from the U.S. Supreme Court, the 1st Circuit Bankruptcy Appellate Panel, and the Maine Bankruptcy Court are both interesting and instructive.
The first case is Bullard v. Blue Hills Bank decided by the U.S. Supreme Court. Bullard filed a chapter 13 case and proposed a plan for confirmation, but the bankruptcy court denied confirmation. Since some of the provisions of the plan were novel, Bullard appealed the plan denial to the 1st Circuit Bankruptcy Appellate Panel. The Appellate Panel concluded that denial of confirmation of a plan was not a "final order" and therefore not appealable. The First Circuit Court of Appeals also agreed and dismissed the appeal. The U.S. Supreme Court accepted the case for a decision since there was a difference of opinion among the Circuit Courts whether denial of confirmation of a chapter 13 plan was a final order. The Supreme Court concluded that denial of confirmation of the Chapter 13 plan was not appealable since it wasn't a final order. The lesson from this case is that if a debtor cannot convince a bankruptcy court to confirm his or her plan, the only option for a debtor is to propose a different plan.
The second decision is from the 1st Circuit Bankruptcy Appellate Panel. In Harrington v. Simmons, Simmons filed a Chapter 7 case after owning and operating 27 residential properties, but kept very poor business records and he was unable to provide any details of business income or expenses, location of bank accounts, and he reported no income for the 5 years immediately preceding his bankruptcy filing. The US Trustee conducted a Rule 2004 examination of Simmons, who was unable to provide any details of his finances. The US Trustee filed an adversary proceeding to deny Simmons his discharge, and the bankruptcy court ruled in favor of the US Trustee. Simmons appealed to the Bankruptcy Appellate Panel , which affirmed the bankruptcy court. The Appellate Panel concluded that Simmons failed to provide any evidence supporting his position that he should be excused from keeping detailed records or that he was incapable of doing so. The importance of this case is that business debtors should be expected to keep sufficient business records when they file bankruptcy so they can demonstrate what happened to their business prior to filing the case.
The final court decision is from the Maine Bankruptcy Court, In re Bruce Smith. Smith filed a Chapter 13 case after finalizing a divorce in state court. The divorce judgment required Smith to divide his retirement plan and give half to his now ex-wife. The division was not completely papered by a domestic relations order (DRO) signed by the divorce court when Smith filed bankruptcy. Smith asserted that his ex-wife has a property settlement claim, which was dischargeable in Chapter 13. The Bankruptcy Court agreed that if the retirement plan was a claim, it was dischargeable. However the ex-wife asked for relief from the automatic stay to permit the state court to determine whether the division was an interest in property instead of a claim. The Maine Bankruptcy Court granted relief from stay to the ex-wife for that determination by the state court. The importance of this decision is understanding when a divorce judgment creates a claim vs. a property interest. If a property interest is created, it survives a chapter 13 filing.