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No Interlocutory Appeal for Chapter 13 Plan Denial

An Alexandria U.S. District Court denies debtor permission to file an interlocutory appeal of the bankruptcy court’s denial of debtor’s Chapter 13 reorganization plan.
A party seeking leave to file an interlocutory appeal must satisfy three requirements: 1) the order involves a controlling question of law, 2) as to where there is a substantial ground for a difference of opinion, and 3) immediate appeal would materially advance the termination of the litigation.

There is no dispute that debtor satisfies the first requirement because confirmation of his bankruptcy plan depends entirely on the legal question of whether a debtor’s issuing a new promissory note satisfies a debt under chapter 13. He also satisfies the third requirements because an appeal would materially advance termination of this litigant. If the bankruptcy court decision were affirmed, debtor would be required to file an amended plan; if it were reversed, the plan would be confirmed. But the parties disagree on whether debtor has established that there is a substantial ground for difference of opinion as to whether the proposed reorganization plan conforms to the requirements of chapter 13.

Debtor fails to cite to any authority that would allow a debtor to satisfy an existing debt by simply issuing a new note. Such a conclusion would contradict the entire purpose of a 60-month time limit on chapter 13 reorganization. As the bank correctly argues, to replace a note that is payable by the debtor with a new note that is payable by the debtor is not delivering property to the secured debtor. It is simply a modification of the existing debt, which is secured by the current deed of trust on the property. Because debtor has failed to demonstrate that there is a substantial ground for difference of opinion as to whether a new, 30-year promissory note issued by the debtor could satisfy an existing debt within five years, an interlocutory appeal would be improper.

Leave to appeal denied.

Russell v. The Bank of New York Mellon
(Brinkema, J.) No. 1:10cv1362, Dec. 21, 2010; USDC at Alexandria, Va. VLW 011-3-006, 5 pp.

VLW 011-3-006

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