Bankruptcy – Debtor’s plan rejected for myriad issues

Where documentation supporting a debtor’s proposed plan contained inaccuracies, the debtor provided shifting explanations for various expenses and his in-court testimony deviated from the documentation, the bankruptcy court did not err when it found the debtor did not submit his plan in good faith.

Background

Christopher Cook filed for bankruptcy in May 2023. The bankruptcy court denied confirmation of the first plan Cook proposed, finding the plan failed to comply with statutory requirements. Over the next several months, Cook submitted two more revised plans, which the bankruptcy court declined to confirm. Finally, the bankruptcy court confirmed Cook’s fourth proposed plan.

After his fourth plan was confirmed and Cook began to comply with its parameters, Cook appealed to the district court, arguing that the bankruptcy court should have confirmed his first proposed plan. The district court deemed the appeal equitably moot and dismissed it.

Analysis

The district court erred in concluding that Cook’s appeal had become equitably moot. The circumstances of this case do not suggest that “effective relief” has become “impractical, imprudent, and therefore inequitable.” There is no egg to unscramble.

Cook seeks merely to adjust his plan moving forward. No real property has been transferred, no assets have been liquidated and no reorganization has occurred. Cook has continued to make the requisite monthly payments in a timely manner. Altering the amount of the payments prospectively was feasible and well within the authority of the district court.

Moreover, this is a straightforward Chapter 13 bankruptcy involving only one individual with limited assets and debts. Only four creditors have made claims in this bankruptcy, and the total amount of their debt is approximately $115,000. Where this court affirmed a district court’s application of the equitable mootness doctrine, the cases have invariably involved far greater sums of money, tangible property and more parties. Indeed, this court has only upheld the application of the equitable mootness doctrine in more complex cases, generally in the context of Chapter 11 bankruptcy.

Beyond that, this court has previously instructed that relevant factors for consideration include: (1) whether the appellant sought and obtained a stay; (2) whether the reorganization plan or other equitable relief ordered has been substantially consummated; (3) the extent to which the relief requested on appeal would affect the success of the reorganization plan or other equitable relief granted and (4) the extent to which the relief requested on appeal would affect the interests of third parties.

First, Cook did not seek a stay. Nor did he pursue an interlocutory appeal after the bankruptcy court declined to confirm his first plan. Though these facts may weigh in favor of equitable mootness, they are not dispositive. The bankruptcy code does not impose such a requirement, and this court declines to do so here.

Second, Cook made regular monthly payments to the trustee, who then disbursed funds to Cook’s creditors, from the time the plan was confirmed until now. Nevertheless, the substantial consummation factor does not weigh in favor of equitable mootness when “the relief requested does not seek to undo any aspect of the Confirmed Plan that has been Consummated,” as here.

Third, there is no suggestion that confirmation of Cook’s first plan would affect the success of his plan. Cook has made his monthly payments as expected. An adjustment downward, which would be the practical effect of confirming his first plan rather than his fourth, would not increase the risk of the plan’s failure.

Finally, although the four creditors that filed claims in Cook’s bankruptcy would receive less money towards Cook’s debt if his first plan was adopted in lieu of his fourth, the impact is lessened by the fact that Cook’s proposed changes are solely forward-looking. The number of third parties involved in this case, however, as well as the dollar amount at issue, is significantly smaller than the instances where this factor has weighed in favor of equitable mootness.

Considering the record in full, this court concludes that relief would be practically and pragmatically available, and that the factors weigh against application of the doctrine of equitable mootness in this case.

Merits

One basis upon which the bankruptcy court rejected Cook’s first proposed plan was its finding that the plan had not been proposed in good faith. It noted that Cook’s supporting documentation contained inaccuracies, that Cook provided shifting explanations for various expenses and that his in-court testimony deviated from the documentation. It also noted that these issues with the first proposed plan reflected a general lack of care. These reasons suffice to support the bankruptcy court’s finding that Cook did not submit his plan in good faith.

Affirmed.

Cook. v. Chapter 13 Trustee, Case No. 25-1048, May 27, 2026. 4th Cir. (Berner), from EDVA at Alexandria (Nachmanoff). Robert S. Brandt for Appellant. Richard Preston Cook for Amici Curiae. Thomas P. Gorman for Appellee. VLW 026-2-188. 13 pp.

Full-Text Opinion
VLW 026-2-188