Understand the complexities and nuances of the Bankruptcy Code to better advise clients and prepare for court.
By Diane Davis
A Chapter 13 debtor can’t force family members who aren’t in bankruptcy to sell property they all own together, the U.S. Bankruptcy Court for the District of Massachusetts held ( Andrade v. Essenfeld (In re Andrade) , 2017 BL 240769, Bankr. D. Mass., Chapter 13 Case No. 16-31020-EDK Adversary Proceeding No. 17-3009, 7/12/17 ).
Chapter 13 debtors have limited authority under Bankruptcy Code Section 1303 to exercise the powers of a trustee and sell property that is co-owned, Judge Elizabeth D. Katz wrote July 12.
Most courts agree that the plain language of Bankruptcy Code Section 363(h) leads to the “obvious conclusion” that a Chapter 13 debtor can’t force the sale of co-owned property, the court said.
Karen Andrade filed for Chapter 13 protection in which she could retain her property, but must propose a plan that uses future income to repay all or a portion of her debts over a three- to five- year period.
After the death of her father, Andrade inherited property in New York along with her brother and sister. She then asked the court for authority to sell both her interest and her siblings’ interests under Bankruptcy Code Section 363(h).
Section 363(h) allows a trustee to sell both the estate’s interest and the interest of any co-owner in property under certain limited circumstances. Section 1303 limits the power of a trustee, however to those rights under Sections 363(b), 363(d), 363(e), 363(f), and 363(l). Section 363(h) is not listed.
The court noted that it could only find five published cases allowing a Chapter 13 debtor to proceed with a sale under Section 363(h). The courts that allow it use the concept of “incorporation” to conclude that Section 363(h) incorporates subsection (b) by reference so the debtor can proceed.
The incorporation reasoning isn’t persuasive, and a majority of recent cases have rejected it, the court said. The plain language of the statute leads to a conclusion that Chapter 13 debtors can’t bring Section 363(h) actions, the court said.
Mark A. Papirio, Springfield, Mass., represented Andrade; Daniel Parente, Callaghan Parente LLP, Westbury, N.Y., represented Cindy C. Essenfeld; Mark Andrade, Richmond Hill, N.Y., represented himself.
To contact the reporter on this story: Diane Davis in Washington at DDavis@bna.com
To contact the editor responsible for this story: Jay Horowitz at JHorowitz@bna.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)