I read a not-so-good order yesterday.
It affirmed sanctions against debtor’s counsel for advising the client to remain silent in the face of a Chapter 13 confirmation order to disclose.
That sent me off to read through the standard order confirming plan in the Northern District.
I was not keen to see my name in the advance sheets in that context.
I needed to know exactly what our order provided.
The distressing case from the 9th Circuit BAP involved a post confirmation automobile accident. The order confirming the plan provided that the debtor “shall inform the Trustee of any changes in circumstances or receipt of additional income. . . .”
The bankruptcy court found that counsel had advised that the accident claim wasn’t income and the Chapter 13 trustee was unlikely to discover the right to recovery.
The trustee did discover the claim when the carrier’s counsel called the trustee about who should get the settlement check.
Between that call and the BAP decision on sanctions, there ensued a hearing on the allocation of the settlement between the trustee and the estate; the revocation of the debtor’s discharge; and a two day hearing on the court’s OSC concerning counsel’s behavior.
Even if all of those decisions had run in the debtor’s favor, the case sucked up a huge amount of time.
The most egregious part of this story is counsel’s indifference to the provisions of the order confirming the plan about future disclosure.
There is lots of foment in the cases right now about what is property of the estate post confirmation and just what difference new assets or a change of circumstances means to the plan.
In my view, the law is unsettled.
But it’s hard to have any sympathy for an attorney who, in the face of an order requiring disclosure, counsels silence.
Word for word
My review of our local order confirmed what I thought I knew: there is no mandate in our order dealing with reporting of changes of circumstances.
But it is never time misspent to check those things you think you “know” and to read, word for word, the forms, the guidelines, and the rules.
Image courtesy of Flickr and Dustin Gaffke
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