United States Court of Appeals

For the Seventh Circuit

Chicago, Illinois 60604

Submitted August 10, 2011

*

Decided August 16, 2011

Before

FRANK H. EASTERBROOK, Chief Judge

JOHN L. COFFEY, Circuit Judge

DANIEL A. MANION, Circuit Judge

Nos. 11-1797 & 11-1798

In the Matter of RICHARD LOUIS

ALEXANDER,

Debtor-Appellant.

Appeal from the United States District

Court for the Western District of Wisconsin.

Nos. 10-cv-310-wmc & 10-cv-311-wmc

William M. Conley,

Chief Judge.

O R D E R

After Richard Alexander filed for bankruptcy, a bankruptcy judge granted two

secured creditors, Kondaur Capital Corporation and Prime Asset Fund II, relief from the

automatic stay on collecting debts to permit them to pursue pending state-foreclosure

proceedings. See 11 U.S.C. § 362(a), (d). Alexander moved to reconsider, which was denied,

NONPRECEDENTIAL DISPOSITION

To be cited only in accordance with

Fed. R. App. P. 32.1

After examining the briefs and the records, we have concluded that oral argument

*

is unnecessary. Thus, the appeals are submitted on the briefs and the records. See FED. R.

APP. P. 34(a)(2)(C).
Nos. 11-1797 & 11-1798 Page 2

and then appealed to the district court, which affirmed. Because the bankruptcy court

granted both motions for relief for the same reasons, we decide the appeals together.

Finding no abuse of discretion, we affirm.

Each of the creditors asserted in its motion for relief from the stay that Alexander had

executed a promissory note and mortgage on specified property; the original holder of the

notes assigned them to Kondaur Capital and Prime Asset; and Alexander defaulted on the

obligations, prompting foreclosure proceedings. The creditors explained that their interests

were insufficiently protected because Alexander had failed to make monthly payments, had

no equity in the properties secured, and did not plan in his proposed bankruptcy budget to

pay real estate taxes or insurance. Alexander objected to each of the motions, arguing that

the creditors had not provided the bankruptcy court “proofs of claim” under Federal Rule of

Bankruptcy Procedure 3002.

After holding hearings in both cases, the bankruptcy court judge concluded that the

debt remaining on the mortgage notes well exceeded the value of the mortgaged properties,

Alexander retained no equity in the properties secured, and Alexander presented no

evidence of hazard insurance or payments of taxes. The court also rejected Alexander’s

argument that the secured creditors had not offered “proofs of claim,” concluding that no

such proof was required. As a result, the bankruptcy court granted the creditors’ requests

for relief from the automatic stay. A representative of the U.S. Trustee was present at each

hearing and did not object to the grant of relief from the automatic stay.

Alexander first sought reconsideration of each motion in the bankruptcy court and

then review by the district court, which affirmed, finding no abuse of discretion. He then

appealed to us. On appeal, we too review the bankruptcy court’s rulings to lift the automatic

stay for abuse of discretion and its underlying factual findings for clear error. See Colon v.

Option One Mortg. Corp., 319 F.3d 912, 916 (7th Cir. 2003); In re Williams, 144 F.3d 544, 546

(7th Cir. 1998); In re Vitreous Steel Prods. Co., 911 F.2d 1223, 1231-32 (7th Cir. 1990); In re

Boomgarden, 780 F.2d 657, 660 (7th Cir. 1985).

We find no fault with the bankruptcy court’s ruling. Alexander first argues on appeal

that the bankruptcy court erred by failing to permit him a 7-day extension to file an

objection to Kondaur Capital’s motion for relief from the stay. But though the bankruptcy

court denied the extension, it nonetheless entertained on the merits the objections Alexander

later filed. Consequently, any error in denying more time was harmless. See 28 U.S.C. § 2111;

FED. R. CIV. P. 61; Shinseki v. Sanders, 129 S. Ct. 1696, 1705 (2009). Alexander also faults the

bankruptcy court for granting the creditors’ requests for relief without requiring both

creditors to file “proofs of claim” as defined by Federal Rule of Bankruptcy Procedure
Nos. 11-1797 & 11-1798 Page 3

3003(c)(2). But a secured creditor need not file a “proof of claim” unless the creditor wishes

to take part in the distribution of estate assets; here the creditors sought to separate the

mortgaged property from the bankruptcy estate and vindicate their claims in foreclosure

proceedings in state court, as the bankruptcy code permits. See 11 U.S.C. § 506(d)(2); In re

Penrod, 50 F.3d 459, 461 (7th Cir. 1995) (“A secured creditor can bypass his debtor’s

bankruptcy proceeding and enforce his lien in the usual way, which would normally be by

bringing a foreclosure action in a state court. This is the principle that liens pass through the

bankruptcy unaffected.”); In re Pence, 905 F.2d 1107, 1110 (7th Cir. 1990).

Even though a “proof of claim” was not necessary, both creditors adequately justified

their motions for relief. Given the summary nature of automatic-stay proceedings, the

bankruptcy court may lift the stay if it is satisfied that a creditor has presented a colorable

claim that will not impair effective reorganization. See In re Vitreous Steel Prods. Co., 911 F.2d

at 1232; In re Johnson, 756 F.2d 738, 740 (9th Cir. 1985). Here, the creditors established their

claims by citing the original mortgage documents, the validity of which Alexander did not

dispute, and presenting copies of executed and recorded assignments transferring the

mortgage notes to the creditors. Furthermore, lifting the stay did not impair reorganization

because the bankruptcy court found, not clearly erroneously, that Alexander had no equity

in the properties, that he was insufficiently insured, and that he had no plan to pay either

the amount in arrears on the mortgage or the taxes due. The bankruptcy court properly

determined the absence of Alexander’s equity in the properties by comparing the valuations

from his own schedules with the amounts remaining on the notes (which exceeded

Alexander’s own estimates of market value). He had ample opportunity to present evidence

contesting these findings when he filed motions to reconsider in each case. His failure to

back up his arguments (for example, his claim to have insured the properties) with any

additional evidence belies his contrary arguments.

We note finally that Alexander also contends on appeal that creditors, their

attorneys, and the original mortgage holder on his properties conspired to defraud him. His

brief does not substantiate any fraud, however, and, more importantly, this is not the forum

for the airing of those grievances in the first instance. See Loubser v. Thacker, 440 F.3d 439, 442

(7th Cir. 2006) (“one cannot present evidence to an appellate court”).

AFFIRMED.