Opinion ID: 48466
Heading Depth: 2
Heading Rank: 2

Heading: vacate the plan sua sponte 761 days after the

Text: Debtors appeal the bankruptcy court’s deci- confirmation order was entered because, acsion to allow the IRS’s late-filed proof of cording to the terms of the Bankruptcy Code, claim as an amendment to the earlier proof of a confirmed chapter 13 plan can be revoked claim filed by debtors. Although that order only if a party in interest makes a request withwas entered on April 13, 2005, debtors did not in 180 days.3 file a notice of appeal until after they had signed the September 13, 2005, Agreed Order. 2 (...continued) A party cannot appeal a judgment to which cause.”). he has consented.2 Although debtors now 3 The Bankruptcy Code provides a statutory method of revoking a confirmation order in cases of fraud: 2 Swift & Co. v. United States, 276 U.S. 311, 323-24 (1928) (“[A] decree, which appears by the On request of a party in interest at any time record to have been rendered by consent is always within 180 days after the date of the entry of an affirmed, without considering the merits of the order of confirmation under section 1325 of this (continued...) (continued...) 4 “Bankruptcy Courts are courts of equity,” On review, we first reversed the lower court’s Nikoloutsos v. Nikoloutsos (In re Nikoloutsos), findings that the proof of claim was not timely. 199 F.3d 233, 236 (5th Cir. 2000), and “a Nikoloutsos, 199 F.3d at 236. We then found court of equity is enabled to frustrate fraud that the debtor had obtained a chapter 13 conand work complete justice.” Tex. Co. v. Mil- firmation through “a materially false ler, 165 F.2d 111, 116 (5th Cir. 1947). The representation which was either known by him Bankruptcy Code grants broad statutory pow- to be false or made with reckless disregard for er to bankruptcy courts: the truth.” Id. at 238. We remanded with instruction to the bankruptcy court to “vacate The court may issue any order, process, its order confirming the chapter 13 plan.” Id. or judgment that is necessary or appropri- ate to carry out the provisions of this title. The facts of this case are strikingly similar No provision of this title providing for the to those in Nikoloutsos. Debtors, through raising of an issue by a party in interest their counsel, intentionally misrepresented shall be construed to preclude the court their debt to the IRS in their chapter 13 filings from, sua sponte, taking any action or mak- and, by their fraud, obtained a confirmed chaping any determination necessary or appro- ter 13 plan. On these facts, it was well within priate to enforce or implement court orders the equitable authority of the bankruptcy court or rules, or to prevent an abuse of process. to vacate debtors’ confirmed chapter 13 plan, just as we instructed in Nikoloutsos. 11 U.S.C. § 105(a). From the face of the stat- ute, the fact that the Bankruptcy Code may al- Additionally, debtors cannot claim that the low parties in interest to request revocation of vacatur of the plan has deprived them of any a confirmed plan does not prevent the court right to which they are entitled.4 The bankfrom taking the action sua sponte. ruptcy court’s order provided the debtors an opportunity to file an amended plan, and coun- In Nikoloutsos, this court considered a case sel at argument admitted that a new chapter 13 in which a debtor owed a $800,000 personal plan has been confirmed with the sole injury judgment that he did not appeal. He alteration that the entire debt to the IRS is infiled a chapter 13 petition despite the fact that cluded. Debtors have no right to the discharge chapter 13 is not available to debtors with over of a debt that is included in their plan only $250,000 in debts. See 11 U.S.C. § 109(e). through fraudulent and misleading filings with He also listed his debt to the judgment creditor the bankruptcy court. That court need not aid as zero. When the judgment creditor objected, and abet debtors’ fraud. the bankruptcy and district courts found that she had failed to file a timely proof of claim. 3 4 (...continued) See, e.g., Meyer v. Lenox (In re Lenox), 902 title, and after notice and a hearing, the court F.2d 737, 739-40 (9th Cir. 1990) (“[B]ankruptcy may revoke such order if such order was pro- courts, as courts of equity, have the power to recured by fraud. consider, modify or vacate their previous orders so long as no intervening rights have become vested in 11 U.S.C. § 1330(a). reliance on the orders.”). 5