Court Opinion

ID: 5161568
Source: CourtListenerOpinion
Date Created: 2022-01-02 02:52:17.811069+00
Date Added: 2024-06-11T08:25:38.640143
License: Public Domain

ALMA WILSON, Justice,
specially concurring:
I agree with both the majority opinion and the dissent that the general partners’ liability on a partnership debt is not discharged by a bankruptcy proceeding in which the partnership but not the individual partners seek relief. I address issues not discussed in the majority opinion.
The dispositive issue in this case is whether or not the appellants are entitled to a release from a debt which has not yet been satisfied. I agree with the majority that they are not. The obligation has not been discharged, and under these facts the Oklahoma district court cannot declare the debt discharged where the debt has not been paid. (See definition of “payment” quoted in the majority opinion at p. 465 from Continental Gin Co. v. Arnold, 52 Okl. 569, 153 P. 160, 162 (1915)).
The curing of the default by the bankruptcy court is a completely different issue. The dissent states that the bankruptcy court is clearly vested with the power to cure all defaults. See Dissent, p. 465, citing 11 U.S.C. § 1123. However, such power is vested in the bankruptcy court as a method of providing relief for the entity filing bankruptcy. Section 1123 of the Bankruptcy Code addresses what shall be included in the Plan of Reorganization of a chapter 11 debtor and also what may be included in the Plan of Reorganization. The statute does not imply that curing the debtor’s default removes the guarantors’ obligation for the debt. If a default could be cured by the bankruptcy court for the benefit of a guarantor, the provisions of the Bankruptcy Code would operate as a protection for a party not seeking such relief from the bankruptcy court. It is not the intent of the Bankruptcy Code to provide relief to a party not seeking its protection. Bankruptcy court cases agree that the automatic stay provided by 11 U.S.C. § 362 as relief for a debtor/partnership in a chapter 11 reorganization does not apply to the general partners. In re Landmark Air Fund II, 19 B.R. 556 (Bankr.Ct.N.D.Ohio 1982), In re Aboussie Brothers Construction Co., 8 B.R. 302 (Dist.Ct.E.D.Mo.1981), and In re Bank Center, Ltd., 15 B.R. 64 (Bankr.Ct.W.D.Penn.1981).
That Congress did not intend for the automatic stay to apply to the general partners of a debtor/partnership reorganizing under chapter 11 is clear from examining the Bankruptcy Code itself. In contrast, the Bankruptcy Code allows a stay of an action against a codebtor in a chapter 13 proceeding. (The purpose of a chapter 13 proceeding is to provide for the adjustment of debts of an individual with a regular income.) Title 11 U.S.C. § 1301 provides in pertinent part:
(a) Except as provided in subsection (b) and (c) of this section, after the order for relief under this chapter, a creditor may not act, or commence or continue any civil action, to collect all or any part of a consumer debt of the debtor from any individual that is liable on such debt with the debtor, or that secured such debt, unless—
(2) the case is closed, dismissed, or converted to a case under chapter 7 or 11 of this title. [Emphasis added.]
*467One may conclude that in a case of consumer debt, Congress intended that codebt-ors be protected only under chapter 13, and not under chapter 7 or 11 of the Bankruptcy Code. By comparing chapters 11 and 13, we must conclude that Congress intended that codebtors not be protected by the automatic stay of § 362 of the Bankruptcy Code in chapter 11 cases.
Guarantors of debtors reorganizing under chapter 11 are not left without any protection. Title 11 U.S.C. § 509 allows for subrogation of the codebtor to the rights of the creditor to the extent that the codebtor has paid the creditor. In summary, Sections 509 and 1301 of the Bankruptcy Code along with the cases cited above, are strong arguments against the assertion that the debtor’s Plan of Reorganization can cure a default to the benefit of a co-debtor.
This is not to say that a general partner of a debtor/partnership reorganizing under chapter 11 is always denied relief. In the case of In re Bank Center, Ltd., 15 B.R. 64, 66 (Bankr.Ct.W.D.Penn.1981), the bankruptcy court after refusing to enjoin a creditor from collecting a judgment against the partners stated:
It would be possible for the Debtor to show that actions against the partners would have a deleterious effect on the partnership, especially upon the partnership’s ability to present a Plan. If such a showing is made an injunction may be requested. This request for a separate injunction should not be confused with the automatic stay, which the Debtor obtained by filing and subjecting itself to the Bankruptcy Court.
I conclude that if the partners in the case at bar believe that the FDIC’s collection efforts against them would impair the Plan of Reorganization, then they may apply to the bankruptcy court for an injunction. In any event, this Court cannot reverse the trial court's denial of a motion for release and. satisfaction of a judgment when the underlying debt has not been satisfied, even though the bankruptcy court has approved a Plan of Reorganization.
Finally, although the majority opinion does not specifically say so, I must presume that the appellants will receive credit against the judgment on the amounts paid by the debtor/partnership under the Plan of Reorganization. The FDIC is obviously not entitled to double recovery on the loans to the partnership.