Court Opinion

ID: 9373934
Source: CourtListenerOpinion
Date Created: 2023-02-22 16:10:36.990711+00
Date Added: 2024-06-11T17:16:49.372213
License: Public Domain

FILED
                                                                                   AUG 15 2022
                          NOT FOR PUBLICATION                                 SUSAN M. SPRAUL, CLERK
                                                                                 U.S. BKCY. APP. PANEL
                                                                                 OF THE NINTH CIRCUIT
          UNITED STATES BANKRUPTCY APPELLATE PANEL
                    OF THE NINTH CIRCUIT

 In re:                                              BAP No. CC-21-1249-TLG
 YOSHIHIRO TAJIMA and TOMOKO
 NAKAJIMA,                                           Bk. No. 2:21-bk-14177-SK
              Debtors.

 SWARNJIT SINGH SAHNI,
                  Appellant,
 v.                                                 MEMORANDUM∗
 YOSHIHIRO TAJIMA; TOMOKO
 NAKAJIMA; KATHY A. DOCKERY,
 Chapter 13 Trustee,
                  Appellees.

               Appeal from the United States Bankruptcy Court
                    for the Central District of California
                Sandra R. Klein, Bankruptcy Judge, Presiding

Before: TAYLOR, LAFFERTY, and GAN, Bankruptcy Judges.

Memorandum by Judge Taylor.
Concurrence by Judge Lafferty.

      ∗  This disposition is not appropriate for publication. Although it may be cited for
whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential
value, see 9th Cir. BAP Rule 8024-1.
                                            1
                                 INTRODUCTION

      Creditor Swarnjit Singh Sahni (“Sahni”) appeals the bankruptcy

court’s order confirming the first amended chapter 131 plan proposed by

Yoshihiro Tajima and Tomoko Nakajima (“Debtors”). Pre-confirmation,

Debtors filed an objection to Sahni’s $385,926.55 proof of claim and an

adversary proceeding challenging the amount and validity of Sahni’s

junior lien on their residence. But in their first amended plan, the Debtors

identified Sahni’s claim as secured and proposed to pay a portion of the

claim amount, with interest at a non-note rate, over the 5-year life of the

plan. The plan also provided for unspecified modification or dismissal if

Debtors’ claim objection failed. Sahni objected to this treatment. At the

confirmation hearing, the Debtors proposed an additional lump sum

payment in month 24 which would purportedly allow payment of the

Sahni’s claim in full over five years at an amount that assumed litigation

success. Sahni continued to object, but the bankruptcy court, with almost

no findings, confirmed the plan. Given the lack of adequate findings and

the plan’s facial failure to comply with §§ 1322 and 1325(a), we VACATE

and REMAND.

                                       FACTS 2

A.    Debtors’ chapter 13 petition

      1 Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code, 11 U.S.C. §§ 101–1532. “Rule” references are the Federal Rules of
Bankruptcy Procedure.
      2 Where necessary, we have exercised our discretion to take judicial notice of the

                                            2
      Debtors’ chapter 13 schedules, plan, and claims docket evidence only

one serious financial problem. They owe a small priority tax debt and a

single unsecured credit card claim. Their plan pays these claims in full.

And while two trust deeds encumber their residence (the “Home”), the

senior secured debt is neither in default nor paid under their plan. But the

Debtors listed Sahni’s fully matured claim as “disputed,” and they filed

their chapter 13 petition on the eve of Sahni’s foreclosure under the junior

trust deed encumbering the Home.

B.    The dispute with Sahni

      Sahni’s second trust deed secures a note evidencing a $300,000 hard-

money, high-interest, short-term loan (the “Loan”). The note bears non-

default interest at 10% and matured pre-petition, approximately one year

after origination.

      The Debtors were unable to repay the Loan as required, and Sahni

pursued foreclosure. When the Debtors filed bankruptcy, Sahni filed a

proof of secured claim in the amount of $385,926.55, all of which was

characterized as arrearage in the form of unpaid principal, interest, late

fees, and pre-petition attorneys’ fees. Further, the schedules reflected that

Sahni was over-secured, so contractual interest would continue over the

dockets and imaged papers filed in Debtors’ bankruptcy case and the related adversary
proceeding. See Atwood v. Chase Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233
n.9 (9th Cir. BAP 2003).
                                          3
course of the chapter 13 case. Debtors’ schedules evidence no ability to pay

the claim amount in full in equal monthly installments over 60 months.

      But the Debtors’ situation is far from hopeless. They objected to

Sahni’s claim, alleging that he failed to provide disclosures as required by

the Truth in Lending Act, 15 U.S.C. § 1601 et seq.(“TILA”), and the Real

Estate Settlement Procedures Act of 1974, 12 U.S.C. § 2601 et seq.

(“RESPA”), when making the Loan; they requested rescission and argued

that Sahni, at best, held an unsecured claim in a vastly reduced amount.

Specifically, the Debtors allege that they are entitled to a statutory

reduction of the debt by 200% of the loan charges of $79,939.73 or

$159,879.46. They also assert that the interest rate is usurious and is an

unenforceable penalty, at least in part. After giving credit for the $30,000

interest prepayment, removal of the asserted pre-petition fees and costs

and certain other reductions, they conclude that Sahni has an unsecured

claim of no more than $132,089.07.

      The Debtors also filed an adversary proceeding on the same theories

seeking a determination of the validity, priority, or extent of Sahni’s lien,

objecting to Sahni’s claim, and requesting a reduction of the interest rate to

7.89%. 3

      In response, Sahni conceded that he did not make TILA and

RESPA disclosures but argued that he is not a “creditor” under these

      3
         Debtors computed interest as the “Average Prime Offer Rate of 4.39% plus 3.5%
interest for subordinate lien under 12 CFR 1026.35(a)(iii).”
                                          4
statutes and therefore had no disclosure obligations. He also argued that

the rescission notice was untimely, that the statute of limitations had run,

and that the Debtors had not and could not tender the rescission amount.

      As a result of this dispute and until its resolution, formulation of a

chapter 13 plan and confirmation consistent with § 1325(a) was necessarily

complicated.

C.    The initial chapter 13 plan process

      Debtors’ original plan paid nothing to Sahni. But after it drew

objections from the chapter 13 trustee as well as Sahni, Debtors filed an

amended plan. The amended plan increased monthly plan payments from

$43.98 to $1,112 per month in months five through sixty and provided for

$869.00 in monthly payments to Sahni.

      The amended plan placed Sahni’s claim in class 2 which is reserved

for secured obligations maturing after the plan term. This is curious

because no one disputes that the claim matured pre-petition even as the

Debtors hotly dispute that it should be treated as secured. It then provided

that the arrearage on the Sahni claim was $132,089.07 and called for an

interest rate of 7.89%. And this was odd because the amended plan paid

Sahni only $52,140 and obviously problematic because it does not pay the

specified arrearage in equal monthly installments as required by

§ 1325(a)(5)(B)(iii)(I).

      And contained in the amended plan were other facial problems. Plan

payments for the first four months were only $43.98 so it is mathematically

                                       5
impossible for the trustee to pay $869.00 in each of 60 months – even as we

assume there is no problem if she is able to advance the required payments

at confirmation. The plan was confirmed a little over five months into the

case. At that point, five months of payments at $869.00 would equal $4,345.

But the total amount actually paid under the plan, four months of $43.98

payments plus one month of $1,112 payments equaled only $1,287.92 at

confirmation. The amended plan would be in default immediately.

      Also, the amended plan provided that the amount of arrearage in the

proof of claim ($385,926.55) controls over the amount of arrearage in the

plan ($132,089.07). This further complicates the ability to make payments as

required by the Code.

      Section IV.D. of the amended plan attempted to remedy some of the

amended plan’s problem through a non-standard provision that allowed

for a final calculation of the amount owed to Sahni after conclusion of the

claim objection and adversary proceeding litigation. It provided that the

amended plan’s terms did not have claim preclusive effect, required Sahni

to file an amended proof of claim after litigation concluded, and allowed

the Debtors, within an unspecified timeframe, to file a motion to further

modify the amended plan if it became “infeasible” as a result of this

litigation. Section IV.D. also allowed the chapter 13 trustee, but not Sahni,

to seek dismissal if the Debtors failed to file a modification motion. But this

language didn’t resolve the facial problems in the amended plan. And it is

silent as to the impact of any post-litigation appeal.

                                       6
      Lengthy comments and calculations of the estimated amount owed to

Sahni based on the alleged TILA and RESPA violations followed. The

explanation stated: “[t]he principal amount for the sole purpose of

disbursement of funds in this matter is $132,089.07.” There was no

explanation regarding the proposed amended plan payment of only

$52,140.

      Sahni objected to confirmation of the amended plan on several

grounds including: its failure to pay his claim in full; its failure to pay even

$132,089.07; feasibility; the allegedly arbitrary and inappropriate reduction

in the interest rate; and bad faith.

D.    Confirmation of the amended plan as modified

      At the third continued confirmation hearing, the chapter 13 trustee

proposed, and Debtors’ counsel agreed, to modify the amended plan to

provide for a balloon payment of $119,395 in month 24.4 Sahni objected to

the proposal and requested time to do discovery and a Rule 2004 exam.

      The bankruptcy court, however, confirmed the amended plan as so

modified (hereafter, the “Confirmed Plan”) at the hearing. It noted that the

Debtors had significant equity in the Home and posited that Debtors

would easily qualify for a refinance if necessary to meet their obligations

under the Confirmed Plan. The bankruptcy court made no findings

      4
        The confirmation order states that this equates to total plan payments of
$180,730.92.
                                            7
regarding how the Confirmed Plan met the confirmation requirements of

§ 1325 beyond the reference to feasibility.

      The confirmation order omitted the language outlining the impact of

TILA and RESPA on the Sahni claim. Consistent with this deletion, the

record reflects a total absence of any attempt to resolve or even consider

the Debtors’ TILA/RESPA claims before confirmation. The claim objection

and adversary proceeding remain pending.5 The bankruptcy court has not

held a status conference, and the parties appear to have made little

progress towards resolution. This is perplexing.

      Both Debtors’ claims and Sahni’s defenses are plausible, but the

dispute appears capable of prompt and perhaps summary resolution after

applying the law to the undisputed or easily determined facts. At bottom,

the first question is whether TILA disclosures were required. And the

controlling statutes and regulations are clear. Sahni became subject to TILA

if he made five or more loans during the relevant time period or a lesser

number of loans having certain characteristics such as high costs. 15 U.S.C.

§ 1602(g); 12 C.F.R. § 1026.2(a)(17).6 Next, if TILA is controlling, resolution

of the statute of limitation and timing issues probably requires little beyond

      5
         The parties stipulated to continue the claim objection motion status conference
to July 26, 2022, pending the outcome of this appeal. The bankruptcy court continued
the adversary status conference to that date as well. Thereafter, the bankruptcy court
further continued the status conferences.
       6 As the parties’ respective briefs focus on TILA, we cite only the TILA sections

and regulations at issue in the pending litigation.
                                            8
reference to a calendar. See 15 U.S.C. § 1635(f). And if rescission is available,

the bankruptcy court has some discretion as to whether and how the

tender of the rescission amount will occur. See 15 U.S.C. § 1635(b).

Significant factual disputes do not appear likely to complicate this analysis.

      Sahni timely appealed.

                               JURISDICTION

      The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and

157(b)(2)(L). Subject to the discussion below, we have jurisdiction under

28 U.S.C. § 158.

                                    ISSUES

      1.    Is the bankruptcy court’s order confirming the Confirmed Plan

a final order giving the Panel jurisdiction over this appeal?

      2.    Did the Confirmed Plan properly treat Sahni’s claim such that

confirmation was appropriate?

                         STANDARD OF REVIEW

      Whether the order on appeal is a final order over which we have

jurisdiction under § 158(a)(1) is a question of law we assess de novo. E.g.,

Jue v. Liu (In re Liu), 611 B.R. 864, 870 (9th Cir. BAP 2020). “Under the

de novo standard of review, we do not defer to the lower court’s ruling but

freely consider the matter anew, as if no decision had been rendered

below.” United States v. Silverman, 861 F.2d 571, 576 (9th Cir.1988) (citing

Exner v. FBI, 612 F.2d 1202, 1209 (9th Cir. 1980)).

                                       9
      We review de novo a bankruptcy court’s interpretation of the

Bankruptcy Code. Meruelo Maddux Props.-760 S. Hill St. LLC v. Bank of Am.,

N.A. (In re Meruelo Maddux Props., Inc.), 667 F.3d 1072, 1076 (9th Cir.2012).

      A bankruptcy court’s decision concerning confirmation of a

chapter 13 plan is reviewed for abuse of discretion. Bank of Am. Nat’l Tr. and

Savs. Ass’n (In re Slade), 15 B.R. 910, 913 (9th Cir. BAP 1981). A bankruptcy

court abuses its discretion if it applies the wrong legal standard, or

misapplies the correct legal standard, or if it makes factual findings that are

illogical, implausible, or without support in inferences that may be drawn

from the facts in the record. United States v. Hinkson, 585 F.3d 1247, 1262

(9th Cir. 2009) (en banc).

                                 DISCUSSION

A.    Jurisdiction

      1.    The confirmation order is a final order.

      The Debtors assert that the confirmation order is not final for appeal

purposes and that this appeal should be dismissed. We disagree.

      “[A] bankruptcy order is appealable where it 1) resolves and

seriously affects substantive rights and 2) finally determines the discrete

issue to which it is addressed.’” Wiersma v. Bank of the West (In re Wiersma),

483 F.3d 933, 939 (9th Cir. 2007) (cleaned up); see, Ritzen Gr., Inc. v. Jackson

Masonry, LLC, 140 S.Ct. 582, 588 (2020) (“Only plan approval . . . ‘alters the

status quo and fixes the rights and obligations of the parties.”). (cleaned

up). Section 1327(a) provides that the “provisions of a confirmed plan bind

                                        10
the debtor and each creditor, whether or not the claim of such creditor is

provided for by the plan, and whether or not such creditor has objected to,

has accepted, or has rejected the plan.”

      Debtors argue that the appeal is not “ripe” pointing to the paragraph

in the Confirmed Plan which states that it is not “res judicata [nor does it]

bind Creditor, SWAR[N]JIT SINGH SAHNI, to the amount proposed

[therein] within the meaning of 11 U.S.C. § 1327 or the calculation of

Amended Claim No. 6.” But the confirmation order clearly determined the

discrete issue of the confirmability of the Confirmed Plan. And it seriously

affected and fixed the substantive rights and obligations of all relevant

parties and the creditor body as a whole. Sahni will be paid as provided by

the Confirmed Plan, and he is bound by its injunction. The fact that there is

a potential for changed treatment based on a future contingency does not

make the confirmation order less than final. And this is particularly true

where this contingency is provided for by the Confirmed Plan.

      2.     The appeal is not moot.

      The Debtors also argue that the appeal is moot because “the issues

presented are no longer live, and no case or controversy exists. The test for

mootness is whether the Court can still grant effective relief to the

prevailing party if the Court decides the merits in their favor,” citing Pilate

v. Burrell (In re Burrell), 415 F.3d 994, 998 (9th Cir. 2005).

      Mootness is a basis to dismiss an appeal. See North Carolina v. Rice,

404 U.S. 244, 246 (1971) (“federal courts are without power to decide

                                         11
questions that cannot affect the rights of litigants in the case before them.”)

(citation omitted). But this appeal is not moot.

      The Debtors do not explain why the bankruptcy court cannot grant

effective relief to either party upon remand or why this is not “a real and

substantial controversy admitting of specific relief through a decree of a

conclusive character.” Id. Put bluntly, this is essentially a two-party case

where the issues between Debtors and Sahni can be easily adjusted

through a new plan and a change in payment terms, if feasible, or case

dismissal or conversion, if a payment change is not feasible and a plan

cannot be confirmed.

B.    The Code’s confirmation requirements relating to secured claims
      applied to the Sahni claim and were not met in the Confirmed Plan.
      1.    The bankruptcy court did not estimate the Sahni claim for
            purposes of plan confirmation.
      Debtors argue at length that the bankruptcy court estimated Sahni’s

claim at $132,089.07 for the purpose of chapter 13 plan confirmation.

      Section 502(c) states:

            (c) There shall be estimated for purpose of allowance
      under this section—
            (1) any contingent or unliquidated claim, the fixing or
      liquidation of which, as the case may be, would unduly delay
      the administration of the case.
11 U.S.C. § 502(c).

      “‘Estimation’ simply means that the bankruptcy court may use its

discretion in determining the allowability of claims in bankruptcy.” Falk v.

                                      12
Falk (In re Falk), BAP No. NC-12-1385-DJuPa, 2013 WL 5405564, at *5 (9th

Cir BAP Sept. 26, 2013) (citations omitted); see also, In re Pac. Gas & Elec. Co.,

295 B.R. 635, 642 (Bankr. N.D. Cal. 2003) (“estimation under section 502(c)

may be for broad or narrow purposes.”); In re N. Am. Health Care, Inc. 544

B.R. 684 (Bankr. C.D. Cal.2016) (“[e]stimation can take various forms and

can be made for different purposes.”) But there are several problems with

the assertion that estimation occurred here.

      First, neither § 502(c) nor estimation in general were discussed either

at the confirmation hearing or in any of the plan-related documents, nor

did the Debtors request estimation by motion or otherwise. The estimation

argument is totally unsupported by the record.

      Second, as the Bankruptcy Code states, a claim may be estimated

only when the claim is contingent or unliquidated. The claim here is

obviously not contingent and neither party argues otherwise. True, Debtors

assert on appeal that the claim is unliquidated but it is a contract claim and

the amount owed, albeit disputed, is readily discernable. Nicholes v. Johnny

Appleseed of Wash. (In re Nicholes), 184 B.R. 82, 89 (9th Cir. BAP 1995). And

Debtors contradict their own position on this point because in their

amended schedule D, they listed the Sahni debt as “disputed” but the box

“unliquidated” is not checked.

      Finally, estimation is appropriate only where the time required to

complete the allowance process “would unduly delay the administration of

the case.” See 11 U.S.C. § 502(c). The bankruptcy court commented at the

                                        13
confirmation hearing that it expected the pending issues to be “resolved

well before [two years].” We agree; the record supports that the Sahni

claim issues can be very promptly resolved. Absent a finding of undue

delay based on the facts of this case, estimation was not appropriate.

      2.    If the bankruptcy court estimated the claim, it became an
            allowed secured claim.
      As stated, § 502(c) provides that a claim “shall be estimated for

purpose of allowance under this section.” If the bankruptcy court actually

estimated the Sahni claim at $132,089.07, it became an allowed secured

claim for purposes of plan confirmation. As an allowed secured claim, the

Confirmed Plan must pay it in accordance with § 1325(a)(5)(B). It doesn’t.

      3.    The Sahni claim must be paid as required by the Code.
      Where a chapter 13 plan identifies a claim as secured and interest

bearing, it must pay it in accordance with § 1325(a)(5)(B). The Confirmed

Plan classified the Sahni claim as a class 2 secured claim and proposed to

pay it in an amount calculated by Debtors with interest. Confusingly, the

Confirmed Plan facially required payment of the proof of claim amount as

it states that: “[t]he arrearage amount stated on the proof of claim controls

over any contrary amount listed below.” But we need not resolve this facial

inconsistency because the Confirmed Plan pays neither the arrearage

expressly stated in the Confirmed Plan nor the arrearage in the Sahni proof

of claim as required by the Code.

                                      14
      Debtors argue that Sahni had no right to a payment that met the

requirements of §1325(a)(5)(B) because of their pending objection to the

Sahni claim. But this argument is contrary to the plain language of their

own plan. And it is otherwise not supportable as a matter of law. See de la

Salle v. U.S. Bank (In re de la Salle), 461 B.R. 593, 602 (9th Cir. BAP 2011). A

pending objection does not allow a chapter 13 debtor to ignore the Code’s

requirements for plan treatment of secured claims.

      4.    The Sahni claim is not paid as required by § 1325(a)(5)(B).
      Section 1325(a)(5)(B)(iii)(I) provides that the arrearage on an allowed

secured claim must be paid in equal monthly payments over the life of the

plan. Again, Debtors’ argument that their claim objection renders this

provision inapplicable lacks merit.

      Even using the Debtors’ arrearage amount, the Confirmed Plan does

not comply with § 1325(a)(5)(B)(iii)(I). It makes monthly payments

designated at the confirmation hearing as “interest-only adequate

protection payments” and a one-time payment of some or all of $119,395.

Absent Sahni’s consent, and until receipt of the balloon payment,

§ 1325(a)(5)(B)(iii)(I) required Debtors, at a minimum, to pay the amount

necessary to amortize their self-selected secured claim amount, $132,780,

over the plan term. This required monthly payments of more than $2,213 at

confirmation; the Confirmed Plan pays only $869.00.

                                        15
      And again, the Confirmed Plan’s language stating that the actual

arrearage to be paid is the amount in the Sahni proof of claim would

require a much greater monthly payment to Sahni.

      There is no finding or anything in the record that supports this

deviation from the chapter 13 plan confirmation requirements. 7

      We assume that in proposing the balloon payment the chapter 13

trustee was trying to be an honest broker of a plan that had a chance of

garnering secured creditor consent. But when consent is not forthcoming,

neither the chapter 13 trustee nor the bankruptcy court should overlook a

plan’s noncompliance with the Code. And the chapter 13 trustee’s consent

to a plan should not support deviation from the correct application of

§ 1325(a)(5). Expediency has a place, but if the related litigation does not

support a prompt imposition of a litigation injunction, if creditor consent

cannot be obtained to interim plan treatment pending litigation outcomes,

or if payment pursuant to § 1325(a)(5) is not possible, then case dismissal or

conversion may be the appropriate route. In this case, Debtors should

consider an injunction request; they might well be able to establish

likelihood of success on the merits.

      5.     We cannot determine that the Confirmed Plan complies with
             § 1325(a)(1) because it does not comply with § 1322(a).

      And, as already discussed, other facial problems with the Confirmed Plan’s
      7

payment structure exist.
                                         16
      Because the Sahni debt is secured by the Debtors’ principal residence,

it cannot be modified. See 11 U.S.C. § 1322(b)(2) (the plan may “modify the

rights of holders of secured claims, other than a claim secured only by a

security interest in real property that is the debtor’s principal residence . .

.”). And because, as the bankruptcy court noted, it is oversecured, until the

claim objection is resolved, Sahni has the right under § 506(b) to

postpetition interest under his contract.

      The Confirmed Plan does not comply with § 1322(b)(2) because it

treats Sahni’s claim as secured by the Home and modifies his contractual

interest rate. The non-default contractual interest rate is 10%. The

Confirmed Plan purports to pay 7.89%.

      6.    Feasibility under § 1325(a)(6) is not established.
      Section 1325(a)(6) requires a judicial determination that the debtor

can make plan payments and comply with the plan. Here, the bankruptcy

court observed that a refinance or sale was feasible and would allow

payment of the month-24 balloon payment. But the Confirmed Plan

requires neither sale nor refinance. And it establishes no timeline that

allows for reasonable certainty as to the accomplishment of these acts.

Further, it does not explain how Debtors would make payments on this

new debt while concurrently paying their remaining obligations.

      Of more concern is the fact that the Confirmed Plan makes no

meaningful provision for payment of the claim if Sahni prevails in

defending his claim. It, in effect, says that the Debtors will try to do

                                       17
something, on a schedule entirely of their own choosing, and will attempt a

further modified plan. But at that point sale or refinance may not work.

      First, while the implication is that the Debtors will do something

promptly, again there is no particular timing requirement. And unless

Debtors can almost immediately produce either payment in full or a

regular payment stream that would amortize the debt in regular monthly

installments over the life of the remaining plan term, plan modification is

impossible over Sahni’s opposition if he wins the litigation. Again, a plan

must comply with § 1325(a)(5)(B). See 11 U.S.C. § 1329(b)(1). And a plan

that indefinitely delays appropriate payments on this secured claim after

an objection is overruled is unconfirmable.

      Finally, the Ninth Circuit has determined that the impact of pending

litigation must be evaluated when determining the feasibility of a

chapter 11 plan. See Sherman v. Harbin (In re Harbin), 486 F.3d 510, 519

(9th Cir. 2007). The Ninth Circuit stated, “we cannot conclude, without the

benefit of the bankruptcy court’s analysis of the issue, whether the plan

was in fact feasible when confirmed.” Id. at 520. In Harbin, this required

consideration of the impact of a successful appeal. We see no reason why

the result in this chapter 13 case should be different.

      Given the total lack of findings and the problems obvious from the

known facts, we cannot conclude that feasibility exists on this record.

C.    The matter must be remanded because there are no findings of fact
      or conclusions of law.

                                      18
      We cannot discern, from the transcript of the hearing or the record,

the factual or legal basis on which the bankruptcy court confirmed the

plan. It appears that the bankruptcy court believed that there was

significant equity in the Home and therefore no risk to Sahni in waiting for

the claim litigation to conclude. Findings might identify a different basis

for decision but we are left to mere speculation.

      An objection to confirmation is a contested matter under Rule 9014.

Rule 7052 applies, and the bankruptcy court is required to make separate

findings of fact and conclusions of law in support of an order granting or

denying confirmation over a party’s objection. See, e.g., 550 W. Ina Rd. Tr. v.

Tucker (In re Tucker), 989 F.2d 328, 330 (9th Cir. 1993) (good-faith objection

to confirmation requires findings of fact by the bankruptcy court.); accord

Spokane Ry. Credit Union v. Gonzales (In re Gonzales), 172 B.R. 320, 325 (E.D.

Wash. 1994) (remanding because the bankruptcy court “provided no

findings of fact, conclusions of law, or analysis in reaching its decision“).

      Here we confront a facially nonconfirmable plan. And absent some

resolution or reasoned consideration of the claim objection, we cannot see a

path to affirmance. And the lack of fact finding also makes it impossible for

us to do other required analysis.

      If the bankruptcy court, in fact, estimated the claim, findings would

so establish. Findings might also clarify how the claim at the estimated

amount is paid in full, whether the claim objection is likely to be successful,

                                       19
and whether a feasible plan that complies with § 1325 is possible if it does

not. But absent such findings we cannot find compliance with § 1325(a).

                               CONCLUSION

      We acknowledge the pragmatism in the bankruptcy court’s

approach. It appears likely that Sahni will be paid in full if he successfully

defends his claim given the equity in his collateral. And the Debtors are

likely to facilitate this payment through refinance, if possible, to save the

Home. But the provisions of § 1325(a) must be met before a chapter 13 plan

is confirmed and the plan injunction binds creditors. Pragmatism and an

understandable desire to get a plan confirmed quickly are not a substitute

for compliance with the Code. The fact that Sahni may be able to obtain

payments in full through foreclosure in a few years does not meet the

requirements of § 1325(a).

      Instead, the record supports that the Confirmed Plan’s injunction is a

substitute for a preliminary injunction in the adversary proceeding and

that Debtors obtained this injunctive relief without a determination

regarding the likelihood of success on the merits of the TILA/RESPA claims

and a consideration of other required factors. Nothing in the current record

supports the appropriateness of injunctive relief because there is nothing

suggesting that the bankruptcy court considered the injunction standards.

      And this push to confirm a place-holder chapter 13 plan is unfair to

at least one of the parties and maybe both. Sahni may not be paid as

required by chapter 13 while he is barred from access to his claimed

                                       20
collateral. And this is true even though no one was required to prove that

Debtors’ attack on his claim is likely successful. And, as to the Debtors,

they have significantly more flexibility under chapter 13 if Sahni’s claim is

unsecured and reduced. Yet they were required to propose a plan that may

be generous before they were allowed to pursue their litigation.

      Finally, we recognize that litigation claims often conflict with the

reasonable desire for prompt confirmation of a chapter 13 plan. And we

also acknowledge that a court may determine that the resulting delay is

unreasonable within the meaning of § 1307(c)(1). But dismissal, not

confirmation of a place-holder plan, is the appropriate result of such a

decision. And before dismissing the case, a bankruptcy court must find that

a delay to accommodate required litigation is not appropriate. No such

findings exist on this record. And, we emphasize, this is not a case where

the litigation claims are facially frivolous, repetitive of litigation already

lost in another court, or likely in bad faith. Debtors assert a claim objection

that deserves prompt and serious attention.

      Based on the foregoing, we VACATE and REMAND to the

bankruptcy court for further proceedings consistent with this

memorandum.

      Concurrence begins on next page.

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      LAFFERTY, Bankruptcy Judge, Concurring.

      I concur with my colleagues’ careful and well-reasoned disposition of

this challenging matter.

      I write separately because in my view this case presents, starkly, a

scenario that highlights a tension in chapter 13 between the implicit but

unmistakable policy of confirming plans as soon as practicable, and the

uncertainty of how to resolve and work into the confirmation process

litigation issues, the outcome of which are confirmation (and feasibility)

determinative.

      On the speedy confirmation side, though chapter 13 does not

explicitly set forth a deadline for confirmation of a plan and does not

expressly empower the bankruptcy court to set such a deadline, the policy

in favor of such an outcome resonates implicitly throughout the statute.

Indeed, (i) the requirement that only “individuals with regular income”

may be debtors under chapter 13; (ii) the relatively modest (in the context

of economic realities in some jurisdictions) debt limits for chapter 13 filings;

and (iii) the move to nationalize forms for chapter 13 plans, collectively

indicate, strongly, that chapter 13 is set up to help regular folks with certain

“regularized” problems and is not meant to promote or indulge the three-

ring circus that chapter 11 can sometimes appear to be. Also, the

requirement that a chapter 13 debtor file a plan essentially immediately

upon filing the petition, and the provision that the court may convert or

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dismiss based on “unreasonable delay by the debtor” are strong indicators

that, in the view of the drafters, in most cases chapter 13 “works” only if it

works expeditiously, i.e., plans are confirmed and become effective as soon

as practicable. The speedy confirmation policy expressed in these

provisions recognizes that it’s important for chapter 13 debtors promptly to

propose and commit themselves to a plan, and, given that payments to

most creditors start only after confirmation, that plans get confirmed

promptly.

      None of this plays out easily when a debtor’s case presents a complex

litigation-based problem, whether an objection to a claim or the debtor’s

assertion of a claim against a creditor. And the problem is exacerbated

when the debtor’s reasons for not dealing with challenging confirmation

issues are litigation based, but vague and imprecise, and not easily

evaluated (or maybe easily evaluated so long as one may indulge some real

world cynicism). As the Memorandum points out, such does not appear to

be the case here—the debtor’s objections to Sahni’s claim appear to be quite

precise, and capable of a relatively expeditious determination.

      In any event, the Code doesn’t give a lot of guidance about how to

integrate litigation problems into chapter 13 plans or into the confirmation

process, so courts do lots of different things in such situations—sometimes

they delay confirmation until the litigation issues are resolved, sometimes

they prescribe alternative treatments based on the outcome of the litigation,

and sometimes they try to “confirm around” the problem via other means.

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None of these approaches are expressly prohibited by the Code or the

Rules, and thus they are all theoretically supportable—provided that, as

the Memorandum instructs, they are based not on a general but imprecise

sense of sufficient value available for creditors, and an unspoken

determination of when or how an allowed claim may eventually be paid,

but rather on a fair application of confirmation standards (including

feasibility, treatment of creditors in line with the Code’s requirements and,

where delay may be involved, a fair application of injunctive relief

principles), and provided that those standards and that reasoning are fairly

and plainly articulated.

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