Court Opinion

ID: 5161567
Source: CourtListenerOpinion
Date Created: 2022-01-02 02:52:17.807429+00
Date Added: 2024-06-11T08:25:38.639216
License: Public Domain

DOOLIN, Chief Justice,
dissenting.
I dissent.
The opinion promulgated by the majority of the court overlooks the fundamental and far-reaching power of the bankruptcy court to cure defaults and the effect of such a cure in this case.
The Bankruptcy Code provides:
(a) Notwithstanding any otherwise applicable nonbankruptcy law, a plan shall—
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(5) provide adequate means for the plan’s implementation, such as—
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(G) curing or waiving of any default; 1
Under this and other provisions of the Code, the bankruptcy court is clearly vested with the power to cure all defaults.2
Both parties to the instant case agree that the guarantors’ liability was invoked by the default of the partnership. I agree with the majority that the liability of general partners on a partnership debt is not discharged by a bankruptcy proceeding in which the partnership, but not the individual partners seek relief.3 However, I would *466recognize the special power of the bankruptcy court to retroactively vacate a debt- or’s default; and since here there was a single debt, made by the partnership and guaranteed by the individual partners, without a default on that debt, no cause of action accrued on the guaranty agreements. Under the terms of the guaranties, the guarantors have no liability unless and until there has been a default. Therefore it is incorrect to speak in terms of joint liability for the debt because the event which would produce liability in the guarantors has, in effect, never occurred.
The majority opinion has the effect of permitting the creditor, FDIC, to receive payment of the underlying indebtedness from the partnership while at the same time pursuing the guarantors for payment of an undefaulted debt. Such an unfair result seems to me to be quite beyond the contemplation of the parties at the time they made and accepted the guaranties and quite outside the purpose and intent of the Bankruptcy Code. I would therefore REVERSE the judgment of the trial court.

. 11 U.S.C.A. § 1123.

. See: In Re Masnorth Corp., 36 B.R. 335 (Bkrtcy.Ga.1984).

.Rehearing of: In the Matter of Consolidated Motor Inns, 666 F.2d 189 (5th Cir.1982).