Court Opinion

ID: 9518776
Source: CourtListenerOpinion
Date Created: 2023-08-07 01:01:43.532449+00
Date Added: 2024-06-11T12:35:41.011506
License: Public Domain

PERRIS, Bankruptcy Judge,
concurring.
I agree with the majority that it may be possible for a debtor to object to a creditor’s claim through a proposed plan, if the proper notice is given. See, e.g., Brady v. Andrew (In re Commercial W. Fin. Corp.), 761 F.2d 1329, 1336 (9th Cir.1985) (rejecting attempt to avoid liens through chapter 11 plan); Dresser Indus. v. Rite Autotronics Corp. (In re Rite Autotronics Corp.), 27 B.R. 599, 602 (9th Cir. BAP 1982) (“where a debtor questions the quality of a claim thereby placing the creditor in a position of potential default and loss, due process would call for specific notice to the creditor.”). Cf. Shook v. CBIC (In re Shook), 278 B.R. 815, 826 (9th Cir. BAP 2002) (formal objection to claim might not always be necessary; chapter 13 plan may be used to determine amount of claim if creditor receives clear notice that plan will do so).8
I write separately to explain why the amended plan in this case did not provide sufficient notice to serve as a substitute for the claim objection process set out in the rules and the Bankruptcy Code.
The only notice Varela had that debtor disagreed with the amount of the Varela “deemed allowed” claim was the provision in one of the later amended plans that stated a dollar figure for the amount of the claim that differed from the amount stated *501in debtor’s schedules. There was nothing in the plan that pointed out the discrepancy or gave any explanation for it.
Although debtor says that the disclosure statement explained that the principal of the claim was reduced because debtor had determined that a reduction was an appropriate remedy for what it viewed as a usurious interest rate, even such an explanation would not have been a specific notice to this creditor that his claim would be reduced through the plan. As the Ninth Circuit said in another case dealing with confirmation of a chapter 11 plan,
[i]f [the debtor] intended [the amount of the creditor’s claim stated in the plan] as a means of challenging the amount of [the creditor’s] claim, he picked a peculiar way of going about it, hardly consistent with his fiduciary obligations to a creditor of the estate. While the debtor may challenge any claim he believes in good faith should not be allowed, he must do so by raising the issue squarely with the court and giving the affected creditor an opportunity to respond.
Perez, 30 F.3d at 1215 (emphasis supplied; citation omitted). Debtor’s amended plan did not do that.
Debtor’s attempt to object to the Varela “deemed allowed” claim through a provision in the plan was procedurally inadequate. The unilateral plan provision failed to provide explicit notice to Varela that his claim was being challenged and would be reduced unless Varela took affirmative action. Therefore, I agree with the majority that the bankruptcy court erred in disallowing the Varela “deemed allowed” claim and instead allowing the claim as presented in the chapter 11 plan.
I concur.

. I realize that chapter 13 differs in some ways from chapter 11, in that there is no chapter 13 analog of § 1111(a) making claims "deemed allowed” without the need to file a proof of claim. However, the reasoning of those cases is instructive.