Mark Vincent Kaplan

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
ORDER NOT FOR PUBLICATION
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
LOS ANGELES DIVISION
In re:
MARK VINCENT KAPLAN,
Debtor.
Case No. 2:15-bk-16187-RK
Chapter 11
ORDER DENYING DEBTOR’S MOTION
FOR ORDER PURSUANT TO 11 U.S.C. §
363 SETTING BUDGET FOR INTERIM
USE OF ESTATE PROPERTY AS
DEFINED IN 11 U.S.C. § 1115
On May 11, 2015, Debtor filed the instant “Motion in Individual Chapter 11 Case
for Order Pursuant to 11 U.S.C. § 363 Setting Budget for Interim Use of Estate Property
as Defined in 11 U.S.C. § 1115” (Docket No. 16) (the “Motion). On May 29, 2015, Debtor
filed a Declaration of Non-Opposition pursuant to Local Bankruptcy Rule 9013-1(o).
Having reviewed and considered the Motion, the court hereby denies the motion
without prejudice and with leave to amend subject to the conditions set forth herein.
The motion is denied because it is not supported by admissible and credible
evidence and legal authority to support findings of facts and conclusions of law that the
proposed use of estate funds for the personal living expenses of Debtor in the amount of
FILED & ENTERED
JUN 11 2015
CLERK U.S. BANKRUPTCY COURT
Central District of California
BY DEPUTY CLERK	bakchell
Case 2:15-bk-16187-RK Doc 29 Filed 06/11/15 Entered 06/11/15 16:28:06 Desc
Main Document Page 1 of 5

2
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
$45,318 per month is authorized under 11 U.S.C. § 363, which governs the use, sale and
lease of property of a bankruptcy estate, or any other provision of the Bankruptcy Code,
11 U.S.C. In re Villalobos, 2011 WL 4485793, slip op. at **8-9 and n. 13 (9th Cir. BAP
2011)(unpublished memorandum opinion). Although no opposition or objection to the
Motion has been filed, and Local Bankruptcy Rule 9013-1(h) authorizes the court to deem
such failure to be consent to granting the motion, the court is not obligated to do so. The
court cannot grant a motion that has not made a prima facie case establishing that the
moving party is entitled to the relief sought in the motion based on admissible evidence
under the applicable law.
Debtor only provides his conclusory declaration as evidence in support of the
Motion containing form language, “In order for the Debtor to reorganize effectively,
Debtor must pay for reasonable actual household and/or business expenses.” Motion at
3. Unless the court orders otherwise, a trustee or a debtor-in-possession may use, sell or
lease estate property in the “ordinary course of business” without court approval pursuant
to 11 U.S.C. § 363(c)(1). See also, 3 March, Ahart and Shapiro, California Practice
Guide: Bankruptcy, ¶ 14:25 at 14(I)-2 (2014); In re Seely, 492 B.R. 284, 289-291 and nn.
4-6 (Bankr. C.D. Cal. 2013). The court notes that 11 U.S.C. § 1115, as added to the
Bankruptcy Code in 2005 by the Bankruptcy Abuse Prevention and Consumer Protection
Act of 2005 (“BAPCPA”), includes as property of the estate of a Chapter 11 debtor all
earnings of the debtor after the commencement of the case before the case is closed,
dismissed or converted, but that section does not refer to the use of such property while
the case is pending. 11 U.S.C. § 1115(a)(2); In re Villalobos, 2011 WL 4485793, slip op.
at **8-9 and n. 13.
In filing the Motion, Debtor seeks court approval of his proposed use of estate
funds from his postpetition earnings in accordance with his budget for personal living
expenses attached to the Motion, apparently because he believes that his proposed
budget for use of estate funds is outside the ordinary course of business. The proposed
budget to use estate funds of $45,318 per month for personal living expenses of Debtor,
Case 2:15-bk-16187-RK Doc 29 Filed 06/11/15 Entered 06/11/15 16:28:06 Desc
Main Document Page 2 of 5

3
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
a single person with no dependents, on first blush does seem to be outside the ordinary
course of business, and Debtor makes no showing that his proposed use of estate funds
meets the standard of ordinary course of business under 11 U.S.C. § 363. In re Dant &
Russell, Inc., 853 F.2d 700, 704-705 (9th Cir. 1988) (setting forth a two-part legal
standard for ordinary course of business under 11 U.S.C. § 363); accord, In re
Straightline Investments, Inc., 525 F.3d 870, 879 (9th Cir. 2008).1
If the proposed use of estate funds for personal living expenses is not within the
ordinary course of business, a trustee or debtor-in-possession may use, sell or lease
estate property only after notice and a hearing and upon a showing of the exercise of
reasonable business judgment for such use outside the ordinary course of business
under 11 U.S.C. § 363(b)(1). See also, 3 March, Ahart and Shapiro, California Practice
Guide: Bankruptcy, ¶¶ 14:75 and 14:595 at 14(I)-6 and 14(I)-49, citing inter alia, In re
Lionel Corp., 722 F.2d 1063, 1071 (2nd Cir. 1983) and In re Ernest Home Ctr., Inc., 209
B.R. 974, 979 (Bankr. W.D. Wash. 1997).
Because the evidence in support of the Motion is insufficient to show that Debtor’s
proposed use of estate funds is within the ordinary course of business or that Debtor has
demonstrated reasonable business judgment for such use, the Motion will be denied.
Other courts apparently have not articulated a specific and different standard for use of
estate funds of an individual Chapter 11 debtor for personal living expenses under 11
U.S.C. § 363 or another Bankruptcy Code provision other than the standards laid out in In
re Dant & Russell, Inc., 853 F.2d at 704-705, In re Straightline Investments, Inc., 525
1 Debtor’s personal living expenses on his proposed budget in the Motion appear to be anything but
ordinary for a single individual with no dependents: (1) $24,657 per month (not per year) for housing; (2)
$2,500 per month for food; (3) $1,000 per month for entertainment; (4) $2,770 per month for his leased
vehicle (a 2015 Porsche Carrera 911 4S Cabriolet 2D as shown on his Schedule D of his petition, Docket
No. 13, leased on January 14, 2015 (indicated by the date claim was incurred on the schedule), just over
three months before the petition date of April 20, 2015); and (5) $10,500 per month for payment of
domestic support obligations (no supporting documentation submitted in the Motion). Exhibit B to Motion;
Schedule D to Petition; see also, In re Wood, 68 B.R. 613 (Bankr. D. Haw. 1986)(large expenditures for
unreasonable personal living expenses when other legitimate debts are not being paid may signify gross
management of individual debtors’ business affairs for purposes of 11 U.S.C. § 1112(b) to warrant
conversion or dismissal of Chapter 11 case).
Case 2:15-bk-16187-RK Doc 29 Filed 06/11/15 Entered 06/11/15 16:28:06 Desc
Main Document Page 3 of 5

4
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
F.3d at 879, or In re Lionel Corp., 722 F.2d at 1071. See also, In re Villalobos, 2011 WL
4485793, slip op. at **8-9 and n. 13. In Villalobos, the Bankruptcy Appellate Panel of the
Ninth Circuit reversed the order of the bankruptcy court approving the individual Chapter
11 debtor’s personal living expenses on grounds that the bankruptcy court failed to issue
sufficient findings of fact and conclusions of law to support approval or disapproval of the
expenses in the debtor’s proposed budget as well as to support approval of the debtor’s
budget nunc pro tunc to the petition date. Id. In Villalobos, the Bankruptcy Appellate
Panel stated, “[g]iven the uncertainty in this area of the law [i.e., post-BAPCPA], the
identification of the proper Bankruptcy Code section for approval of personal expenses of
individual Chapter 11 debtors, it is all the more important for the bankruptcy court to
articulate the legal rule being applied and the explicit findings of fact that support the legal
rule.” Id. at *9.
IT IS HEREBY ORDERED as follows:
1. The Motion is denied without prejudice.
2. Debtor is granted leave to file an amended motion which addresses the
concerns raised in this order, if he wishes. If Debtor files an amended motion,
the court expects that he will submit admissible and credible evidence and
briefing to support findings of fact and conclusions of law on the approval or
disapproval of the use of estate funds to pay his personal living expenses
under the Bankruptcy Code as outlined by the Bankruptcy Appellate Panel in
Villalobos and by this court in this order.
///
///
///
Case 2:15-bk-16187-RK Doc 29 Filed 06/11/15 Entered 06/11/15 16:28:06 Desc
Main Document Page 4 of 5

5
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
3. Debtor may not use the “negative notice” provisions of Local Bankruptcy Rule
9013-1 for such an amended motion.
IT IS SO ORDERED.
###
Date: June 11, 2015
Case 2:15-bk-16187-RK Doc 29 Filed 06/11/15 Entered 06/11/15 16:28:06 Desc
Main Document Page 5 of 5