Eugenie M. Broussard

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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re 	No. 07-41711 T
Chapter 11
EUGENIE BROUSSARD,
Debtor.
___________________________/
MEMORANDUM AND ORDER DIRECTING APPOINTMENT OF CHAPTER 11 TRUSTEE
The debtor appeared through counsel on February 20, 2007 at 2:00
p.m. at the hearing on the Court’s order to show cause why the case
should 	not 	be 	converted 	to 	chapter 	7 	of 	the 	Bankruptcy 	Code,
dismissed, or a chapter 11 trustee appointed. 	At the conclusion of
the 	hearing, 	the 	Court 	directed 	the 	Office 	of 	the 	United 	States
Trustee to appoint a chapter 11 trustee. 	The basis for the Court’s
ruling is set forth below.
The 	Court 	scheduled 	the 	hearing 	because 	the 	debtor’s 	original
plan, which was grossly deficient in many respects, also appeared to
be in bad faith in that it proposed to sell unencumbered, nonexempt
real property in Wyoming and to use the proceeds to cure the arrears
on her exempt real property with no guaranty that unsecured creditors
would be paid. 	Moreover, the debtor failed to disclose the value of
Signed: February 20, 2008
________________________________________
LESLIE TCHAIKOVSKY
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
February 21, 2008
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 07-41711 Doc# 59 Filed: 02/20/08 Entered: 02/21/08 16:42:59 Page 1 of 6

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any 	of 	her 	real 	property, 	the 	nature 	of 	her 	valuable 	personal
property, 	or 	the 	amount 	of 	the 	rental 	income 	she 	receives 	on 	her
rental 	property. 	The 	plan 	also 	failed 	to 	classify 	all 	of 	the
debtor’s secured claims or to propose a treatment for them.
On 	February 	19, 	2008, 	one 	day 	before 	the 	hearing 	scheduled 	on
the Court’s order to show cause, the debtor filed an amended plan and
disclosure statement. 	The Court reviewed these documents and found
them only marginally better than the original filings.
In the amended disclosure statement, the debtor discloses that
she 	has 	a 	sale 	for 	which 	she 	is 	seeking 	court 	approval 	of 	the 	real
property 	in 	Wyoming 	which 	she 	expects 	to 	net 	over 	$87,000. 	She
states 	that 	she 	intends 	to 	use 	the 	proceeds 	to 	cure 	the 	arrears 	on
her house which she states are about $27,000 and that she will then
seek to dismiss her case. 	The plan reveals that the debtor also has
arrears 	of 	about 	$30,000 	on 	her 	rental 	property 	in 	California 	and
Arizona. 	Clearly, 	the 	debtor 	intends 	to 	use 	a 	portion 	of 	the
proceeds from the sale of the Wyoming property to cure these arrears.
The 	debtor 	does 	not 	disclose 	the 	amount 	of 	her 	unsecured 	debt
which according to her schedules totals about $57,000. If permitted
to 	dismiss 	her 	case, 	she 	states 	that 	she 	will 	pay 	these 	debts 	from
future income. 	She is currently unemployed and has been apparently
since March 2007. 	Moreover, her disclosure statement and schedules
make 	it 	clear 	that 	she 	has 	sufficient 	equity 	in 	her 	nonexempt
property to pay these claims in full. 	Given the fact that the debtor
has been in chapter 11 for approximately eight months, the Court is
unwilling 	to 	let 	the 	debtor 	simply 	dismiss 	her 	case 	based 	on 	a
Case: 07-41711 Doc# 59 Filed: 02/20/08 Entered: 02/21/08 16:42:59 Page 2 of 6

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speculative 	promise 	to 	pay 	unsecured 	claims 	at 	some 	time 	in 	the
future.
The 	plan 	also 	states 	that, 	if 	the 	debtor 	is 	not 	permitted 	to
dismiss her case after selling the Wyoming real property and if the
proceeds of the sale of the Wyoming real property are insufficient to
pay her unsecured debts, she will also sell the Arizona real property
in 	order 	to 	pay 	those 	debts. 	Clearly, 	the 	proceeds 	of 	the 	sale 	of
the 	Wyoming 	real 	property 	will 	be 	sufficient 	to 	pay 	the 	unsecured
debts 	and 	the 	arrears 	on 	the 	debtor’s 	residence. 	The 	only 	way 	in
which 	a 	shortfall 	will 	occur 	is 	if 	the 	debtor 	also 	uses 	the 	sale
proceeds to pay the arrears on her rental properties. 	Moreover, no
sale 	is 	pending 	on 	the 	Arizona 	real 	property, 	and 	no 	time 	frame 	is
specified 	in 	the 	plan 	within 	which 	she 	must 	sell 	it. 	In 	addition,
the disclosure statement also refers to a proposed refinance of the
remaining real property. 	The plan contains no such provision.
The plan does not appear to schedule all of the debtor’s secured
debt, and the names of the secured creditors identified in the plan
are inconsistent with those scheduled and disclosed elsewhere in the
record. 	In 	the 	plan, 	the 	only 	secured 	claims 	scheduled 	are 	a 	GMAC
claim secured by the debtor’s residence, a GMAC claim secured by the
debtor’s 	Antioch 	real 	property, 	and 	an 	Aurora 	Loan 	Service 	claim
secured 	by 	the 	Arizona 	real 	property. 	In 	the 	debtor’s 	bankruptcy
schedules, the debtor identifies two creditors secured by the Antioch
real property, GMAC and Aurora. 	It is unclear whether there are two
loans 	on 	the 	property 	or 	only 	one. 	Moreover, 	a 	motion 	for 	relief
from the automatic stay was filed by Mortgage Electronic Registration
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Systems, 	Inc. 	as 	nominee 	for 	GreenPoint 	Mortgage 	Funding, 	Inc.
Finally, the debtor also listed in her schedules but did not classify
as 	a 	secured 	claim 	in 	her 	plan 	the 	Bank 	of 	Stockton 	as 	a 	cr 	editor
secured by her Jeep Cherokee.
The 	disclosure 	statement 	does 	not 	contain 	a 	summary 	of 	the
debtor’s assets or a liquidation analysis. 	Thus, the reader can only
discover 	by 	reading 	the 	schedules 	that 	the 	debtor 	owns 	an
unencumbered truck valued at $5,000 and an unencumbered boat valued
at $8,000. 	There are numerous other problems. 	For example, her plan
fails to designate numbers for the classes of claims or to describe
them 	as 	impaired 	or 	unimpaired. 	The 	proposed 	treatment, 	if
provided, is too nonspecific. 	The plan states that there is no class
of equity. 	Yet, the disclosure statement acknowledges that, when the
debtor is an individual, the debtor represents the equity class.
The priority claims listed in the debtor’s schedules include a
claim 	owed 	to 	the 	court 	of 	$1,039, 	the 	amount 	of 	the 	filing 	fee.
However, 	the 	docket 	does 	not 	reflect 	nonpayment 	of 	the 	filing 	fee.
Of particular interest to the Court is a reference on Schedule I, the
debtor’s income statement, of payments of $6,300 as the average from
prior 	sales. 	However, 	in 	answer 	to 	question 	10 	on 	the 	debtor’s
statement 	of 	financial 	affairs, 	no 	transfers 	are 	disclosed 	outside
the ordinary course of business within the last two years.
In 	sum, 	particularly 	since 	this 	is 	an 	amended 	plan 	and
disclosure statement, the Court concludes that either the debtor is
proceeding in bad faith or is in any event incapable of formulating
a 	reasonable 	chapter 	11 	plan 	and 	an 	adequate 	disclosure 	statement.
Case: 07-41711 Doc# 59 Filed: 02/20/08 Entered: 02/21/08 16:42:59 Page 4 of 6

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Dismissal would be unfair to unsecured creditors. 	The Court offered
the 	debtor 	conversion 	to 	chapter 	7 	but 	the 	debtor 	expressed 	the
desire 	to 	continue 	to 	attempt 	to 	confirm 	a 	chapter 	11 	plan 	which
appointment 	of 	a 	chapter 	11 	trustee 	would 	permit 	her 	to 	do.
Consequently, 	the 	Court 	concluded 	that 	directing 	the 	Office 	of 	the
United States Trustee to appoint a chapter 11 trustee was in the best
interests 	of 	all 	concerned. 	Based 	on 	the 	foregoing, 	good 	cause
appearing therefor, it is
SO ORDERED.
END OF DOCUMENT
Case: 07-41711 Doc# 59 Filed: 02/20/08 Entered: 02/21/08 16:42:59 Page 5 of 6

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COURT SERVICE LIST
Fayedine Coulter
Law Offices of Fayedine Coulter
1425 Leimert Bl. #306
Oakland, CA 94602
Case: 07-41711 Doc# 59 Filed: 02/20/08 Entered: 02/21/08 16:42:59 Page 6 of 6