George Holland, Jr. and Lisa Alexholland

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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re 	No. 07-44503 T
Chapter 11
GEORGE HOLLAND JR., and 	R.S. No. BRL 88
LISA ALEXHOLLAND, 	R.S. No. DHC 5986
Debtors.
____________________________/
MEMORANDUM RE MOTIONS FOR RELIEF FROM STAY
The 	motions 	of 	General 	Motors 	Acceptance 	Corporation 	(“GMAC”)
and Calliance Realty Fund LLC (“Calliance”) seeking relief from the
automatic stay in the above-captioned case came on for a preliminary
hearing 	on 	March 	14, 	2008. 	Appearances 	were 	stated 	on 	the 	record.
At the conclusion of the hearing the Court granted partial relief to
GMAC 	and 	took 	the 	remainder 	of 	its 	motion 	and 	the 	entirety 	of
Calliance’s 	motion 	under 	submission. 	Having 	duly 	considered 	the
evidence and arguments presented by the parties, the Court sets forth
its conclusions below. 	In sum, the Court now grants complete relief
to GMAC and grants partial relief to Calliance.
Signed: March 15, 2008
________________________________________
LESLIE TCHAIKOVSKY
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
March 17, 2008
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 07-44503 Doc# 55 Filed: 03/15/08 Entered: 03/17/08 16:29:19 Page 1 of 8

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DISCUSSION
Background
The 	above-captioned 	debtors 	filed 	a 	petition 	seeking 	relief
under chapter 11 of the Bankruptcy Code on December 27, 2007. 	On the
same 	day, 	they 	filed 	their 	schedules 	of 	assets 	and 	liabilities
(“Schedules”) and statement of financial affairs (“SOFA”). 	However,
the Schedules did not list all of the debtors’ property and omitted
certain 	creditors, 	including 	Calliance. 	Although 	they 	appeared 	at
their 	meeting 	of 	creditors 	on 	January 	28, 	2008, 	according 	to 	the
notes on the docket, they failed to appear for their initial debtors’
examination.
On 	January 	31, 	2008, 	the 	debtors 	filed 	an 	amendment 	to 	their
SOFA and certain other required documents. 	A continued meeting of
creditors and a status conference were both conducted on February 4,
2008. 	At 	the 	status 	conference, 	the 	debtors 	were 	ordered 	to 	file
amended 	schedules. 	Amended 	Schedules 	were 	filed 	the 	same 	day. 	An
amended SOFA was filed on February 11, 2008.
At the conclusion of the status conference, the Court issued an
order, 	giving 	the 	debtors 	until 	March 	6, 	2008 	to 	file 	a 	plan 	and
disclosure 	statement 	and 	to 	submit 	a 	proposed 	form 	of 	order
conditionally 	approving 	the 	disclosure 	statement 	and 	setting 	a
confirmation hearing. 	The debtors filed a plan on March 6, 2008 but
did 	not 	file 	a 	disclosure 	statement 	and 	did 	not 	submit 	a 	proposed
form of order.
On March 11, 2008, the Office of the United State Trustee (the
“UST”) filed a motion to convert the case to chapter 7. 	The motion
Case: 07-44503 Doc# 55 Filed: 03/15/08 Entered: 03/17/08 16:29:19 Page 2 of 8

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26 	1Calliance notes that the debtors failed to schedule them as
secured creditors.
3
notes that the debtors have failed to file monthly operating reports
or 	pay 	quarterly 	fees 	to 	the 	UST. 	It 	further 	notes 	that, 	although
the debtors filed a plan by the date set forth in the Court’s order,
they failed to comply with the order by filing a disclosure statement
or 	submitting 	a 	proposed 	form 	of 	order. 	The 	motion 	is 	set 	for
hearing on March 31, 2008.
The Motions
The 	motion 	of 	GMAC 	sought 	relief 	to 	repossess 	two 	leased
vehicles, 	a 	2005 	Hummer 	and 	a 	2007 	Cadillac. 	The 	motion 	indicated
that 	the 	monthly 	payments 	on 	the 	Hummer 	are 	$626, 	that 	the 	monthly
payments on the Cadillac are $1,979, and that no payments have been
received 	on 	either 	vehicle 	since 	October 	2007. 	In 	addition, 	the
motion represents that the 2007 Cadillac was purchased in August 2007
so that only three payments were made on the lease before the debtors
defaulted. 	The motion also states GMAC’s belief that neither vehicle
is insured.
The 	motion 	of 	Calliance 	represents 	that 	it 	holds 	a 	junior
secured claim on the debtors’ residence in the approximate amount of
$210,000 	behind 	a 	first 	deed 	of 	trust 	in 	the 	approximate 	amount 	of
$1,115,000. 1 	Calliance 	represents 	that 	the 	debtors 	are 	not 	making
payments to the holder of the first deed of trust, thus putting its
claim at risk. 	It represents that it has not yet recorded a notice
of 	default 	and 	seeks 	relief, 	at 	least, 	to 	do 	so. 	Calliance 	values
the residence at $1,600,000.
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26 	2The debtors fail to explain why they originally scheduled the
value of the residence at only $1 million.
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On 	March 	11, 	2008, 	the 	debtors 	filed 	oppositions 	to 	the 	two
motions 	for 	relief. 	In 	response 	to 	GMAC’s 	motion 	for 	relief, 	the
debtors represent that the vehicles are insured and that they intend
to propose payment of GMAC’s debt through their plan. 	They represent
that 	the 	vehicles 	are 	necessary 	for 	their 	reorganization 	because
debtor 	Lisa 	Alexholland 	uses 	the 	Cadillac 	to 	drive 	to 	work 	and 	to
care for her two minor children. 	They do not address the necessity
of the Hummer. 	However, they apparently propose to retain it as well
at 	the 	same 	time 	disclosing 	that 	the 	lease 	is 	due 	to 	terminate 	on
March 31, 2008.
In response to Calliance’s motion, the debtors contend that the
value of the residence is actually in excess of $1.6 million. 	Thus,
they contend that Calliance is not entitled to relief under 11 U.S.C.
§ 362(d)(2). 2 	In addition, they contend that Calliance is adequately
protected by the value of the real property so that relief should not
be granted under 11 U.S.C. § 362(d)(1). 	They do not deny that they
have 	defaulted 	on 	their 	payments 	to 	the 	creditor 	holding 	the 	first
deed 	of 	trust 	on 	their 	residence, 	thus 	putting 	Calliance’s 	junior
secured position at risk.
Decision
At the hearing, the Court concluded that GMAC should clearly be
granted 	relief 	from 	the 	automatic 	stay 	with 	respect 	to 	the 	Hummer.
The debtor may not retain a vehicle after the lease has terminated.
The Court found the lease payment on the Cadillac unreasonably high.
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26 	3Very likely, the debtors could purchase a car that operates
adequately for the price of one monthly payment on the Cadillac.
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It was not persuaded by the debtor’s contention at the hearing that
she would be unable to obtain a replacement vehicle while she was in
bankruptcy. 3 	However, the Court took this part of the motion under
submission because it had not yet reviewed the debtors’ plan.
Having 	now 	reviewed 	the 	plan, 	the 	Court 	concludes 	that 	the
motion should be granted with respect to the Cadillac as well. 	The
plan 	proposes 	to 	assume 	the 	lease 	with 	respect 	to 	the 	Cadillac.
Thus, 	any 	past 	due 	amounts 	would 	have 	to 	be 	paid 	on 	or 	before 	the
effective date. 	However, no payments are apparently proposed in the
meantime 	despite 	the 	fact 	that 	the 	value 	of 	the 	Cadillac 	is
indisputably less than the debt. 	The debtors may not retain a leased
vehicle 	in 	which 	they 	have 	no 	equity 	pending 	confirmation 	without
making monthly payments. 	Moreover, having now reviewed the debtors’
plan, the Court concludes that the debtors are unlikely to be able to
confirm a plan within a reasonable time.
The plan is grossly defective. 	It provides for certain payments
on 	the 	effective 	date 	but 	fails 	to 	define 	the 	effective 	date. 	It
fails 	to 	classify 	all 	of 	its 	secured 	debt 	and 	includes 	one 	secured
claim 	in 	its 	class 	of 	general, 	unsecured 	claims. 	It 	proposes 	to
modify debt secured only by their principal residence contrary to the
law since the enactment of BAPCPA. 	It fails to classify equity while
proposing 	that 	the 	debtors 	will 	retain 	their 	interests 	in 	their
property. 	It 	proposes 	to 	discharge 	their 	unsecured 	debts 	without
paying 	them 	anything. 	Moreover, 	the 	source 	of 	their 	proposed
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payments, 	their 	accounts 	receivable, 	appear 	to 	be 	of 	dubious
collectibility, virtually all being more than 90 days past due.
With respect to Calliance’s motion, the Court concludes that the
motion should be granted at this time only to a limited extent, so as
to 	permit 	Calliance 	to 	record 	its 	notice 	of 	default. 	The 	Court
believes that it is likely to convert the case to chapter 7 on March
31, 2008. 	If the Court were certain that the value of the residence
were 	$1.6 	million 	or 	more, 	it 	might 	not 	grant 	Calliance 	even 	this
limited 	relief. 	To 	do 	so 	may 	hamper 	to 	some 	extent 	a 	chapter 	7
trustee’s efforts to sell the residence. 	It does not appear that the
holder of the first deed of trust has filed a motion for relief from
the automatic stay at this time.
However, the Court is mindful that the debtors originally placed
a much lower value on the residence. 	While the senior lender has not
yet requested relief from the automatic stay, it may have recorded a
notice 	of 	default 	before 	the 	bankruptcy 	was 	filed. 	Therefore, 	the
Court 	is 	not 	persuaded 	that 	Calliance 	has 	sufficient 	adequate
protection to justify denying any sort of relief.
CONCLUSION
For 	the 	reasons 	stated 	above, 	GMAC’s 	motion 	is 	granted 	in 	its
entirety, and GMAC’s counsel is directed to submit a proposed form of
order accordingly. 	Calliance’s motion is granted in part so that it
may 	record 	its 	notice 	of 	default. 	If 	the 	debt 	remains 	in 	default
when the default period has run, Calliance may place its motion back
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on 	calendar 	to 	seek 	additional 	relief. 	Calliance 	is 	directed 	to
submit a proposed form of order accordingly.
END OF DOCUMENT
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COURT SERVICE LIST
Lisa Alexholland
George Holland, Jr.
3920 Columbian Dr.
Oakland, CA 94605
Benjamin R. Levinson
46 N. Second St., Ste. A
Campbell, CA 95008
Adam N. Barasch
Severson & Werson
One Embarcadero Center, Ste. 2600
San Francisco, CA 94111
Case: 07-44503 Doc# 55 Filed: 03/15/08 Entered: 03/17/08 16:29:19 Page 8 of 8