Bryan Thomas Milliren

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Case 05-30237 Doc105 Filed 12/13/06 Entered 12/13/06 14:05:12 Desc Main
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UNITED STATES BANKRUPTCY COURT
DISTRICT OF MASSACHUSETTS

EASTERN DIVISION
IN RE:
BRYAN THOMAS MILLIREN, CASE NO. 05-30237
DEBTOR CHAPTER 7
ORDER

WHEREAS, Bryan Thomas Milliren (the “Debtor’) has filed his Motion for Authority to
Enter Into Forbearance Agreement (the “Motion’’); and

WHEREAS, the Forbearance Agreement attached to the Motion (the “Agreement”)
reflects that prepetition the Debtor was a guarantor of the obligations of MTI-Milliren
Technologies, Inc. a corporation of which he is an employee, president and shareholder; and

WHEREAS, the Agreement reflects that in exchange for its agreement to forbear and
refrain from exercising its rights under the borrowing agreements amcng MTI-Milliren
Technologies, Inc., the Debtor and TD Banknorth, N.A. Massachusetts (the “Lender’”), the
Debtor individually agrees to execute a second mortgage on his home (the “Property’”), waive any
and all claims he may have against the Lender and seek bankruptcy court approval; and

WHEREAS, the Chapter 7 trustee (the “Trustee’’) filed an objection to the Motion on the
two principal grounds that there are no provisions under the Bankruptcy Code under which the
Debtor can encumber the Property which is property of the estate and the Motion does not
comply with 11 U.S.C. § 524 which section details the provisions for reaffirming a prepetition
unsecured debt; and

WHEREAS, the Debtor responded that the Trustee will not be able to administer the
Property after it is deemed exempt, the Debtor can file a reaffirmation agreement and the
Agreement is in the best interest of the estate; and

WHEREAS, in his response the Debtor confirmed that the second mortgage which he
would provide would be security for his personal guaranty of the debt of MTI-Milliren

Technologies, Inc., and

WHEREAS, [ held a hearing on the Motion and objection at which time the parties

AUTHENTICATED
U.S. GOVERNMENT
INFORMATION

GPO

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disputed whether the Debtor’s ex-spouse was a secured creditor;' and

WHEREAS, after the hearing the Debtor submitted an affidavit describing the chain of
possession of the stocks pursuant to the separation agreement which the Debtor and his ex-wife
executed; and

WHEREAS, upon further reflection, the Court concludes that the Debtor cannot enter
into the Agreement because (1) it is a reaffirmation of his pre-petition personal guaranty and the
Debtor has not filed a reaffirmation agreement which is in conformance with 11 U.S.C. § 524;
and (2) the Agreement provides for the Debtor to encumber the Prope:ty at a time when the real
estate 1s property of the estate, 11 U.S.C. §541, not property of the Debtor, and the Debtor has
provided no authority to encumber property of the estate;’ and

WHEREAS, because the Debtor lacks the authority to encumber the property and enter
into a Reaffirmation Agreement without complying with the applicable statute, I need not address
the issue of whether the Trustee is entitled to administer the Property and the ex-spouse holds an

'The importance of this fact arose thusly: Under 11 U.S.C. §§ 507(a)(1)(A) and (B), an
unsecured claim for domestic support obligations is given first prioritv. Under subsection (C), a
trustee who is administering an estate will have priority over the foregoing claims “to the extent
that the trustee administers assets that are otherwise available for the payment of such claims.”
The Trustee contends that this subsection, in addition to 11 U.S.C. § 522(c), entitles him to
administer the Property even if there 1s no equity above the mortgages and homestead exemption.
The Trustee claims that the ex-spouse holds either an undersecured dcmestic support obligation
claim, as the only security for the payment of her 1.4 million dollar claim is the shares in MTI-
Milliren Technologies, Inc. (which stock is worthless according to the Debtor’s schedules) or an
unsecured domestic support obligation because her security interest in the stock was never
perfected by possession. The Debtor did not contest the valuation but did argue that her interest
was perfected. The Debtor further contends that the claim of his ex-spouse cannot be considered
a domestic support obligation under the definition set forth in 11 U.S.C. § 101(14A). Ineed not
address these issues in order to decide the merits of the Motion.

*The Trustee asserted at the hearing without opposition from the Debtor that the period
for objecting to the Debtor’s claim of homestead has not yet expired.

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unsecured or undersecured claim;

NOW THEREFORE, the Court orders as follows:

1. The Motion is denied.

6, Pays SLE he ;
Li Meal fllliutiove

William C. Hillman
U.S. Bankruptcy Judge

Dated: 2\ | OG

“Likewise, the Debtor has objected to the Trustee hiring a real estate broker as a
preliminary step towards selling the Property. I entered an order allow:ng the hiring of the broker
as the Property is property of the estate and the Debtor’s opposition failed to demonstrate
otherwise. If the Trustee files a motion to sell the Property, the Debtor will be able to interpose
an objection.