Clyde L Winchester, Jr and Amanda L. Winchester

In re
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF WYOMING
)
)
CLYDE L. WINCHESTER, JR.
AMANDA L. WINCHESTER
) 	Case No. 	12-21018
) 	Chapter 13
)
Debtors. 	)
OPINION DENYING CONFIRMATION OF AMENDED CHAPTER 13 PLAN
DATED JANUARY 15, 2013
On May 21, 2013, this matter came before the court for an evidentiary hearing for
confirmation of the Amended Chapter 13 Plan dated January 15, 2013 (Amended Plan),
filed by Clyde Winchester, Jr. and Amanda Winchester (''Debtors") and the objections
filed by Mark Stewart, Standing Chapter 13 Trustee ("Trustee") and Wyoming
Community Bank, Riverton ("WCB"). At the conclusion of the hearing, the court took
the matter under advisement. The court, having reviewed the recorded, testimony and
evidence and applicable law, denies confirmation.
The court has jurisdiction over this proceeding under 28 U.S.C. §§ 157 and 1334.
This is a core proceeding within the definition of28 U.S.C. § 157(b)(2)(L).
The Trustee objects to confirmation of the Amended Plan asserting: ( 1) the plan is
not feasible in violation of 11 U.S.C. § 1322(a)(1); (2) Debtors are not contributing all of
their disposable income into the plan; (3) Debtors propose to cure defaults on their loans
with WCB, but are not entitled to "cure" the defaults and must pay the amounts owed in
full during the term of their Amended Plan or are in violation of§ 1322(b)(5); and, (4)
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the plan unfairly discriminates. WCB asserts that: (1) the Amended Plan is not
confirmable as the Debtors propose an improper treatment of its secured claim; and, (2)
the plan is not feasible. 1
Debtors' Amended Plan proposes to pay two payments in the amount of$1,070.00
and 55 monthly payments in the amount of$1,550.00 for a total amount to be paid into
the Amended Plan of$87,390.00. The Amended Plan proposes the following
distribution:
Administrative Expenses:
Attorney fees 	................................... $3,281.00
Priority Claims:
IRS 	........................ ($424.00 per month) $23,747.38
Defaults Cured
Wyoming Natl Bank - n/k/a
Wyoming Community Bank .... $44,260.00 over 57 months
* 	does not include loan 6123 which Debtors propose
that Himark will pay. The loan was personally
guaranteed by the Debtors.
Citifinancial 	....................... $4,118.00 over 57 months
Unmodified Claims/pursuant to contract terms:
Wyoming Community Bank (loan 6124) ..... $1,650.00 per month
Wyoming Community Bank (loan 5707) . . . . . . 	$646.00 per month
Citifinancial 	........................... $1,350.00 per month
Joe Pinter 	............................. $1,700.00 per month
Central Bank and Trust 	........................... 	$1,553.14
* 	CB&T was granted relief from stay on a horse trailer at
a hearing on June 18, 2013. The issue regarding the 51h
wheel camper is still pending. The amount of the
monthly payment is allegedly $115.26.
1 The Trustee also raised the objection that the Wyoming Department of Revenue ("WDR") filed a priority
claim in the case. However, the Debtors and Trustee each stated at the hearing that the WDR claims are the
responsibility ofHimark (Case No. 12-21173), a sister case to the Debtors' individual chapter 13 case.
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The court's review of the financial infonnation shows that the proposed Amended
Plan does not reconcile with Debtors' reality. The Amended Plan does not provide for the
correct WCB arrearage in the amount of $75,098.68. Debtors list their monthly house
mortgage payment on Schedule J in the amount of$1,350.00. However, the testimony
reflects that the adjusted pre-petition monthly payment was $1,650.00. Debtors do not list
Cititinancial or CB&T debts on their Schedule J.
Debtors' income is based upon draws from their two businesses, Hi mark and the
AK Enterprises which operates a bookstore in Lander, Wyoming. Additionally, Mr.
Winchester obtained employment that shall provide an additional $3,200.00 to $4,000.00
per month gross income to fund the Debtors' Amended Plan. Debtor estimates his federal
income tax withholding will be in the amount of $400.00 per month. However, as Mr.
Winchester only worked for a brief time prior to the hearing, his wage statements do not
reflect the amount of his actual federal income tax withholding. Additionally, Debtors
have not yet filed their 2012 federal tax return that would provide current historical
income evidence regarding their income from their two businesses.
A review of the financial records for Himark and AK Enterprises reflect that the
businesses are not generating sufficient income to service their own debt, much less
provide Debtors the income necessary to sustain Chapter 13 plan payments. Debtors
testified that they have $8,000.00 to pay to WCB toward the post-petition arrears. During
the testimony, it was discovered that the source of that $8,000.00 was a portion of a
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payment from a customer who wrecked one ofHimark's trailers. The trailer was part of
WCB's collateral. Debtors used the proceeds from the wrecked trailer to partially fund
Himark's operations and asserted they had sufficient income to pay $8,000.00 to WCB
toward the arrearage amount. Mrs. Winchester conceded that deducting this one-time
payment from the monthly income left Himark operating in the negative for April, 20 13.
The court is concerned that the Debtors continue to use assets from the Himark
bankruptcy case to fund their lifestyle and pay their personal debts. The court's review of
Himark's operating reports that included copies of its bank statements, reflect that there
are unexplained payments from Himark's bank account to Safeway; Lander Valley
Animal Hospital; Bass Pro Shop in Denver; and numerous "NSF" charges. Debtors seem
to be "robbing Peter to pay Paul," or in this case, robbing Himark to pay their personal
expenses, providing financial information that skews Himark's monthly income, and
subsequently the Debtors' income. Then Debtors propose to pay WCB a portion of the
default amount from funds that were proceeds from WCB's collateral, but not pay
Himark' s creditors.
Additionally, the book store is not generating enough income to service its debt.
Debtors' propose to pay Mr. Pinter the amount of$1,700.00 a month on a mortgage in the
amount of nearly $225,000.00 that: (1) has matured by its own terms and was not paid at
that time: and, (2) the collateral appears to have a value of approximately $88,000.00.
Mrs. Winchester testified that Debtors had drawn income from the book store in nominal
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amounts of$400.00- $750.00 for the family's living expenses. 	She also conceded that
the Debtors are not paying Citifinancial. Even with the additional income generated by
Mr. Winchester, Debtors' income is not enough to pay the amounts proposed in the
Amended Plan.
Debtors argue that as their plan payments are current, they should be afforded an
opportunity to succeed. 	The court does not disagree that the debtors should be afforded
the opportunity to reorganize. However, based upon testimony and evidence presented,
the court cannot find that the proposed Amended Plan is feasible. 	The numbers do not
add up to a plan that is confirmable. On this issue alone, confirmation of the Amended
Plan fails.
The court, finding that the Amended Plan is not confirmable based upon
feasibility, declines to rule on the balance of the Trustee's and WCB's objections.
This opinion constitutes the Court's findings of fact and conclusions oflaw. A
separate order shall be entered pursuant to Fed. R. Bankr. P. 9021.
DATED thi~day of June, 2013.
Service to:
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Paul Hunter
Jay Vincent
By the Court
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