Wednesday, July 26, 2006

8th Cir. BAP Imposes Sanctions on Creditor for "Frivolous" Appeal of Amended Bankruptcy Plan

Per In re Schachtele, 343 B.R. 661 (8th Cir. BAP May 11, 2006):

[W]hat makes these appeals particularly frivolous are the points that (i) Tina Livestock [an unsecured creditor] lacked standing to object to the amended plans and (ii) the issues on the merits of the objections were res judicata because the original Plan, containing the same treatment of creditors, was confirmed without being appealed. Counsel does not respond to the res judicata point at all. And, the only response offered by counsel on the fact that Tina Livestock lacked standing to object to the amended plans is that the bankruptcy court “ruled that counsel had standing when that issue was raised by Debtors' counsel” and that, had the bankruptcy court not ruled he had standing, counsel would not have been permitted to present his arguments.

We find this explanation to be unsatisfactory for several reasons. First, counsel does not cite to the record anywhere where the bankruptcy court ruled he had standing, and we could find none. The Orders confirming the amended plans are summary orders simply confirming the respective plans and do not address Tina Livestock's objections or its standing at all. Further, the parties did not submit the transcripts of the hearings on confirmation of the First or Second Amended Plans and, despite the fact that we expressly invited the parties to supplement the record to submit the transcript of the hearing on confirmation of the First Amended Plan, they declined to do so, with Tina Livestock expressly stating the only transcript it wished to submit was the one from the hearing on allowance of its late-filed claim.

. . .

We reiterate that the res judicata and standing issues are what particularly rendered these appeals frivolous and, because Tina Livestock's response to those issues are absent or unconvincing, we find sanctions are warranted in this case. [A sanctions award of $4,201 in attorney fees and costs assessed against creditor's counsel were imposed].


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