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In re Andrews

filed*fn*: March 8, 1995.

IN RE: WILLIAM ANDREWS; ELANA ANDREWS, DEBTORS. WILLIAM ANDREWS; ELANA ANDREWS, APPELLANTS,
v.
LAWRENCE J. LOHEIT, CHAPTER 13 TRUSTEE, APPELLEE.



Appeal from the Ninth Circuit Bankruptcy Appellate Panel. BAP No. EC-93-01120-RMeO. Russell, Meyers, and Ollason, Judges, Presiding.

Before: Thomas Tang, and Diarmuid F. O'Scannlain, Circuit Judges, and Robert R. Merhige, Jr.,*fn** District Judge. Opinion by Judge Tang.

Author: Tang

TANG, Senior Circuit Judge:

Appellants filed a plan of reorganization to which only the Chapter 13 trustee objected. No secured creditors objected. The bankruptcy appellate panel ("BAP") held that a Chapter 13 trustee had standing to object to confirmation of a plan under § 1325(a)(5) of the Bankruptcy Code.*fn1 We have jurisdiction under 28 U.S.C. § 158(d) and we affirm. We hold that the trustee had standing to object under 11 U.S.C. § 1325(a)(1) rather than § 1325(a)(5).

I.

William and Elena Andrews, debtors, filed their Chapter 13 petition concurrently with their plan of reorganization on February 28, 1992 ("plan"). The Andrews' schedules listed four secured creditors with claims totalling $161,064, of which $13,933 was to be disbursed by the Chapter 13 trustee. The remainder, which was the amount due on the Andrews' mortgage with Beneficial California, Inc., ("Beneficial") would be paid directly by the Andrews. The Andrews also owed to Beneficial a mortgage arrearage of $5,664. In addition, the Andrews owed $6,700 to General Motors Acceptance Corporation, $869 to Montgomery Ward, and $700 to Bank of America.

The plan proposed monthly payments of $396 over 60 months which would pay 27 percent of the allowed non-priority unsecured claims and would pay the secured creditors through a pro-rata share. No regular monthly payment was proposed to any creditor. The creditors with smaller claims could not receive payments each month because the trustee's distribution system would not distribute any amount under $15.

A meeting of creditors, pursuant to 11 U.S.C. § 341(a), was held May 28, 1992. No creditors objected to the plan. The Chapter 13 trustee ("trustee"), however, suggested modifications to the plan that changed the manner of distribution to the secured creditors. The trustee argued these modifications were necessary, inter alia, to provide a distribution in which the smaller secured claims would receive adequate protection. The Andrews rejected the modifications because no secured creditors had objected to the original plan.

On June 24, 1992, the trustee filed a Notice of Intent to Deny Confirmation and Dismiss the Case, arguing in part that the secured creditors would not receive adequate protection. On September 1, 1992, the Andrews filed an opposition to the trustee's objection, arguing that the trustee does not have standing to object to the confirmation on behalf of secured creditors and that the Andrews' plan complied with the Bankruptcy Code. The bankruptcy court found, inter alia, that the Chapter 13 trustee had standing to object. The bankruptcy appellate panel affirmed, finding that the trustee had standing to object under 11 U.S.C. § 1325(a)(5).*fn2

We review the bankruptcy appellate panel's decision de novo. In re Johnston, 21 F.3d 323, 326 (9th Cir. 1994). We hold that the trustee had standing to object under 11 U.S.C. § 1325(a)(1).

II.

The Chapter 13 trustee has standing to object to a plan that does not meet the requirements for confirmation. Section 1302(b) of the Bankruptcy Code states:

The trustee shall -

(1) perform the duties specified in sections 704(2), 704(3), 704(4), 704(5), 704(6), 704(7), ...


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