Saturday, December 1, 2012

In re Radden case brief

 In re Radden (Bankr. ED Va. 1983)
 Bankruptcy Law

Facts: Debtor bought a car and the note was assigned to GMAC. GMAC repossessed the car prior to bankruptcy after default. GMAC notified the debtor of their right to redeem the property and of a proposed sale if they did not redeem. 2 days before the sale, the debtor filed for Chapter 13. Debtor listed the car value as $2,700 and balance due of $4,400.30. The plan proposed to pay GMAC in full up to the value of the car plus interest at 5% per annum in monthly payments of $89.68 over 36 months. The other portion is treated as an unsecured claim to receive .70/$. Creditor seeks relief on lack of adequate protection §361(d)(1), and that the property has no equity and is not necessary for the debtor’s effective reorganization §362(d)(2).
Issue: Does GMAC have adequate protection? Can the debtor motion for a turnover?

Holding: Yes and Yes.

Analysis: §362(g) places the burden on the debtor to show the property is necessary for effective reorg. He needs the car to get to and from work. It is necessary so relief cannot be granted under §362(d)(2). Also, GMAC is adequately protected because they retain their lien on the collateral and receive the amount of their allowed secured claim and they will be adequately protected if the plan is effectively consummated. GMAC hasn’t shown the debtor’s chances of rehabilitation are remote. He has stable employment and is capable of meeting the payments. He has reasonable likelihood of having the plan confirmed. Debtor has all the rights of the trustee under Chapter 7 or DIP under Chapter 11. Debtor may seek turnover under §542(a) because he may use it in the ordinary course of business. §363. 
§542 elements: 1) entity has possession, custody, or control over property, 2) the debtor may use the property pursuant to §363, and 3) the property has value or benefit to the estate. Adequate protection is necessary for the turnover, and the debtor will 1) procure adequate insurance on the property at time of recovering possession, and 2) make monthly payments under the K w/ GMAC until confirmation, then GMAC will be adequately protected and §361 and 362 will be satisfied.

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