Replacement Cost or Liquidation Value — What Is the Appropriate Standard for Redemption in a Chapter 7 Case?

Under §722 of the U.S. Bankruptcy Code, a debtor may redeem collateral from a lien by paying the secured creditor, in a lump sum, the value of the collateral. An increasing number of debtors have been obtaining loans to “redeem” collateral in chapter 7 cases. This article will examine what standard courts should use to determine the value of an asset that the debtor seeks to redeem.
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Confirmation of Chapter 13 Plans With Early Lien Release Provisions

Recently, several bankruptcy courts have reviewed the issue of whether a chapter 13 plan containing a provision requiring the release of a lien if the allowed secured claim has been paid in full prior to the completion of the chapter 13 plan may be confirmed. In re Smith, --- B.R. ---, 2002 WL 31954449 (Bankr. W.D. Tex. 2002) (decided December 20, 2002); In re Castro, 285 B.R. 703 (Bankr. D. Ariz. 2002)(decided November 17, 2002); In re Gray, 285 B.R. 379 (Bankr. N.D. Tex. 2002)(decided November 14, 2002); In re Parker, 285 B.R. 394 (Bankr. E.D. Tenn. 2002)(decided October 17, 2002); and In re Moore, 275 B.R. 390 (Bankr. D. Colo. 2002)(decided March 28, 2002).
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Consumer Bankruptcy Committee News

Annual Spring Committee Meeting to Address
Legislation, In Rem Relief
The bankruptcy reform legislation is expected to be reintroduced in the House this March and will be the focus of the ABI Consumer Bankruptcy Committee meeting at the Annual Spring Meeting in Washington, D.C., April 12, at 9:30 a.m. Pending congressional action on the reform legislation, the meeting will address potential changes to the consumer sections of the Code.

In addition, a presentation on in rem relief from the automatic stay will be featured. The discussion will include: when such relief is appropriate; what notice to affected parties is required; how broad in time and scope such relief should be; and how the relief should be structured in the court’s order. The materials will include a survey of published opinions where in rem relief has been granted or denied. Presenters will include Chief Judge Audrey Evans (D. Ark.) and Patrick Mears (Dickinson Wright; Grand Rapids, Mich.).

New Consumer E-newsletter Unveiled, Primer In the Works
This is the first in a series of e-newsletters to be distributed to Consumer Bankruptcy Committee members on a regular basis. ABI launched the committee e-newsletters in November. Committee Co-vice chair Dennis R. Dow is the e-newsletter editor. If you would like to contribute to the newsletter, or have some suggestions, please contact Dennis at (816) 391-6411 or at ddow@shb.com.

Committee members also began work on a project to prepare materials to assist in the education of new bankruptcy practitioners and their staff. Committee Co-vice chair Tom Yerbich has taken the lead in creating a consumer bankruptcy primer that will be used at ABI’s special one-day program, Bankruptcy – Nuts and Bolts for Young Practitioners, to be held on April 10, 2003, the day preceding the regularly scheduled Annual Spring Meeting in Washington, D.C. This program will have a separate track for young consumer bankruptcy practitioners. Other presenters at the program will include Prof. Jack Williams, Judge Stephen Mitchell (E.D. Va) and Ford Elsaesser. The committee plans to adapt the primer into an ABI handbook on Fundamentals of Consumer Bankruptcy Law & Procedure.

Winter Leadership Committee Meeting Addresses Appeals,
Disclosure Issues
A number of issues were addressed by the Consumer Bankruptcy Committee at the 2002 Winter Leadership Conference in Tucson, Ariz. The meeting began with a discussion on appeals of consumer cases and issues, led by Judge Jim Marlar (D. Ariz.). The discussion focused on five consumer opinions issued by the 9^th Circuit BAP in 2002. Chief Judge Steven Rhodes (E.D. Mich.) then discussed his empirical study of the omissions and errors in disclosure by individual chapter 7 debtors of assets in their bankruptcy schedules. An initial summary of his study appears in the May 2002 issue of Norton Bankruptcy Law Adviser, which is available from WestLaw. A more complete law review article is expected in the future. Committee Co-vice chair Tom Yerbich ended the meeting with an overview of the District of Alaska’s revision of its local rules, in part to address obtaining more complete and accurate disclosure of assets in the schedules.