Appeal from the United States Bankruptcy Court for the District of Montana Hon. Ralph B. Kirscher, Chief Bankruptcy Judge, Presiding. Bk. No. 09-60452
The opinion of the court was delivered by: Hollowell, Bankruptcy Judge.
SUSAN M SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT
Argued and Submitted on March 16, 2011 at Pasadena, California
Before: HOLLOWELL, JURY, and MARKELL, Bankruptcy Judges.
The Bankruptcy Code requires an individual debtor in a chapter 7*fn1 case to undertake certain obligations with respect to personal property that secures a debt. 11 U.S.C. § 521(a)(2). A debtor must file a statement of intention indicating whether she intends to surrender or retain such property and must file and perform on her intention within a certain time frame. 11 U.S.C. § 521(a)(2)(A). If a debtor fails to timely meet those obligations, the automatic stay terminates and the property is removed from the estate unless the chapter 7 trustee obtains a determination that the property is of consequential value or benefit to the estate. 11 U.S.C. §§ 521(a)(2)(C), 362(h)(1) and (2).
In this case, the debtor did not file a statement of intention with respect to personal property that was pledged to a creditor and the chapter 7 trustee did not seek a determination that the property was of value or benefit to the estate. However, the chapter 7 trustee appeals the bankruptcy court's ruling that § 362(h) terminated the automatic stay on all of the debtor's personal property secured by the creditor's claim and not just on personal property scheduled as securing the claim. We AFFIRM.
Edra Blixseth (the Debtor) guaranteed a $13,650,000 loan (Loan) made to her son by Western Capital Partners, LLC (Western Capital). The Debtor also pledged certain personal property as collateral for the Loan (the Collateral).*fn2 Western Capital's security agreement (Security Agreement) describes the Collateral as including all interests owned by the Debtor in any corporation, partnership or limited liability company, all instruments, general intangibles, rights of action, contracts, accounts, goods, antiques, art, and automobiles, wherever located. On June 19, 2007, Western Capital filed a UCC Financing Statement, referencing the Loan and Security Agreement. The UCC Financing Statement, like the Security Agreement, contained a comprehensive description of the Collateral, and encompassed "all personal property of the Debtor wherever located."
On March 26, 2009, the Debtor filed for chapter 11 relief. She filed her bankruptcy schedules and statement of financial affairs on April 29, 2009 (the Schedules). In her Schedules, Western Capital was listed as a secured creditor holding a $13,298,628.13 claim secured by $2 million in "ALL PERSONAL PROPERTY OWED [sic] BY DEBTOR, FAMILY COMPOUND AT YELLOWSTONE MOUNTAIN CLUB." The Debtor's Schedule B listed personal property valued at $76 million.
On May 29, 2009, the case was converted to chapter 7 and Richard Samson was appointed the chapter 7 bankruptcy trustee (the Trustee). The Debtor amended her Schedules on June 14, 2009 (the Amended Schedules) to, among other things, correct the list of personal property assets to reflect a value of $69,216,315. The Amended Schedules did not alter the description of Western Capital's debt or the $2 million value given to the Collateral.
On June 30, 2009, the chapter 7 § 341 meeting of creditors was held.*fn3 By that date, the Debtor had not filed a statement of intention regarding the Collateral, as required by § 521(a)(2)(A).*fn4 The Trustee did not move for a determination of consequential value or benefit under § 362(h)(2) or for an extension of time to do so.*fn5
During the bankruptcy case, Western Capital filed three motions for relief from the automatic stay (the Stay Relief Motions). The Stay Relief Motions sought relief under § 362(d)(2) and were filed on May 1, 2009 (pre-conversion), June 30, 2009, and August 24, 2009. In its May 1, 2009 Stay Relief Motion, Western Capital sought ...