Estate – Bankruptcy

Listen to this article

7^th Circuit Court of Appeals

Case Name: City of Chicago v. Shelly C. Moore, et al.

Case No.: 17-3630; 17-3663; 17-3664

Officials: EASTERBROOK, ROVNER, and HAMILTON, Circuit Judges.

Focus: Estate – Bankruptcy

An application for relief under Chapter 13 of the Bankruptcy Code transfers most of a debtor’s assets to the newly formed bankruptcy estate. 11 U.S.C. §§ 541, 1306. Property stays in the estate until the bankruptcy court confirms a plan of payment. Then, “[e]xcept as otherwise provided in the plan or the order confirming the plan, the confirmation of a plan vests all of the property of the estate in the debtor.” 11 U.S.C. §1327(b). This means that the debtor becomes personally responsible for the expenses of maintaining that property.

A case-specific order, supported by good case-specific reasons, would be consistent with §1327(b), but none was entered in any of these cases. Chicago therefore is entitled to the principal relief it seeks: an order restoring the estates’ assets to the debtors’ personal ownership. Chicago tells us that, if it receives that relief, we need not decide whether parking and moving-violation fines should be treated as administrative expenses. On this understanding, we bypass that subject.

Reversed

Full Text

Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.