In the Matter of John and Cathleen Kennedy

Summary

The bankruptcy court considered whether individual Chapter 11 debtors could modify and repay a New Jersey residential foreclosure judgment through a Chapter 11 plan despite the creditor's objection. The court held that the Bankruptcy Code authorizes modification or satisfaction of a foreclosure judgment under 11 U.S.C. § 1123(a)(5)(E), because Chapter 11 lacks Chapter 13's home-mortgage anti-modification provision. The court further analyzed whether the proposed twenty-year repayment term satisfied the fair-and-equitable requirement of 11 U.S.C. § 1129(b).

Holdings

1. A Chapter 11 plan may satisfy or modify a foreclosure judgment because 11 U.S.C. § 1123(a)(5)(E) expressly authorizes satisfaction or modification of any lien, and the Bankruptcy Code's broad definition of claim includes a foreclosure judgment or the resulting right to payment.
2. The proposed twenty-year payout of Dominion's foreclosure judgment was not fair and equitable and could not be confirmed over Dominion's objection.

Questions Presented

1. Whether a Chapter 11 plan may satisfy or modify a New Jersey foreclosure judgment secured by the debtor's principal residence after entry of the judgment.
2. Whether the debtors' proposed twenty-year payout of the foreclosure judgment satisfied the fair-and-equitable requirement for confirmation over the objection of the impaired secured creditor under 11 U.S.C. § 1129(b).

Disposition

other