In re Northampton Corp.

In re Northampton Corp.

Opinion

 [*955]  By EMIL F. GOLDHABER, Bankruptcy Judge:

The issue in the matter before us is whether we should grant a creditor's renewed motion to convert or dismiss a chapter 11 proceeding when the debtor attempts to use that proceeding to affect or modify claims which were to be satisfied under a plan confirmed in its prior chapter 11 case when that prior plan has been substantially, although not fully, consummated. For the reasons stated herein, we will convert the case to chapter [**2]  7.

The facts of this case were outlined more thoroughly in our previous opinion ¹ in this matter, and thus we will reiterate only the most salient facts here: ² The debtor's first  [*956]  petition for reorganization under chapter 11 of the Bankruptcy Code ("the Code") was filed in 1981 and we confirmed the debtor's plan later that year. That plan provided, inter alia, that the debtor would pay a $2,000,000.00 secured claim to Manufacturers Hanover Trust Company ("Hanover") by April 28, 1983. The debtor failed to provide payment to Hanover by that time and Hanover began foreclosure proceedings against the realty which secured the debt. The debtor then filed its second petition for reorganization under chapter 11 on September 16, 1983, which gave rise to an automatic stay under 11 U.S.C. § 362(a) which barred Hanover from further continuing with the foreclosure. Hanover moved for dismissal of the case or, in the alternative, for conversion to chapter 7. The debtor opposed the motion on several grounds, one of which was its allegation that Hanover interfered with the debtor's ability to refinance or develop its only significant asset, which is a parcel of realty. In [**3]  an order accompanied by our opinion we withheld adjudication on Hanover's motion pending the completion of the debtor's discovery against Hanover on the above mentioned allegation. Asserting that discovery has been competed, Hanover now renews its motion, but such renewed motion only addresses the issue of dismissal while the original motion discussed dismissal and alternatively conversion.

In our original opinion we reached several legal conclusions, among which is that the plan which had been confirmed in the debtor's previous chapter 11 proceeding had been substantially -- although not fully -- consummated. 11 U.S.C. § 1101(2). ] A confirmed plan may be modified only before substantial consummation, but not after. 11 U.S.C. § 1127(b). The filing of a chapter 11 petition, with an eye toward curing defaults arising under a previously [**4]  confirmed chapter 11 plan, is so akin to modifying the previous plan within the meaning of § 1127(b) that we deemed the filing of a new chapter 11 petition an attempted modification under that section. 37 B.R. 113. Since such a modification may not be sought after substantial consummation of the plan, the debtor cannot effect that result by filing a new chapter 11 petition. Consequently, the debtor cannot affect or modify the claims of creditors, which were fixed through substantial consummation of a confirmed chapter 11 plan, by later filing another chapter 11 petition and plan. Thus, the pendency of this chapter 11 proceeding is for naught.

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