Case 12-46965

Doc 173

Filed 10/29/13 Entered 10/29/13 15:48:13 Document Page 1 of 3

Desc Main

UNITED STATES BANKRUPTCY COURT DISTRICT OF MINNESOTA ______________________________________________________________________________

In re: BKY 12-46965 Steven F. Meldahl Debtor. _____________________________________________________________________________ WELLS FARGO BANK, N.A.S OBJECTION TO THE DEBTORS DISCLOSURE STATEMENT ______________________________________________________________________________

INTRODUCTION Wells Fargo Bank, N.A. (hereinafter "Wells Fargo") hereby objects to the September 20, 2013 disclosure statement [Docket 158] (hereinafter Statement), filed by the Debtor in support of the Debtors plan of reorganization (hereinafter Plan) filed the same day [Docket 157.] The Debtors Statement fails to provide adequate information as required by 11 U.S.C. 1125 of the Bankruptcy Code (hereinafter Code) with respect to treatment of Wells Fargos claim. ARGUMENT I. ADEQUATE INFORMATION STANDARD Under 1125(b) of the Code, a debtor may not solicit the votes of creditors under a plan of reorganization unless the Court has approved a written disclosure statement. A disclosure statement cannot be approved unless it contains adequate information. Adequate information means information of a kind, and in sufficient detail, as far as is reasonably practicable in light of the nature and history of the debtor and the condition of the debtors books and records, including a
1

Case 12-46965

Doc 173

Filed 10/29/13 Entered 10/29/13 15:48:13 Document Page 2 of 3

Desc Main

discussion of the potential material Federal tax consequences of the plan to the debtor, any successor to the debtor, that would enable a hypothetical reasonable investor of the relevant class to make an informed judgment about the plan 11 U.S.C. 1125(a)(1). The purpose of the disclosure statement is to provide creditors with information necessary to determine whether to accept or reject a debtors plan of reorganization. In re Monnier Bros. 755 F2d 1336, 1342 (8th Cir. 1985); In re Dakota Rail, Inc., 104 B.R. 138, 142 (Bankr. D. Minn. 1989). The statutory definition of adequate information leaves the bankruptcy court wide discretion to determine on a case by case basis whether a disclosure statement contains adequate protection, without burdensome, unnecessary, and cumbersome detail. Dakota Rail, 104 B.R. at 143. A bankruptcy court must distinguish between (1) whether the disclosure statement contains adequate information to allow the typical creditor to make an informed decision on how to vote, and (2) whether the Plan can be confirmed. Id. Only where the disclosure statement on its face relates to a plan that cannot be confirmed does the court have an obligation not to subject the estate to the expense of soliciting votes and seeking confirmation of the plan Id.
(emphasis in original) (citing In re Pecht, 57 B.R. 137, 139 (Bkrtcy E.D. Va. 1986)).

II.

DEBTORS DISCLOSURE STATEMENT FAILS TO PROVIDE ADEQUATE INFORMATION The Debtors Statement fails to comply with the adequate information requirement in

that the Statement does not give sufficient and complete information regarding the proper treatment of Wells Fargos claim, fails to adequately disclose the amount of outstanding liens and mortgages, does not disclose the monthly cash flow from rents in order to provide for plan payments, and is facially related to a plan which cannot be confirmed. In order for the Debtors
2

Case 12-46965

Doc 173

Filed 10/29/13 Entered 10/29/13 15:48:13 Document Page 3 of 3

Desc Main

Statement to contain adequate information, the Statement must include additional information such as additional liens and mortgages, status of rental payments and leases, and future projections as to rental income to fund the proposed treatment of Wells Fargos claim. Moreover, the Debtor needs to provide information and proof that the claim of Wells Fargo is not fully secured. A disclosure statement which supports a plan that, on its face, is not confirmable does not need to be and should not be approved as containing adequate information. See In re Dakota Rail, Inc., 104 B.R. 138, 142-143 (Bkrtcy. D. Minn. 1989). CONCLUSION In light of the foregoing authority and discussion, Debtors Disclosure Statement is deficient and should not be approved because it fails to provide adequate information as required by 1125(a)(1).

Dated: October 29, 2013

WILFORD, GESKE & COOK, P.A.

____e/Orin J. Kipp____________________ Orin J. Kipp, #0390438 Attorneys for Wells Fargo Bank, N.A. 8425 Seasons Parkway, Suite 105 Woodbury, MN 55125 651-209-3300