IN RE: B & T LIQUORS, INC. CASE NO. 92-52190

UNITED STATES BANKRUPTCY COURT 

EASTERN DISTRICT OF KENTUCKY

LEXINGTON

IN RE:

B & T LIQUORS, INC. CASE NO. 92-52190

d/b/a Hidden Rock Cafe,

Hidden Cove Restaurant,

South Point Quick Mart

DEBTOR

MEMORANDUM OPINION

This case is pending on the motion of Brock-McVey Company, by counsel, for an order permitting said creditor to withdraw its claim in this chapter 11 case. The debtor's confirmed chapter 11 plan provides for payment of creditors holding allowed unsecured claims to the extent of .40 cents on the dollar.

Brock-McVey filed its claim herein as an unsecured claim in the amount of $6,345.00. Brock-McVey also filed an acceptance of the debtor's plan proposing to pay this claim to the extent of .40 cents on the dollar.

The claim of Brock-McVey Company filed herein on January 6, 1993, as claim no. 6, is based on a note dated May 21, 1991 in the amount of $8,400.00 payable in monthly installments of $500.00 each commencing June 21, 1991, with interest at the rate of 12% per annum. The claim indicates the principal amount of the indebtedness had been reduced to $6,345.06 by five payments thereon prior to the intervention of bankruptcy.

The note on which the claim of Brock-McVey Company is based was signed by Phil Stella, c/o Hidden Cove Restaurant, 4456 Nicholasville road, Lexington, Kentucky 40515. However, the debtors did not object to allowance of the claim as an obligation of B & T Liquors, Inc., d/b/a Hidden Cove Restaurant. Under the Bankruptcy Code a claim is deemed allowed unless a party in interest objects. 11 U.S.C. 502(a). Moreover, in a chapter 11 case such as this the schedule of liabilities filed by the debtor constitutes prima facie evidence of the validity and amount of the claims of creditors unless they are scheduled as disputed, contingent, or unliquidated. Rule 3003(b), Federal Rules of Bankruptcy Procedure.

In the schedules to its petition the debtor B & T Liquors scheduled Brock-McVey as a creditor holding an unsecured, nonpriority claim in the amount of $6,345.06 as a fixed, liquidated claim on an "open trade account." While the record is by no means clear on the point, apparently the indebtedness is for materials purchased from Brock-McVey and used in reconstructing the present building on the premises owned by the debtor.

The record indicates the debtor purchased the property at 4456 Nicholasville Road, Lexington, Kentucky on October 23, 1983 as evidenced by a deed of record in Deed Book 1328, page 32, in the Fayette County Clerk's office. The building on the property had been built in the 1930's as a social club and tavern. The debtor operated a restaurant on the premises. The building was destroyed by fire in 1988. It was rebuilt and reopened on July 15, 1991, a few months after the May 21, 1991 note was executed by Mr. Stella to Brock-McVey Company.

Mr. Stella is identified in the record variously as the President, Vice-President, Secretary, Director, and sole shareholder of the debtor, B & T Liquors, Inc. Possibly he signed the note to Brock-McVey Company as a means of guaranteeing payment of the debtor's account.

In any event, it is clear from the record that both the debtor and Mr. Stella are jointly and severally responsible for the indebtedness owed to Brock-McVey Company.

The order of confirmation of a chapter 11 plan discharges the debtor from prepetition debts. 11 U.S.C. 1141(d)(1). However, it does not affect the liability of any other entity, or the property of any other entity, for such debt. 11 U.S.C. 524(e). Consequently, Mr. Stella remains fully responsible for the debt to Brock-McVey Company. The fact that the debtor under its confirmed plan is now responsible for only 40% of the debt does not affect or in any other way relieve Mr. Stella of his liability for 100% of the debt. If Mr. Stella pays 100% of the debt he can be subrogated to Brock-McVey's claim against the debtor and can recoup 40% of the debt. 11 U.S.C. 509(a).

The motion of Brock-McVey to withdraw its claim in this case is denied as superfluous. There is no provision of law that precludes Brock-McVey from proceeding to collect the full amount of its claim, plus interest and attorney fees, if permitted by law, from Mr. Stella, while at the same time receiving a 40% dividend on its claim against the bankruptcy estate. The only restriction is that Brock-McVey cannot collect from both sources more than the full amount of its claim.

Dated:

By the court -

 

____________________________

JOE LEE, CHIEF JUDGE

 

Copies to:

 

William M. Reed, Esq.

Barbara M. Griffin, Esq.

Philip F. Stella

U.S. Trustee

 

 

 

f:\opinions\1996\b&t

UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF KENTUCKY

LEXINGTON

 

 

IN RE:

 

B & T LIQUORS, INC. CASE NO. 92-52190

d/b/a Hidden Rock Cafe,

Hidden Cove Restaurant,

South Point Quick Mart

 

DEBTOR

 

 

 

ORDER

 

 

In conformity with the memorandum opinion this day entered, IT IS ORDERED that the motion of Brock-McVey Company for an order permitting said creditor to withdraw its claim is denied as superfluous. No provision of law precludes Brock-McVey from proceeding to collect the full amount of its claim, plus interest and attorney fees, if permitted by law, from Philip M. Stella, while at the same time receiving a 40% dividend on its claim against the bankruptcy estate. Brock-McVey cannot collect from both sources more than the full amount of its claim.

Dated:

By the court -

 

___________________________

JOE LEE, CHIEF JUDGE

 

Copies to:

 

William M. Reed, Esq.

Barbara M. Griffin, Esq.

Philip F. Stella

U.S. Trustee