1 ELLEN F.

ROSENBLUM #753239
Attorney General
2 CAROLYN G. WADE #832120
Senior Assistant Attorney General
3 Department of Justice
1162 Court Street NE
4 Salem, OR 97301-4096
Telephone: (503) 934-4400
5 E-mail: carolyn.g.wade@doj.state.or.us
6 Attorneys for State of Oregon
7 UNITED STATES BANKRUPTCY COURT
8 FOR THE DISTRICT OF OREGON
9 In re Chapter No. 13
10 Cylvia Lynne Hayes, Case No. 18-32339-pcm13
11 Debtor. PRECAUTIONARY OBJECTION TO
CONFIRMATION/ MOTION FOR
12 EXTENSION OF TIME TO FILE
OBJECTION TO CONFIRMATION
13

14

15 The State of Oregon, acting by and through the Oregon Government Ethics Commission

16 (OGEC), by and through its counsel, Carolyn G. Wade, hereby objects to the confirmation of

17 debtor’s First Pre-Confirmation Amended Chapter 13 Plan, dated October 16, 2018.

18 This court has indicated that further extensions of time to object to confirmation will not

19 be granted, yet the status of the case is such that, through no fault of OGEC, it is not ripe for an

20 objection to confirmation. Neither the debtor nor the Oregonian objects to an extension to

21 January 25, 2019. The debtor and Advance Local Media LLC (the Oregonian) are continuing to

22 negotiate the treatment of the Oregonian’s claim. (See, D.I. 44, Precautionary Objection of the

23 Oregonian.) Until and unless that settlement is concrete, OGEC cannot determine if an objection

24 to confirmation is warranted. In any event, the settlement of that dispute will require a motion to

25 settle and another amended plan. It is premature to require an objection to confirmation and

26 OGEC requests an extension of time to file such an objection, pending a resolution of the facts.

Page 1 of 3 – PRECAUTIONARY OBJECTION TO CONFIRMATION

In re Cylvia Lynne Hayes CGW:mbr/CED9367802
DEPARTMENT OF JUSTICE
1162 Court Street NE
Salem, OR 97301-4096
PHONE: (503) 934-4400
Case 18-32339-pcm13 Doc 46 Filed 12/31/18
 1 PRECAUTIONARY OBJECTION

2 The plan should not be confirmed as it has been proposed in bad faith—debtor used the

3 chapter 13 as a mechanism to file a meritless adversary proceeding, has played the bankruptcy

4 process against the OGEC’s administrative process to drag both out for months longer than

5 necessary, to the extent that six months after the petition, we have yet to have the final pre-

6 confirmation amended plan be fully evaluated in a confirmation hearing. 11 U.S.C. § 1325(3).

7 The plan does not meet the best interests of creditors, as it ignores the unsecured non-

8 exempt equity in debtor’s homestead, but seeks the benefit of a superdischarge after paying only
9 the debtor’s attorney fees and less than a pittance to the unsecured creditors. At most, the

10 unsecured creditors will receive 1.988% of their claims. If the final amount of debtor’s civil

11 penalty owed to OGEC is $110,000 (that is the maximum penalty of $5,000 per violation, times

12 22 violations), then the composition rate for unsecured creditors will be only .707%. The plan is

13 filed in bad faith. Confirmation would violate 11 U.S.C. § 1325(3).

14 Debtor’s CMA valuation is hopelessly flawed. The Oregonian values the debtor’s

15 homestead’s fair market value at $266,322 (see POC #11, filed September 11, 2018). Although

16 at first glance, it appears that the claims debtor acknowledges are secured total somewhere

17 around $150,000,1 it turns out that the Wells Fargo secured claim (POC No. 1) was filed for

18 $49,445.81 and the U.S. Bank secured claim (POC No. 6) was filed for $87,388.84; the two total

19 only $136,834.65. The debtor is entitled to a $40,000 homestead, and that would leave at least

20 $89,000 of equity for unsecured creditors, were the debtor intent on completely avoiding the

21 Oregonian’s lien.

22 The debtor’s October 19, 2018 plan, however, does not include the provision previously

23 included in the July 16, 2018 plan, to-wit, that the lien record abstract filed by the Oregonian had

24 no legal force or effect. (See, D.I. 16, paragraph 16.) Until the settlement with the Oregonian is

25 complete, no one knows what the agreed amount of the Oregonian’s secured claim is; and if it is

26
1
See Summary of Assets and Liabilities, D.I. 43, p. 1, Part 2, line 2.
Page 2 of 3 – PRECAUTIONARY OBJECTION TO CONFIRMATION
In re Cylvia Lynne Hayes CGW:mbr/CED9367802
DEPARTMENT OF JUSTICE
1162 Court Street NE
Salem, OR 97301-4096
PHONE: (503) 934-4400
Case 18-32339-pcm13 Doc 46 Filed 12/31/18
 1 any less than $89,487.35, there is equity for unsecured creditors. That equity would be

2 recovered and paid to the unsecured creditors in a chapter 7. Confirmation would violate the

3 best interests of creditors test. 11 U.S.C. § 1325(4).

4 DATED this 31st day of December, 2018.

5 ELLEN F. ROSENBLUM
Attorney General
6
/s/ Carolyn G. Wade
7 Carolyn G. Wade #832120
Senior Assistant Attorney General
8 Department of Justice
9 Of Attorneys for OGEC
1162 Court Street NE
Salem, OR 97301-4096
10 Telephone: (503) 934-4400
Facsimile: (503) 373-7067
11 E-mail: carolyn.g.wade@doj.state.or.us
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Page 3 of 3 – PRECAUTIONARY OBJECTION TO CONFIRMATION

In re Cylvia Lynne Hayes CGW:mbr/CED9367802
DEPARTMENT OF JUSTICE
1162 Court Street NE
Salem, OR 97301-4096
PHONE: (503) 934-4400
Case 18-32339-pcm13 Doc 46 Filed 12/31/18
 1 CERTIFICATE OF SERVICE

2 I certify that on December 31, 2018, I served the foregoing Precautionary Objection to

3 Confirmation/Motion for Extension of Time upon the parties hereto by E-notification and by

4 United States Postal Service, First Class mail, postage prepaid, a true, exact and full copy thereof

5 to as indicated:

6 By E-Notification:

7  REX K DAINES rdaines@olsendaines.com,

noticerd@olsendaines.com;ignintake@olsendaines.com;dainesrr46944@notify.bestcase.c
8 om
9  MICHAEL R FULLER michael@underdoglawyer.com,
michaelfuller@gmail.com;michael@underdoglawblog.com;mfuller@olsendaines.com;m
10 nelson@olsendaines.com;rdaines@olsendaines.com
11  Wayne Godare c0urtmai1@portland13.com, c0urtmai1@portland13ct.com
12  OREN B HAKER oren.haker@stoel.com,
docketclerk@stoel.com;jennifer.lowes@stoel.com;learonjohn.bird@stoel.com;alyssa.petr
13
off@stoel.com;alexa.kim@stoel.com
14
 CARA J RICHTER gshahak@logs.com
15
 US Trustee, Portland USTPRegion18.PL.ECF@usdoj.gov
16
By United States Postal Service, First Class Mail:
17
PRA Receivables Management, LLC
18 PO Box 41021
Norfolk, VA 23541
19
Cylvia Lynne Hayes
20 932 SE Douglas Street
Bend, OR 97702
21

22 /s/ Carolyn G. Wade

Carolyn G. Wade #832120
23 Senior Assistant Attorney General

24

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Page 1 of 1 – CERTIFICATE OF SERVICE

In re Cylvia Lynne Hayes CGW:mbr/CED9367802
DEPARTMENT OF JUSTICE
1162 Court Street NE
Salem, OR 97301-4096
PHONE: (503) 934-4400
Case 18-32339-pcm13 Doc 46 Filed 12/31/18