The opinion of the court was delivered by: William M. Skretny United States District Judge
Currently before this Court is an appeal from the United States Bankruptcy Court for the Western District of New York. The Appellant/Debtor contends that the bankruptcy court miscalculated the present value rate of interest for secured claims under his Chapter 13 bankruptcy plan. Because this Court agrees, it will reverse and remand this case for further proceedings.
On July 9, 2004, Appellant/Debtor (hereinafter "Debtor") filed for bankruptcy in the United States Bankruptcy Court for the Western District of New York pursuant to Chapter 13 of Title 11 of the United States Code.*fn1 Debtor proposed a Chapter 13 plan under which he would pay his secured creditors a 5 percent rate of interest per annum.
On September 27, 2004, the bankruptcy court conducted a confirmation hearing, during which the Chapter 13 Trustee ("Trustee") objected to the plan's provision of 5 percent annual interest rate for secured claims.*fn2 The Trustee suggested that the bankruptcy court apply a 9 percent rate of interest -- the New York judgment interest rate*fn3 -- to the creditors' secured claims, in keeping with the Western District's long-standing practice. See Williams v. Reiber, No. 93-CV-6484L, 1994 WL 16127089, at *9 (W.D.N.Y. May 27, 1994) (affirming "Judge Ninfo's decision adopting the New York judgment rate of interest at 9%" as "clearly proper"). Counsel for the Debtor argued that under Till v. SCS Credit Corp., 541 U.S. 465, 124 S.Ct. 1951, 158 L.Ed. 2d 787 (2004), the "appropriate present value interest rate" for all secured claims "should be the prime rate plus between one and three percent." (Tr., p. 2).*fn4
Immediately after hearing argument, the Honorable Michael J. Kaplan, United States Bankruptcy Judge, modified the Debtor's Chapter 13 plan to provide that all secured claims be paid at an interest rate of 9 percent, except for a single claim which the Debtor and creditor agreed would be paid at a lesser rate of interest,*fn5 and confirmed the plan without prejudice to the Debtor to seek a reduction of the interest rate paid to secured creditors. (Tr., p. 10-12). Judge Kaplan entered an Order to this effect on October 5, 2004.
On October 8, 2004, Debtor's counsel submitted a letter requesting that the bankruptcy court reduce the interest rate paid to secured creditors to 5.25 percent consistent with Till and In re Valenti, 105 F.3d 55, 63 (2d Cir. 1997).*fn6 By letter dated December 21, 2004, Judge Kaplan denied Debtor's request,*fn7 reasoning that the Bankruptcy Court was not required to apply a "formula rate" of interest to secured claims in response to a debtor's objections. (Ltr., p. 1). The bankruptcy court formalized its denial of Debtor's objection by Order entered on January 18, 2005.
On January 20, 2005, Debtor filed the instant appeal with the United States District Court for the Western District of New York.*fn8
This Court dismissed the appeal on March 11, 2005, for failure to comply with the Rules of Bankruptcy Procedure. Upon Appellant's Motion, this Court vacated the Order of Dismissal and reopened the case on March 23, 2005.
The challenged Order of the bankruptcy court consists solely of a legal determination, which this Court, under its appellate jurisdiction, reviews de novo. See Morin v. Frontier ...