James Dennis Severa & Julie Anne Otten, Ch. 11, BK11-82511-TJM (Mar. 19, 2013)
The debtors previously entered into a stipulation settling a motion for stay relief filed by the creditor holding liens on numerous rental properties owned by the debtors. The stipulation contained a provision that any attempt by the debtors to modify its terms without the creditor’s express written consent would be an event of default which would automatically terminate any stay or injunctive provision of the Bankruptcy Code. The debtors later moved to modify the amount of adequate protection payments, based on changed circumstances. The creditor deemed this an event of default and moved for relief from the stay.
The court denied the debtors’ motion to modify the adequate protection payments, finding unconvincing evidence of changed circumstances. The court also denied the creditor’s motion for relief, finding that the default provision in the stipulation gave the creditor too much power at the expense of the debtors’ rights under the Bankruptcy Code. “Although the stipulation was negotiated in good faith, and approved by this court, it is the function of the court to determine if there is cause for relief from the automatic stay. The parties cannot negotiate away the authority of the court or the right of a debtor in bankruptcy to request relief from the court.”