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Green Acres MHP, LLC v. George Dunlop, Jr. (In re Green Acres MHP, LLC), Ch. 11 Sub. V, BK22-80635-TLS, A23-8003-TLS (Aug. 28, 2023)

The court granted the Subchapter V debtor’s unopposed motion for summary judgment in this adversary proceeding seeking the court’s permission to use the plan confirmation process to restructure the manner in which the debtor provides water to and receives payment from the residents of its housing development.

The debtor has for years furnished water to the lots in the subdivision in a manner that does not allow for service to individual lots to be turned off. The water is provided under an arrangement that originally envisioned the formation of a homeowners’ association to approve assessments on each lot to pay for water service and enforce non-payment by filing a lien against the property. However, the original set of covenants has expired and the homeowners’ association was never formed. None of the subsequent covenants and easements are enforceable to give the debtor the ability to assess and collect payment for the water it provides. Most of the residents are years in arrears on water payments; this delinquency caused the debtor to file its bankruptcy petition.

In its plan, the debtor proposed a payment and assessment scheme. Because the proposal would affect the rights of parties not under the bankruptcy court’s jurisdiction, the debtor filed this adversary proceeding and served all of the lot owners. Most did not respond and are in default. None resisted this amended motion for summary judgment, so the court granted it. The debtor may proceed with developing a plan to establish a payment structure to compensate it for maintaining a water utility and providing water to residents, and to establish procedures for shutting off the water for non-payment.

Monday, August 28, 2023
Judge Thomas L. Saladino