IN RE DIAMANTIS

C. STILSON, Bankruptcy Judge

This matter was set for hearing on the Verified Motion By Plan Trustee For Approval Of Final Report, Closing Of Case, Assignment Of Rights, Approval Of Final Payment Of Professional Fees, Expenses And Costs And Discharge Of Plan Trustee (BK Doc. 331) filed by Robert P. Reynolds, plan trustee in the above styled bankruptcy case, and the Objection (BK Doc. 335, as amended by BK Doc. 337) of Michalis Diamantis to said motion. This was the second hearing on these matters. The court previously entered a Memorandum on May 22, 2008 (BK Doc. 339, which is incorporated herein). The court GRANTS the Plan Trustee's Verified Motion By Plan Trustee For Approval Of Final Report, Closing Of Case, Assignment Of Rights, Approval Of Final Payment Of Professional Fees, Expenses And Costs And Discharge Of Plan Trustee and OVERRULES the Objection of Michalis Diamantis.

FINDING OF FACTS

The claim of Michalis Diamantis was designated a "disputed claim" under the terms of the confirmed plan of Panayiotis Diamantis (BK Doc. 247/229). Michalis Diamantis asserts that the plan trustee should have made no distributions in this case until the court determined the allowed amount of Michalis Diamantis' claim. The plan trustee asserts that the claim became an allowed claim under the plan upon the final liquidation of the related bankruptcy case of Perfect Home, LLC. (Perfect Home).

The plan trustee has asked the court to approve his final report and Michalis Diamantis has objected to the final report. The accuracy of the plan trustee's final report depends upon whether or not the plan trustee used the correct amount for the claim of Michalis Diamantis in determining the distribution.

The plan trustee began his computation of the claim of Michalis Diamantis by using the amount of $367,299.62 and reducing that by the amount of principal paid on the Bank of Greece claim in the Perfect Home bankruptcy case. The plan trustee bases this computation on the court's order in the case of Panayiotis Diamantis dated September 27, 2002 (BK Doc. 221/205).

Michalis Diamantis asserts that the beginning point for determining his claim is $556,048.45, which should then be reduced by the principal amount paid on the claim of the Bank of Greece in the Perfect Home bankruptcy case. This figure is the amount paid by Michalis Diamantis on February 22, 2002, to the Bank of Greece as a result of his guaranty of the Bank of Greece debt owed by Perfect Home.

Much of the confusion in this case arises out of the fact that there are two separate bankruptcy cases, each having its own assets. Each case had two common, but not identical creditors. Perfect Home, under the terms of its confirmation order, was to pay $421,085.00 to Puritan Lace and $390,184.00 to the Bank of Greece. Neither of these creditors was to receive interest on their monthly installments. The amount of the claim of the Bank of Greece was equal to 93% of the total debt owed by Perfect Home to the Bank of Greece. Michalis Diamantis, father of the debtor Panayiotis Diamantis, had guaranteed the Bank of Greece debt and therefore was personally liable for any amount not paid under the terms of the Perfect Home plan.

Panayiotis Diamantis filed his own individual Chapter 11 bankruptcy case on January 21, 2000, three months after the Perfect Home bankruptcy plan was confirmed. He was also indebted to Puritan Lace. His total debt to Puritan Lace was $2,202,780.00, which included the $421,085.00 claim which was being paid in the Perfect Home case. Panayiotis Diamantis was not indebted to the Bank of Greece, but was indebted to his father as a result of his agreement to indemnify his father in the event he was called upon to pay the Bank of Greece debt. Panayiotis Diamantis filed claims on behalf of his father and the Bank of Greece in his own case in the amount of $606,515.51 (Claims #9 and #11). Both claims show on the face of the claim "4. Total Amount of Claim at Time Case Filed: $606,515.51."

Puritan Lace objected to the claims of Michalis Diamantis and the Bank of Greece (BK Docs. 79/69 and 81/71). In both objections Puritan Lace alleged that the claims were not due and owing, and in the alternative that the amount of the claims should be estimated. The parties settled the objection to the claim of Michalis Diamantis and an order was submitted and dated September 27, 2002, providing:

A. Claim number 11 filed by Michalis is allowed as a general unsecured claim in the amount of $367,299.62, without prejudice as to Michalis' rights, if any, against Perfect Home, LLC.

B. The Objection is withdrawn, without prejudice, on the terms and conditions set forth herein.

After the confirmation order was entered in the case of Panayiotis Diamantis, the plan trustee filed an objection to the claims of Puritan Lace, Bank of Greece, and Michalis Diamantis. An order, by agreement, was entered April 29, 2003 (BK Doc. 270/252) which provided in part:

4. With respect to the Claim of Puritan Lace Manufacturing Company, Inc. designated as Claim Eight; the claim of National Bank of Greece designated as Claim Nine and the claim of Michalis Diamantis designated as Claim Eleven, said Claims being potentially paid in full or reduced from proceeds received from the sale of the assets of Perfect Home, LLC, are hereby designated as Disputed Claims as defined by the Plan of Liquidation for Panayiotis Diamantis confirmed by this Court, pending final allowance upon liquidation of Perfect Home, LLC. All parties reserve all rights, claims and defenses with respect to final allowance of said claims.

5. Pursuant to Article 5E of the Confirmed Plan, no distribution shall be paid on account of a Disputed Claim until such time as the claim becomes an allowed claim subsequent to the final liquidation of Perfect Home, LLC.

Judge Caddell entered a final order in the Perfect Home case determining how the assets of Perfect Home were to be disbursed between Puritan Lace and Michalis Diamantis, who is now standing in the place of the Bank of Greece (Exhibit 1 to BK Doc. 331). The disbursement of Perfect Home's assets has been completed, and as indicated above, the current dispute is how the assets in the case of Panayiotis Diamantis should be disbursed.

CONCLUSIONS OF LAW CLAIM AS ALLEGED BY MICHALIS DIAMANTIS

Michalis Diamantis asserts that his distribution in the Panayiotis Diamantis case should begin with a claim of $556,048.45, the amount he paid to the Bank of Greece on February 22, 2002, as a result of his guaranty of the Bank of Greece debt. Panayiotis Diamantis filed his bankruptcy petition on January 21, 2000. "It is a well-settled principle of American bankruptcy law that in cases of ordinary bankruptcy, the accumulation of interest on claims against a bankrupt estate is suspended as of the date the petition is filed . . ." Nicholas v. U.S., 384 U.S. 678, 682 (1966). See also Securities and Exchange Commission v. Ambassador Church Finance/Development Group, Inc., 788 F.2d 1208 (6^th Cir. 1986), Addison v. Langston, 737 F.2d 1338 (5^th Cir. 1984), National Energy Gas Transmission, Incorporated v. Liberty Electric Power, LLC, 492 F.3d 297 (4^th Cir. 2007).

The claims filed by Panayiotis Diamantis on behalf of his father and/or the Bank of Greece reflect $606,515.51 due as of January 21, 2000. The Memorandum issued by Judge Caddell in the Puritan Lace case shows that the debt due the Bank of Greece was paid from $532,069.95 down to $390,184.67, for a total of $141,885.28 paid by Perfect Home to the Bank of Greece under the terms of the confirmation order. Judge Caddell's order further shows that the liquidation of the Perfect Home assets resulted in the Bank of Greece claim principal being further reduced by $283,278.34. Applying these post petition payments to the Bank of Greece claims, which are the basis of Michalis' claims in Panayiotis Diamantis' case, reduces the $606,515.51 claim to $181,351.89.

Judge Caddell's order further provided that the principal balance of the claim of Puritan Lace was reduced by $316,724.59 in the Perfect Home case, which therefore reduced its $2,202,780.00 claim in Panayiotis Diamantis' case to $1,886,055.41. This gives total claims to be paid in the Panayiotis Diamantis case in the amount of $2,067,407.30 of which Michalis Diamantis comprised 9% of the claims and Puritan Lace 91% of the claims. $965,899.00 is available for distribution. $86,930.91 would be due to be distributed to Michalis Diamantis. However, he has already received $92,123.00 and therefore has been overpaid by $5,192.09, rather than underpaid as he asserts.

TRUSTEE'S POSITION

The plan trustee computed the distributions due in the Panayiotis Diamantis case based upon the September 27, 2002, order which provided:

A. Claim number 11 filed by Michalis is allowed as a general unsecured claim in the amount of $367,299.62, without prejudice as to Michalis' rights, if any, against Perfect Home, LLC.

B. The Objection is withdrawn, without prejudice, on the terms and conditions set forth herein.

Puritan Lace had objected to the claims of Michalis Diamantis and the Bank of Greece asserting that there was no debt due in the case of Panayiotis Diamantis and in the alternative asking that the claims be estimated. As shown by Judge Caddell's order, payments on the Bank of Greece claim were made by Perfect Home under the terms of its plan until May of 2001. The parties settled the objection and submitted the September 27, 2002 order. The plan trustee asserts that $367,299.62 is the amount the claim was to be allowed for in the Panayiotis Diamantis case with reduction in this amount by any amounts paid in the Perfect Home case. The only amounts paid after September 27, 2002, was the principal payment of $283,278.34 upon the liquidation of Perfect Home. This would reduce the Michalis Diamantis claim to $84,021.28.

The plan trustee called Patrick Darby, an attorney for Puritan Lace, in support of his interpretation of the September 27, 2002 order. Mr. Darby testified that he represented Puritan Lace at the time the order was prepared and that the disputed claim was to be allowed in the amount of $367,299.62 and was to be reduced by any payments received from distribution in the Perfect Home case. This is how the plan trustee computed the disbursement.

Michalis Diamantis asserts that the post confirmation order entered April 29, 2003, in effect, left open for future determination the amount of the Michalis Diamantis claim.

February 20, 2003, Michalis Diamantis had filed a motion to clarify the terms of the confirmation order (BK Doc. 251/233). In his motion he alleged that the trustee had agreed to make no distributions under the Panayiotis Diamantis case until the liquidation of Perfect Home was completed. March 3, 2003, the plan trustee responded to the motion (BK Doc. 256/238) and in paragraph one of his response stated "The Trustee has stipulated on the record that no distributions would be made to creditors of Panayiotis Diamantis who were also creditors of Perfect Home, LLC until such time as all of the assets of Perfect Home, LLC have been liquidated and all allowed claims of creditors of said company had been paid on a pro rata basis."

The same date that the trustee filed his response to the motion to clarify, he filed his objection to the claims of Puritan Lace, Bank of Greece, and Michalis Diamantis. An order, by agreement, was entered April 29, 2003 (BK Doc. 270/252) which provided in part:

4. With respect to the Claim of Puritan Lace Manufacturing Company, Inc. designated as Claim Eight; the claim of National Bank of Greece designated as Claim Nine and the claim of Michalis Diamantis designated as Claim Eleven, said Claims being potentially paid in full or reduced from proceeds received from the sale of the assets of Perfect Home, LLC, are hereby designated as Disputed Claims as defined by the Plan of Liquidation for Panayiotis Diamantis confirmed by this Court, pending final allowance upon liquidation of Perfect Home, LLC. All parties reserve all rights, claims and defenses with respect to final allowance of said claims.

5. Pursuant to Article 5E of the Confirmed Plan, no distribution shall be paid on account of a Disputed Claim until such time as the claim becomes an allowed claim subsequent to the final liquidation of Perfect Home, LLC. (emphasis added)

It was the plan trustee's testimony that designation of these claims as "disputed" insured that he was under no obligation under the terms of the plan to make any distribution until after Perfect Home had been liquidated and claims paid in the Perfect Home case. There was nothing in the April 29, 2003, order suggesting that the prior order setting the amount of the claim was set aside or amended in any manner.

The court rejects Michalis Diamantis' assertion that the April 29, 2003, order meant that the amount of the claim of Michalis Diamantis was to be recomputed from scratch and the September 27, 2002, order was to be ignored. Even assuming his interpretation of the April 29, 2003, order to be correct, which the court does not accept, he was overpaid rather than underpaid as asserted in his objection.

CONCLUSION

The court finds that the plan trustee's computation of disbursements to be made in the case of Panayiotis Diamantis are correct and that his Verified Motion By Plan Trustee For Approval Of Final Report, Closing Of Case, Assignment Of Rights, Approval Of Final Payment Of Professional Fees, Expenses And Costs And Discharge Of Plan Trustee is due to be GRANTED. The Objection of Michalis Diamantis is OVERRULED.

An order consistent with these findings pursuant to Federal Rules of Bankruptcy Procedure 7052 will be entered separately.

DONE and ORDERED.