In re: ALFRED J.R. VILLALOBOS

FILED
MAR 10 2014
1
SUSAN M. SPRAUL, CLERK
2 U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT

3 UNITED STATES BANKRUPTCY APPELLATE PANEL
4 OF THE NINTH CIRCUIT
5 In re: ) BAP No. NV-13-1179-JuKiTa
)
6 ALFRED J.R. VILLALOBOS, ) Bk. Nos. 10-52248
et al. ) 10-52249
7 ) 10-52251
Debtors. ) 10-52252
8 ______________________________) (jointly administered)
)
9 UNITED STATES OF AMERICA, )
)
10 Appellant, )
)
11 v. ) M E M O R A N D U M*
)
12 ALFRED J.R. VILLALOBOS; )
ARVCO CAPITAL RESEARCH, LLC; )
13 ARVCO FINANCIAL VENTURES, LLC;)
ARVCO ART, INC. )
14 )
Appellees. )
15 ______________________________)
16 Argued and Submitted on January 24, 2014
at Las Vegas, Nevada
17
Filed - March 10, 2014
18
Appeal from the United States Bankruptcy Court
19 for the District of Nevada
20 Honorable Gregg W. Zive, Bankruptcy Judge, Presiding
_________________________
21
Appearances: Virginia Cronan Lowe, Esq., U.S. Department of
22 Justice, argued for appellant, United States of
America; Stephen R. Harris, Esq., Harris &
23 Petroni, LTD, argued for appellees, Alfred J.R.
Villalobos, Arvco Capital Research, LLC, Arvco
24 Financial Ventures, LLC, and Arvco Art, Inc.
_________________________
25
26 *
This disposition is not appropriate for publication.
27 Although it may be cited for whatever persuasive value it may
have (see Fed. R. App. P. 32.1), it has no precedential value.
28 See 9th Cir. BAP Rule 8013-1.

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 1 Before: JURY, KIRSCHER, and TAYLOR, Bankruptcy Judges.
2 Alfred J.R. Villalobos (Villalobos) filed a chapter 111
3 petition on behalf of himself and Arvco Capital Research, LLC
4 (ACR), Arvco Financial Ventures, LLC (AFV), and Arvco Art, Inc.
5 (ART) (collectively, Debtors). Subsequently, over the
6 objections of the United States of America, on behalf of its
7 agency, the Internal Revenue Service (IRS), the bankruptcy court
8 confirmed the jointly administered2 Debtors’ liquidation plan
9 and directed Debtors to prepare detailed findings of fact and
10 conclusions of law (FFCL) and submit an order confirming the
11 plan.
12 Over nine months later, Debtors lodged the FFCL and
13 transmitted a modified plan to interested parties. Due to the
14 modifications in the plan and renewed objections by IRS and
15 others, the bankruptcy court held a second confirmation hearing
16 and entered an order confirming the Corrected and Revised First
17 Amended Jointly Administered Debtors’ Plan of Liquidation, as
18 Amended (Plan). IRS appeals from this order.
19 On appeal, IRS alleges that the bankruptcy court erred in
20 finding that the Plan complied with § 1129(a)(9)(C), (11), and
21 (15). We agree. Accordingly, we REVERSE the order confirming
22 the Plan on these grounds and REMAND for further proceedings in
23
24 1
Unless otherwise indicated, all chapter and section
references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
25
“Rule” references are to the Federal Rules of Bankruptcy
26 Procedure. “LR” references are to the Bankruptcy Local Rules for
the District of Nevada.
27
2
The plan was proposed by the jointly administered Debtors.
28 The plan provided for substantive consolidation of the estates.

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 1 accord with this memorandum.
2 I. FACTS
3 A. Debtors’ Business And Events Leading to Bankruptcy
4 Villalobos was an investment banker for the last thirty
5 years. He was the managing member and held a ninety-nine
6 percent equity interest in ACR and AFV (collectively, ARVCO).
7 Villalobos operated ARVCO as a placement agent that solicited
8 investments by public pension funds in private equity funds.
9 In May 2010, the State of California filed a civil law
10 enforcement action in Los Angeles County Superior Court against
11 Villalobos, ACR, and Federico Buenrostro, alleging a fraudulent
12 scheme to obtain placement agent commissions by corrupting the
13 investment decision-making process of the California Public
14 Employees’ Retirement System (“CalPERS”) (State Court Action).
15 After the filing, the State of California Attorney General’s
16 office (AG) sought and obtained a temporary restraining order
17 from the superior court, freezing all assets under Villalobos’
18 control (including all bank accounts, real property, vehicles,
19 and art work) and placing them in the custody of a receiver.
20 The asset freeze extended to ACR business accounts, Villalobos’
21 personal accounts, AFV’s employee benefit accounts, educational
22 trusts set up for Villalobos’ grandchildren, and the artwork of
23 ART.3 On May 28, 2010, the superior court entered a permanent
24 injunction and confirmed the receiver’s appointment.
25
26
3
27 ART is a Nevada corporation and is 100% owned by
Villalobos. Villalobos serves as president and director. ART is
28 a holding company for various works of art.

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 1 B. Bankruptcy Proceedings
2 A few weeks later, on June 9, 2010, Villalobos filed a
3 chapter 11 petition for himself, ACR, AFV and ART.4 On the same
4 day, Debtors sought an order under § 543(b) directing the
5 receiver to turn over Debtors’ property under his control. By
6 stipulation, the receiver turned over to Debtors all of their
7 assets and property within his custody.
8 Villalobos’ schedules showed real and personal property
9 valued at $63 million. In amended Schedule B, Villalobos
10 listed, among other personal property assets, causes of action
11 against CalPERS valued at $10 million.5 Villalobos scheduled
12 liabilities of approximately $14 million, of which $7.2 million
13 was secured against six of his real properties, and $6.5 million
14 was in unsecured non-priority claims.
15 In its amended proof of claim filed on October 24, 2011,
16 IRS asserted an unsecured priority tax claim against Villalobos
17 for $2,654,572.22 and an unsecured general tax claim for
18 $112,392.77.
19 1. IRS’ Motions To Dismiss Or Convert
20 In January 2011, IRS filed its first motion to dismiss or
21 convert Debtors’ cases, alleging there was a substantial or
22 continuing loss to or diminution of the estates and the absence
23 of a reasonable likelihood of rehabilitation, gross
24 mismanagement of the estates, and failure to timely file
25
26 4
In July 2010, the bankruptcy court entered an order for
27 the joint administration of all four debtors.
28 5
This asset was also listed in AFV’s and ACR’s Schedule B.

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 1 required reports. The parties eventually stipulated to time
2 frames in which IRS could update its motion and Villalobos and
3 others could respond. The stipulation in effect restarted the
4 pleading process relative to the initial motion to convert.
5 In May 2011, IRS renewed and supplemented its motion to
6 dismiss or convert (Amended Motion). After a hearing, the
7 bankruptcy court entered an order on June 22, 2011, denying IRS’
8 initial motion and Amended Motion to dismiss or convert without
9 prejudice. In the June 22, 2011 order, the court also
10 (1) directed Debtors to file a plan and disclosure statement by
11 September 2, 2011; (2) set a disclosure statement hearing for
12 September 30, 2011; (3) directed counsel for the unsecured
13 creditors’ committee (Committee) to hold all proceeds from the
14 sale of nonexempt assets; and (4) limited Villalobos’
15 expenditures to $10,000 per month for personal expenditures and
16 $10,000 per month for business expenditures, both commencing
17 June 1, 2011.6 The bankruptcy court continued IRS’ motions to
18 dismiss or convert to the same time as the confirmation hearing.
19 2. The Liquidation Plan
20 Pursuant to the bankruptcy court’s June 22, 2011 order,
21 Debtors filed a chapter 11 plan and a supporting disclosure
22
23
6
Earlier the bankruptcy court had approved an Order, Nunc
24 Pro Tunc, Approving Payment of Ordinary Course Expenses, which
allowed Villalobos proposed expenditures of $128,052 per month.
25 IRS appealed that order to this court, which reversed and
26 remanded the matter because the bankruptcy court had failed to
provide findings of fact and conclusions of law to support
27 Villalobos’ budget under any test. See United States v.
Villalobos, et al. (In re Villalobos), 2011 WL 4485793 (9th Cir.
28 BAP 2011).

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 1 statement on September 2, 2011. Since then, Debtors filed
2 numerous amendments to their disclosure statement and plan. We
3 do not mention them all in this appeal.
4 On October 6, 2011, Debtors filed a First Amended Jointly
5 Administered Debtors’ Disclosure Statement. The next day,
6 Debtors filed an Amended Chapter 11 Plan. Debtors’ plan was a
7 five-year plan of liquidation. To pay secured and unsecured
8 creditors, Debtors proposed to collect over $9 million dollars
9 in accounts receivable held by ACR and to sell various nonexempt
10 real and personal property (Available Assets). Debtors also
11 proposed to devote fifty percent of the net proceeds after
12 collection fees and costs, if any, of Debtors’ claim against
13 CalPERS, which Villalobos valued at $10 million to the payment
14 of unsecured creditors. The plan, however, allowed Villalobos
15 to retain the remaining fifty percent of such proceeds as well
16 as certain exempt assets and did not require him to contribute
17 disposable income to the plan. Debtors would implement the plan
18 by creating a liquidating trust that would be administered by a
19 liquidating trustee and a subsequent transfer of the Available
20 Assets into the trust. Numerous parties, including IRS, filed
21 objections to this version of the disclosure statement and plan.
22 To address the objections, on October 21, 2011, Debtors
23 filed a Second Amended Jointly Administered Debtors’ Disclosure
24 Statement and Amended Chapter 11 Plan.
25 On November 15, 2011, the bankruptcy court approved the
26 Second Amended Jointly Administered Debtors’ Disclosure
27 Statement. One day later, Debtors filed an amendment to their
28 disclosure statement and plan.

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 1 On November 17, 2011, Debtors noticed a confirmation
2 hearing scheduled for December 29, 2011. The plan documents
3 that were noticed for solicitation, balloting, and objections
4 consisted of the plan and disclosure statement filed on
5 October 21, 2011 and the amendment to the plan and related
6 amendment to the disclosure statement filed on November 16,
7 2011. A copy of the liquidating trust was not included with the
8 plan or the solicitation package.
9 IRS, the State of California and the Office of the United
10 States Trustee objected to the confirmation of this version of
11 the plan. IRS complained that although the plan referenced a
12 liquidating trust, there was no document provided concerning the
13 operation and duration of the trust. IRS further argued that
14 the plan violated numerous subsections of § 1129.
15 Debtors filed the proposed liquidating trust agreement one
16 week prior to the confirmation hearing.
17 On December 29 and 30, 2011, the bankruptcy court held the
18 confirmation hearing. A number of objections to the plan were
19 addressed; some were addressed by a further amendment to the
20 plan filed just prior to the second day of the hearing. Other
21 objections were to be resolved by further modifications to the
22 plan, and other objections (certain objections made by the IRS)
23 were overruled.
24 During the December 29, 2011 hearing, the bankruptcy court
25 allowed oral modifications to the plan in connection with IRS’
26 objection under § 1129(a)(9)(C). The court also did not allow
27 the plan to state that § 1115 was “deemed satisfied” when
28 Villalobos had not committed his future income. At the end of

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 1 the hearing, the bankruptcy court stated that it found no
2 liquidation analysis or evidence on the feasibility of the plan.
3 The court continued the hearing until the next day so that
4 Debtors could address these issues.
5 At the end of the second day, the bankruptcy court set
6 forth its FFCL on the record and found that the requirements for
7 confirmation under § 1129 were met. Based on a declaration
8 submitted by Jeffrey Hartman, counsel for the Committee and the
9 proposed liquidating trustee, the bankruptcy court found the
10 plan met the requirements under § 1129(a)(9)(C) and (11). The
11 court overruled IRS’ remaining objections and directed Debtors
12 to jointly prepare detailed FFCL consistent with the oral
13 findings and conclusions placed on the record and to submit an
14 order confirming the plan in accordance with LR 9021.
15 3. The Delay In Entry of the FFCL and Order Confirming
The Plan
16
17 Pursuant to LR 9021, Debtors were required to prepare
18 proposed FFCL and an order and transmit the documents to all
19 counsel for approval or disapproval as to form. Under the rule,
20 Debtors were required to file the proposed documents with the
21 court (lodged) within twenty-eight days after the hearing that
22 concluded on December 30, 2011. See LR 9021(a)(4). If the
23 proposed documents were not lodged with the court within
24 thirty-five days, “the motion or other matter will be deemed
25 withdrawn,” unless otherwise ordered. LR 9021(a)(5).
26 Debtors did not lodge the proposed FFCL with the bankruptcy
27 court until October 12, 2012. The FFCL that were lodged stated
28

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 1 that Debtors’ estates would be substantively consolidated7 and
2 that the substantively consolidated estates’ assets and
3 liabilities would be combined and transferred into the
4 liquidating trust on or before the Effective Date of the Plan.
5 The FFCL also set forth several provisions to implement the
6 substantive consolidation.
7 In addition, the FFCL addressed payment for IRS’ unsecured
8 priority claim. The liquidating trust would disburse quarterly
9 payments of $25,000 to IRS commencing ninety days following the
10 Effective Date and continuing each quarter until March 9, 2015.
11 On June 9, 2015, Debtors proposed to pay IRS’ prepetition
12 priority tax claim in full from the assets available in the
13 liquidating trust. If assets were not available in the
14 liquidating trust for payment, IRS would receive payment from
15 Villalobos’ fifty percent net recovery from litigation against
16 CalPERS. In the event of default, IRS could pursue Villalobos,
17 but not the liquidating trust, for payment as authorized under
18 the Internal Revenue Code. The payment of the quarterly $25,000
19 was conditioned on existing allowable administrative claimants
20 consenting to the payment. All administrative claimants had
21 consented with the exception of the state court receiver and his
22 professionals.
23 On the same day that they lodged the FFCL, Debtors
24 transmitted a Revised First Amended Jointly Administered
25 Debtors’ Plan of Liquidation and the liquidating trust agreement
26
7
27 The original plan also had called for substantive
consolidation. That provision of the plan was never materially
28 challenged nor discussed at the confirmation hearing.

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 1 to counsel. Debtors did not lodge the proposed plan
2 confirmation documents with the bankruptcy court until
3 October 18, 2012.
4 Pursuant to LR 9021(b)(2)(A), IRS filed its statement of
5 objection to the proposed FFCL. In addition to its objections,
6 and as an alternative to the proposed documents, IRS requested
7 the bankruptcy court to simply enter an order that confirmation
8 of the plan was deemed withdrawn pursuant to LR 9021(a)(5).
9 Under LR 9021(b)(2)(A), Debtors had five business days from
10 October 18, 2012, to file responses to the statements of
11 objections filed by IRS and AG. Debtors did not file a response
12 until six weeks later on November 29, 2012.
13 Due to Debtors’ failure to comply with LR 9021 and lodge
14 the FFCL and a proposed confirmation order with the bankruptcy
15 court, IRS filed a third motion to dismiss or convert Debtors’
16 cases on September 20, 2012. In addition to the grounds
17 asserted in IRS’ earlier motions, which were incorporated by
18 reference, the third motion cited Debtors’ inability to confirm
19 their chapter 11 plan and the passage of nine months since the
20 December 2011 confirmation hearing.
21 To address the LR 9021 matters, the bankruptcy court set a
22 status hearing for December 4, 2012, the same time as a
23 continued hearing on IRS’ renewed motion to dismiss or convert.
24 At the December 4, 2012 hearing, the bankruptcy court noted that
25 revised documents had been sent to the court just minutes before
26 the hearing and that the confirmation documents submitted were
27 markedly different from what was discussed at the hearings
28 conducted on December 29 and 30, 2011. After a lengthy

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 1 discussion, the bankruptcy court ordered Debtors to file their
2 proposed confirmation documents with the court and notice a
3 hearing. The court opined that it was relatively satisfied that
4 Debtors did not have to re-solicit votes because the proposed
5 amendments did not adversely affect any other creditor.
6 IRS was given until January 4, 2013, to file a new
7 statement of objections to the filed documents. In effect, the
8 court thereby initiated a new LR 9021 procedure.
9 On December 5, 2012, Debtors filed their Corrected and
10 Revised First Amended Jointly Administered Debtors’ Plan of
11 Liquidation (Redlined) and their proposed FFCL in support of
12 Order Confirming Corrected and Revised First Amended Jointly
13 Administered Debtors’ Plan of Liquidation. Thereafter, IRS
14 filed its statement of objections to the December 5, 2012
15 confirmation documents, along with a supporting declaration.
16 Among other things, IRS objected to the procedure whereby
17 Debtors used the LR 9021 procedures to effect a modification of
18 their original plan rather than complying with the provisions of
19 the Bankruptcy Code. Additionally, without waiving its
20 objection as to procedure, the IRS set forth objections to the
21 recently revised plan and proposed FFCL. Subsequently, Debtors
22 responded, agreeing to some of the IRS’ objections.
23 On February 4, 2013, Debtors filed another Corrected and
24 Revised First Amended Jointly Administered Debtors’ Plan of
25 Liquidation.
26 Meanwhile, on March 14, 2013, an indictment was unsealed in
27 a criminal case pending in the United States District Court for
28 the Northern District of California (Case No. CR 013-169)

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 1 against Villalobos. The indictment charges Villalobos with
2 multiple charges, among other things, that Villalobos created
3 false investor disclosure letters involving CalPERS and lied to
4 federal authorities during their investigations.8
5 On March 19, 2013, the bankruptcy court held a hearing to
6 consider the LR 9021 pleadings and IRS’ renewed motion to
7 dismiss or convert. The court directed certain changes be made
8 and then ruled, again, that the plan would be confirmed and that
9 IRS’ renewed motion to dismiss or convert would be denied, as
10 mooted by confirmation of the plan.
11 Three days later, Debtors filed the Plan at issue in this
12 appeal apparently to make certain modifications discussed at the
13 March 19, 2013 hearing. On April 1, 2013, the bankruptcy court
14 entered the FFCL in support of the order confirming the Plan and
15 the corresponding order. IRS filed a timely notice of appeal.9
16 Thereafter, IRS filed motions for a stay pending appeal, in
17 the bankruptcy court and this court, which were denied.
18 C. Implementation of the Plan
19 On the Effective Date, May 1, 2013, Debtors’ estates were
20 substantively consolidated and the substantively consolidated
21 assets and liabilities were combined and transferred into the
22 liquidating trust. As a result, the liquidating trustee,
23 Mr. Hartman, assumed the management of all the property to be
24 liquidated under the Plan and commenced distributions.
25
8
26 This recent development directly impacted a valuation
analysis of the litigation between Villalobos and CalPERS.
27
9
On April 15, 2013, IRS filed an amended notice of appeal.
28 It is unclear why an amendment was needed.

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 1 II. JURISDICTION
2 Because the Plan has been confirmed, distributions
3 commenced, properties sold, and there is no stay pending appeal
4 of the confirmation order, the question arises whether this
5 appeal is moot and subject to dismissal. We must dismiss if
6 constitutionally moot, Drummond v. Urban (In re Urban), 375 B.R.
7 882, 887 (9th Cir. BAP 2007), and we may dismiss if equitably
8 moot. Clear Channel Outdoor, Inc. v. Knupfer (In re PW, LLC),
9 391 B.R. 25, 33–35 (9th Cir. BAP 2008). For the reasons below,
10 we conclude that this appeal is not constitutionally moot and,
11 in the exercise of our discretion, we do not dismiss this appeal
12 as equitably moot because we can grant IRS effective relief on
13 some of its claims without unraveling the steps taken in
14 reliance on the confirmed Plan. To the extent Debtors’ counsel
15 asserted at oral argument that this appeal may be characterized
16 as “anticipatorily moot”, we reject that contention.
17 The bankruptcy court had jurisdiction over this proceeding
18 under 28 U.S.C. §§ 1334 and 157(b)(2)(L). We have jurisdiction
19 under 28 U.S.C. § 158.
20 III. ISSUES
21 A. Whether IRS’ appeal of the confirmation order is moot;
22 and
23 B. Whether the bankruptcy court abused its discretion in
24 confirming the Plan.
25 IV. STANDARDS OF REVIEW
26 While we review a bankruptcy court’s decision to confirm a
27 chapter 11 plan for an abuse of discretion, its determination
28 that the plan satisfies the confirmation requirements

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 1 necessarily requires the bankruptcy court to make factual
2 findings, which are reviewed under a clear error standard.
3 Acequia, Inc. v. Clinton (In re Acequia, Inc.), 787 F.2d 1352,
4 1358 (9th Cir. 1986); Computer Task Group, Inc. v. Brotby
5 (In re Brotby), 303 B.R. 177, 184 (9th Cir. BAP 2003). Clear
6 error exists when the reviewing court is left with a definite
7 and firm conviction that a mistake has been committed.
8 In re Brotby, 303 B.R. at 184.
9 In applying an abuse of discretion test, we first
10 “determine de novo whether the [bankruptcy] court identified the
11 correct legal rule to apply to the relief requested.” United
12 States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009)
13 (en banc). If the bankruptcy court identified the correct legal
14 rule, we then determine whether its “application of the correct
15 legal standard [to the facts] was (1) illogical, (2)implausible,
16 or (3) without support in inferences that may be drawn from the
17 facts in the record.” Id. If the bankruptcy court did not
18 identify the correct legal rule, or its application of the
19 correct legal standard to the facts was illogical, implausible,
20 or without support in inferences that may be drawn from the
21 facts in the record, then the bankruptcy court has abused its
22 discretion. Id.
23 V. DISCUSSION
24 A. Mootness
25 We have an independent obligation to consider mootness sua
26 sponte, Felton Pilate v. Burrell (In re Burrell), 415 F.3d 994,
27 997 (9th Cir. 2005), because we lack jurisdiction, Urban,
28 375 B.R. at 887, or it may be the case that any remedy may be

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 1 unjust given the change in position of third parties, Clear
2 Channel, 391 B.R. at 33–35. “The test for mootness of an appeal
3 is whether the appellate court can give the appellant any
4 effective relief in the event that it decides the matter on the
5 merits in his favor. If it can grant such relief, the matter is
6 not moot.” In re Burrell, 415 F.3d at 998. We conclude that
7 this appeal is not constitutionally moot.
8 The equitable mootness question requires careful analysis
9 due to the Ninth Circuit’s “comprehensive test” for determining
10 whether an appeal is equitably moot. This analysis requires
11 consideration of: (1) whether a stay was sought; (2) whether
12 substantial consummation of the Plan has occurred; (3) the
13 effect a remedy may have on third parties not before the court;
14 and (4) whether the bankruptcy court can fashion effective and
15 equitable relief without completely knocking the props out from
16 under the plan and thereby creating an uncontrollable situation
17 for the bankruptcy court. Motor Vehicle Cas. Co. v. Thorpe
18 Insulation Co. (In re Thorpe Insulation Co.), 677 F.3d 869, 881
19 (9th Cir. 2012). Here, the circumstances are that of a
20 chapter 11 liquidation and, therefore, we must apply the above
21 factors with that liquidation context in mind. Furthermore, IRS
22 appeals only certain aspects of the confirmation order.
23 Consequently, we consider whether we can fashion effective and
24 equitable relief with respect to each of IRS’ claims.
25 With respect to the first factor, IRS diligently sought a
26 stay pending appeal from the bankruptcy court and this court,
27 both of which were denied. IRS’ failure to obtain a stay is not
28 dispositive. Id. Considering the second factor, the Available

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 1 Assets have been transferred to the liquidating trust for
2 disposition and distributions have commenced to IRS and others
3 in compliance with the Plan,10 rendering the Plan substantially
4 consummated. See § 1102(2).
5 Because the Plan has been substantially consummated, we
6 conclude that equitable mootness forecloses IRS’ challenges to
7 the procedural deficiencies in connection with confirmation of
8 the Plan. Specifically, IRS contends that the bankruptcy court
9 erred by not enforcing the formal requirements for plan
10 modification under § 1127 in violation of § 1129(a)(2). In
11 support, IRS raises a number of points, most notably that
12 sixteen months passed between the time the plan and disclosure
13 statement were noticed to creditors for disclosure, balloting,
14 and objections, the noticed plan did not contain a copy of the
15 liquidating trust and the modifications made to the plan after
16 the notice were material.11 IRS does not say which modifications
17 it considers material. Nonetheless, we conclude that reversal
18 of the confirmation order on this point would have an adverse
19 effect on the Plan and third parties who are not before us.
20 Placing the parties back to square one would require the
21
22 10
Shortly after confirmation, IRS received payments for the
23 four quarters of 2012 and first two quarters of 2013.
11
24 We are not convinced by Debtors’ argument that IRS did
not preserve this issue for appeal. IRS raised the issue in its
25 objection to confirmation of First Amended Jointly Administered
26 Debtors’ Plan of Liquidation, As Amended. In addition, the
bankruptcy court and IRS’ counsel discussed the issue at the
27 December 30, 2011 confirmation hearing. IRS also raised the
issue in many of its other pleadings. Thus, the issue was
28 sufficiently raised and preserved for appeal.

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 1 complete unraveling of the Plan and create an uncontrollable
2 situation for the bankruptcy court. We thus conclude that it
3 would be inequitable to upset the Plan on this ground. We reach
4 the same conclusion with respect to IRS’ contention that
5 Debtors’ failure to timely file monthly operating reports is
6 grounds for reversal of the confirmation order under
7 § 1129(a)(2). Accordingly, we do not address the merits of IRS’
8 appeal on § 1129(a)(2) grounds.
9 However, despite substantial consummation of the Plan, we
10 conclude that it would not be inequitable to consider IRS’
11 remaining claims under § 1129(a)(9), (11) and (15). Even if
12 this court adopted IRS’ positions under each subsection, the
13 liquidation of Debtors’ assets would not have to be modified and
14 any distributions previously made to creditors would not be
15 reduced. Further, § 1127(e) states that “[i]f the debtor is an
16 individual, the plan may be modified at any time after
17 confirmation . . . before completion of payments under the plan,
18 whether or not the plan has been substantially consummated
19 . . . .” Moreover, requiring Villalobos to contribute
20 disposable income in the future is contemplated by the Plan
21 under Article VIII, ¶ 3H. Finally, on remand, if there is
22 sufficient evidence to show that the Plan is feasible and that
23 Debtors can meet their obligation to pay IRS’ priority tax claim
24 within the five year period under § 1129(a)(9)(C), the Plan
25 would survive intact. Accordingly, we address the merits of
26 IRS’ challenges to the confirmation order under § 1129(a)(9),
27 (11) and (15).
28

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 1 1. Anticipatory Mootness
2 At oral argument, Debtors’ counsel asserted in general
3 terms that this appeal may possibly become moot in the future if
4 the Plan is reversed and the cases subsequently converted to
5 chapter 7. Presumably, the argument goes that because the
6 assets have vested in the liquidating trust and there is no
7 longer a chapter 11 estate, a subsequent conversion would not
8 vest trust property in the chapter 7 estate.12 Consequently, any
9 decision by us might make this appeal moot because the chapter 7
10 trustee would not have authority to liquidate the assets that
11 are now held in trust. However, what affect a Plan reversal
12 will have is only speculative. As it stands, effective relief
13 is still available. Accordingly, we need not “dismiss a live
14 controversy as moot merely because it may become moot in the
15 near future.” Hunt v. Imperial Merchant Servs., Inc., 560 F.3d
16 1137 (9th Cir. 2009) (declining to dismiss a case that might be
17 considered “anticipatorily moot” under the doctrine of
18 prudential mootness); see also Campbell v. Wood, 18 F.3d 662,
19 680 (9th Cir. 1994) (“Mootness is caused by an act, not by the
20 apprehension of a potential act.”).
21 Moreover, application of controlling Ninth Circuit law to
22 these facts leads us to conclude that conversion of the
23 chapter 11 cases would revest the assets held by the liquidating
24 trust in the chapter 7 estate. We look at “two plan components
25
12
26 There is no question that § 1141(b) — which states that
upon confirmation of a plan, all property of the estate revests
27 in the debtor — does not apply in this case. Here, the Plan
plainly provides that title to the non-exempt assets would vest
28 in the liquidating trust.

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 1 to determine whether an asset revests in a chapter 7 estate
2 post-conversion: an explicit provision regarding the
3 distribution of future proceeds of an asset to creditors, and
4 the retention of broad powers in the bankruptcy court to oversee
5 implementation of the plan.” Captain Blythers, Inc. v. Thompson
6 (In re Captain Blythers, Inc.), 311 B.R. 530, 539 (9th Cir. BAP
7 2004) (citing Pioneer Liquidating Corp. v. U.S. Trustee
8 (In re Consol. Pioneer Mortg. Entities), 264 F.3d 803, 807 (9th
9 Cir. 2001)).
10 Here, neither the Plan nor the Liquidating Trust Agreement
11 say anything about what happens to the assets in the liquidating
12 trust upon conversion to chapter 7. However, the Plan contains
13 explicit provisions regarding distribution of the liquidation
14 proceeds to Debtors’ creditors. The Plan states that Debtors’
15 non-exempt assets, claims and liabilities were to be transferred
16 to a liquidating trust and that the liquidating trustee would
17 administer those assets through the operative trust agreement
18 for the benefit of Debtors’ creditors. See Plan at p. 2:19-24.
19 The Plan further provides that it will be executed and
20 implemented through the transfer to the liquidating trust of all
21 of “Debtors’ assets . . . in an amount sufficient to pay [ ]
22 Debtors’ allowed secured and unsecured creditors’ claims over
23 the life of the Liquidating Trust . . . .” See Plan, Art. VIII,
24 ¶ 1 at pp. 36-37. Finally, the Plan states that the liquidating
25 trustee “shall be responsible for making the payments
26 contemplated in the Liquidation Plan, collecting money intended
27 for distribution to claimants, and transmitting it to them.”
28 See Plan, Art. IX, ¶ 1 at p. 45. Collectively, the only

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 1 plausible inference from these provisions is that the
2 non-administered assets which remained in the liquidating trust
3 would revert to the chapter 7 estate so that they could be
4 liquidated and the proceeds distributed to creditors consistent
5 with Debtors’ intent under the Plan.
6 This result would also follow from the termination of the
7 liquidating trust. Although the Liquidating Trust Agreement
8 does not have a termination clause, in Article II, ¶ 3, the
9 agreement states that the liquidating trust’s “sole purpose is
10 to hold, liquidate, and distribute the Trust Assets in
11 accordance with the provisions of the Plan.” If Debtors’ cases
12 were converted, the trust would terminate since the purpose of
13 the trust would become an impossibility. At this point, the
14 liquidating trustee would be compelled under § 542 to turn over
15 the remaining assets to the chapter 7 trustee.
16 Finally, Article XII of the Plan gives the bankruptcy court
17 broad powers to oversee the implementation of the Plan. The
18 bankruptcy court retained jurisdiction to determine the
19 allowability and payment of any claims, to determine disputes
20 over administration of the liquidating trust, and to facilitate
21 consummation of the Plan by entering any further necessary or
22 appropriate orders. See Plan, Article XII, ¶ 1,2,&3 at
23 pp. 47-48. These provisions easily satisfy the second
24 Consolidated Pioneer prong.
25 Thus, even if we reverse confirmation of the Plan and the
26 cases converted, the unadministered assets held by the
27 liquidating trust for the benefit of Debtors’ creditors would
28 become assets of the estate upon conversion to chapter 7. As

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 1 this appeal is not moot with respect to § 1129(a)(9), (11) and
2 (15), we now turn to the merits.
3 B. The Merits
4 Debtors had the burden of proving all the elements
5 governing plan confirmation. Leavitt v. Soto (In re Leavitt),
6 209 B.R. 935, 940 (9th Cir. BAP 1997), aff’d, 171 F.3d 1219 (9th
7 Cir. 1999). The requirements for plan confirmation are listed
8 in § 1129(a) (stating that the court shall confirm a plan only
9 if all the following requirements have been met).13
10 1. Whether the Plan Complies With § 1129(a)(7)(A)
11 Section 1129(a)(7)(A)14 requires that the present value of
12 distribution under the plan, which must account for the time
13
13
If the only condition not satisfied is the eighth
14 requirement, § 1129(a)(8), the plan must satisfy the “cramdown”
15 alternative to this condition found in § 1129(b). Cramdown
requires that the plan “does not discriminate unfairly” against
16 and “is fair and equitable” towards each impaired class that has
not accepted the Plan. Here, all voting impaired classes
17 accepted the plan, including the general unsecured creditors in
Class 5A. Thus, the bankruptcy court concluded that the
18
provisions of § 1129(b) were not at issue. Later, however, the
19 bankruptcy court issued a finding that the Plan was fair and
equitable under § 1129(b) “in case it was necessary.” The
20 cramdown provisions are not implicated in this appeal.
21 14
This section states:
22
With respect to each impaired class of claims or
23 interests—
(A) each holder of a claim or interest of such class—
24 (i) has accepted the plan; or
(ii) will receive or retain under the plan on
25 account of such claim or interest property of
26 a value, as of the effective date of the
plan, that is not less than the amount that
27 such holder would so receive or retain if the
debtor were liquidated under chapter 7 of
28 this title on such date.

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 1 value of money, be no less than a dividend upon liquidation in a
2 chapter 7. The bankruptcy court’s determination of the
3 creditors’ best interests under § 1129(a)(7)(A) is a finding of
4 fact reviewed under the clearly erroneous standard. See Farmers
5 Home Admin. v. Arnold & Baker Farms (In re Arnold & Baker
6 Farms), 177 B.R. 648, 653 (9th Cir. BAP 1994).
7 IRS contends that the bankruptcy court erred in finding
8 that the Plan satisfied the best interest of creditors test
9 under § 1129(a)(7)(A) because it improperly allows Villalobos to
10 retain property of the estate which would be available in a
11 chapter 7 case. In this regard, IRS asserts that Villalobos’
12 use of estate funds while IRS successfully appealed the nunc pro
13 tunc order which allowed Villalobos expenditures of $128,052 per
14 month could be recovered by a chapter 7 trustee under § 549.
15 IRS provides no authority in support of this position.
16 Next, IRS asserts that assets borrowed or withdrawn from
17 Villalobos’ defined benefit plan and/or what is called the
18 Voluntary Employee Benefits Association (VEBA) plan would become
19 property of Villalobos’ bankruptcy estate as after-acquired
20 property under § 1115. Therefore, according to IRS, those
21 assets would also be available to a chapter 7 trustee if the
22 case was converted. IRS points out that under the confirmed
23 Plan, Villalobos was allowed to retain those assets. Again, IRS
24 cites no case law to support its position.
25 In its reply brief, IRS takes a different approach, arguing
26 that additional assets have been discovered which would be
27 deemed property of the estate under chapter 7, but which are
28 excluded from the Plan because it designates only “Available

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 1 Assets” for liquidation. According to the IRS, the U.S. Trustee
2 has filed an adversary proceeding against Villalobos alleging
3 that he had failed to disclose numerous jewelry items and an
4 agreement to enter into a paid consultation position with an
5 entity named VCT.
6 In the end, we conclude that IRS’ various arguments offer
7 little if any analysis to assist the court in evaluating its
8 legal challenge to confirmation of the Plan on § 1129(a)(7)(A)
9 grounds. It is IRS’ burden on appeal to present the court with
10 legal arguments to support its claims. Indep. Towers of Wash.
11 v. Washington, 350 F.3d 925, 929 (9th Cir. 2003) (“Our circuit
12 has repeatedly admonished that we cannot manufacture arguments
13 [for a party] . . . . Rather, we review only issues which are
14 argued specifically and distinctly . . . .”). If an argument is
15 not properly argued and explained, the argument is waived. Id.
16 at 929–30 (holding that a party’s argument was waived because
17 “[i]nstead of making legal arguments,” the party simply made a
18 “bold assertion” of error, with “little if any analysis to
19 assist the court in evaluating its legal challenge”); Hibbs v.
20 Dep’t of Human Res., 273 F.3d 844, 873 n. 34 (9th Cir. 2001)
21 (finding that an assertion of error was “too undeveloped to be
22 capable of assessment” and thus waived). Moreover, we have no
23 practical reason to attempt to analyze IRS’ undeveloped
24 arguments when reversal on § 1129(a)(7)(A) grounds would provide
25 only superfluous relief due to our reversal of confirmation on
26 other grounds.
27 2. Whether the Plan Complied With § 1129(a)(9)(A)
28 Section 1129(a)(9)(A) requires that a plan provide that

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 1 administrative claims will be paid in full, in cash on the
2 effective date of the plan. The exception is when “the holder
3 of a particular claim has agreed to a different treatment of
4 such claims.” Here, the Plan provides that:
5 With respect to the allowed administrative claimants
and the Code requirement that they be paid on or
6 before the Effective Date unless they consent to some
type of alternative treatment, all allowed
7 administrative claimants have agreed to be paid on a
pro rata basis as funds become available from the
8 Liquidating Trust, except the Allowed Administrative
Claims of the Receiver and his professionals, and that
9 they will not insist on payment in full as of the
Effective Date of the Liquidation Plan.
10
11 IRS contends that the Plan does not comply with § 1129(a)(9)(A)
12 because it incorrectly provides that administrative claims will
13 be paid, not on the effective date of the Plan, but “as funds
14 become available from the Liquidating Trust.” IRS asserts that
15 while certain specific holders of administrative claims did
16 agree to that treatment, the Plan inaccurately defers payment of
17 all administrative claims. IRS further maintains that it did
18 not consent to deferred payment and the identity of all
19 administrative claim holders was not yet known since the bar
20 date for filing administrative claims was set after
21 confirmation.15
22 A reorganization plan resembles a consent decree and,
23 therefore, should be construed basically as a contract. Hillis
24 Motors, Inc. v. Haw. Auto. Dealers’ Ass’n, 997 F.2d 581, 588
25 (9th Cir. 1993). Under Nevada law, when the parties do not
26
15
27 At the time it raised this objection, the IRS stated it
did not know whether it had an administrative claim. As noted
28 below, it did not file one.

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 1 dispute the facts, the interpretation of a contract is a
2 question of law. Washoe Cnty. v. Transcontinental Ins.,
3 878 P.2d 306, 307–08 (Nev. 1994). We disagree with IRS’
4 interpretation of the language in the Plan. The language
5 employed does not explicitly take away any administrative
6 claimant’s right to payment in full absent consent. Rather, the
7 Plan states that the only administrative claimants which did not
8 consent to deferred payment were the state court receiver and
9 his attorneys and those claimants were paid in full upon
10 confirmation by the liquidating trustee as required under
11 § 1129(a)(9)(A). While there may have been some outstanding
12 administrative claims, no other creditor, including the IRS,
13 filed an administrative claim post-confirmation by the June 10,
14 2013 administrative claims bar date. Claimants who did not file
15 their claims by the administrative claims bar date are not
16 administrative claimants with allowed claims entitled to payment
17 in full on the Effective Date. Accordingly, we conclude that
18 the Plan’s alleged failure to comply with § 1129(a)(9)(A) is not
19 a basis for reversal.
20 3. Whether the Plan Complied With § 1129(a)(9)(C) and
(11)
21
22 Debtors’ obligation to pay IRS’ priority tax claim in
23 installments over a period ending not later than five years
24 after the date of the order for relief under § 1129(a)(9)(C) is
25 related to the feasibility requirement under § 1129(a)(11).
26 Under § 1129(a)(9)(C) and (11), Debtors must prove that they are
27 likely to meet their obligations under the Plan, including their
28 priority tax obligations. Generally, the feasibility test under

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 1 § 1129(a)(11) requires only that the debtor demonstrate that the
2 plan has a reasonable probability of success. Beal Bank USA v.
3 Windmill Durango Office, LLC (In re Windmill Durango Office,
4 LLC), 481 B.R. 51, 67 (9th Cir. BAP 2012). “[Feasibility] is a
5 finding of fact, which [a court] may not disturb on appeal
6 unless it is clearly erroneous.” In re Gavia, 24 B.R. 573, 574
7 (9th Cir. BAP 1982).
8 Debtors proposed a plan of liquidation which is permissible
9 under § 1129(a)(11). According to the Plan, Debtors will pay
10 the IRS’ priority tax claim by making $25,000 quarterly payments
11 from the liquidating trust with a balloon payment on June 9,
12 2015. If there are insufficient funds in the liquidating trust
13 on June 9, 2015, to make the balloon payment, as a back-up,
14 Villalobos will contribute his fifty percent net recovery in the
15 CalPERS litigation. IRS complains that there was no evidence to
16 show Debtors will be able to pay IRS’ unsecured priority claim
17 in full within the five-year period prescribed by
18 § 1129(a)(9)(C). We agree.
19 At the December 29, 2011 confirmation hearing, Debtors
20 presented no evidence on feasibility. The bankruptcy court
21 noted that the plan was to be funded by the conveyance of assets
22 to the liquidating trust and “there’s no evidence that there are
23 sufficient value to those assets to pay the unsecured
24 creditors.” The court further noted that the value of the
25 tangible assets going to the trust, based on sales already
26 approved, were not anything close to the values listed on
27 Debtors’ schedules. With respect to the various causes of
28 action to be pursued by the liquidating trust, the bankruptcy

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 1 court stated that those potential assets “are certainly not
2 subject to quantification at this time.” In response, Committee
3 counsel, Mr. Hartman, stated that “it would be a shot in the
4 dark to attempt to ascribe value.”
5 Nonetheless, the next day, Mr. Hartman submitted a
6 declaration which estimated a high liquidation value of the
7 Available Assets, including the litigation, at $24,888,500 and a
8 low value at $11,185,000. Taking Mr. Hartman’s declaration at
9 face value, the bankruptcy court estimated that the liquidation
10 value of the assets would be around $14 million, excluding
11 proceeds from CalPERS litigation and the recovery of the
12 accounts receivable. The court next estimated that perhaps
13 $5.5 million would be recovered with respect to the accounts
14 receivable. That would, in the bankruptcy court’s view, amount
15 to $19 million which would be enough to pay creditors in full,
16 “notwithstanding the CalPERS litigation.” Then, on top of that,
17 the bankruptcy court considered Villalobos’ contribution of his
18 fifty percent recovery from the CalPERS litigation as additional
19 “back-up” to make payment to IRS. On this basis, the bankruptcy
20 court found that the Plan was feasible under § 1129(a)(11) and
21 complied with § 1129(a)(9)(C).
22 While a relatively low threshold of proof will satisfy
23 § 1129(a)(11), there was no competent evidence in the record to
24 show that Debtors would be able to meet their obligations under
25 the Plan, including their priority tax obligations. Mr. Hartman
26 did not testify at the confirmation hearings in December 2011 or
27 at the March 19, 2013 hearing as to how he arrived at the
28 liquidation values nor did he provide evidence to support them.

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 1 In his declaration, Mr. Hartman stated that the “real property
2 values are difficult to anticipate.” With respect to the
3 personal property, Mr. Hartman declared that the “[e]stimated
4 recovery for other assets necessarily requires some amount of
5 speculation and in some cases will require litigation for
6 recovery.”
7 There were no appraisals attached to his declaration
8 showing the value of the real properties to be sold nor was
9 there evidence of comparable sales. Thus, it is impossible to
10 tell whether the real property could be sold at Hartman’s
11 estimated high value, the low value or somewhere in between.
12 Further, personal property included avoidance actions valued at
13 between $600,000 and $450,000, but nowhere is there an analysis
14 regarding that litigation. Nonetheless, the bankruptcy court
15 placed a value of $14 million on the assets, excluding the
16 accounts receivable and CalPERS litigation.
17 In addition, at least $7.3 million of the low liquidation
18 value was ascribed to collection of accounts receivable, but
19 nowhere was there information about the collectability of the
20 accounts receivable when those accounts were implicated in the
21 State Court Action.16 As noted by the U.S. Trustee at the
22 December 30, 2011 confirmation hearing, “[i]f nothing gets
23
16
24 In fact, the record reflects that collecting two major
accounts, Apollo Management and Aurora Resurgence Capital, is
25 problematic and intertwined with the State Court Action. Unless
26 Debtors prevail in that litigation, which no one attempts to
predict, these accounts are likely uncollectible. Therefore, to
27 the extent the bankruptcy court relied on collection of these
accounts in its feasibility analysis, such reliance was
28 unfounded.

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 1 collected from those, this plan is not feasible.” Nonetheless,
2 the bankruptcy court estimated $5.5 million would be recovered.
3 Moreover, Mr. Hartman ascribed a high value of $5 million
4 to Debtors’ litigation against CalPERS and a low value of 0.
5 However, he never provided an analysis of the litigation nor did
6 he discuss the probabilities of Villalobos’ success in light of
7 the criminal case against Villalobos. Yet, the bankruptcy court
8 accepted Villalobos’ contribution of his fifty percent recovery
9 from the CalPERS litigation as a “back-up” for payment to IRS.17
10 Finally, Mr. Hartman provided no information regarding the
11 timing for the sales or any information on when the litigation
12 against CalPERS would end.
13 In sum, the bankruptcy court’s account of the evidence on
14 feasibility and whether Debtors’ could pay the IRS’ unsecured
15 priority claim within the five year period under § 1129(a)(9)(C)
16 was not plausible in light of the record viewed in its entirety.
17 We thus conclude that the bankruptcy court clearly erred by
18 finding that the Plan met the requirements under § 1129(a)(9)(C)
19 and (11).
20 4. Whether the Plan Complied With § 1129(a)(15)(B)
21 The Plan provides in Article VIII, ¶ 3H:
22 Villalobos is entitled to retain his post-confirmation
disposable income and any after acquired property
23 through the duration of the Liquidation Plan, although
Villalobos must disclose his post confirmation
24 disposable income and after acquired property in a
written report to be filed with the Court every six
25
26 17
Debtors further asserted that performance under the Plan
27 was assured because in default the IRS could collect directly
from Villalobos and his exempt assets. A default provision is
28 not performance under the Plan and cannot support feasibility.

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 1 (6) months after the Confirmation Date. Further,
during the duration of the Liquidation Plan (i.e. five
2 (5) years from the Effective Date), any creditor . . .
may move to modify the Plan pursuant to § 1127 to
3 request that after acquired property or post
confirmation disposable income may be used to
4 implement and consummate the Debtors’ Liquidation
Plan.
5
6 Section 1129(a)(15) sets forth the burden of proof an
7 individual debtor must meet to obtain confirmation of a plan
8 when an allowed unsecured claim objects to confirmation.
9 Because IRS is the holder of an allowed unsecured claim18 which
10 has objected to the confirmation of the Plan, § 1129(a)(15)(A)
11 requires Villalobos to pay all creditors in full19 or comply with
12 subsection (B) which states:
13 [T]he value of the property to be distributed under
the plan is not less than the projected disposable
14 income of the debtor (as defined in section
1325(b)(2)) to be received during the 5–year period
15 beginning on the date that the first payment is due
under the plan, or during the period for which the
16 plan provides payments, whichever is longer.
17 The statute refers us to § 1325(b)(2), which defines
18 disposable income as current monthly income (CMI) received by
19 the debtor less amounts reasonably necessary to be expended for
20 the maintenance or support of the debtor or dependent of the
21 debtor. § 1325(b)(2)(A)(i). CMI for purposes of calculating
22 disposable income is defined under § 101(10A) as the average
23 monthly income from all sources that the debtor receives over
24
18
IRS’ unsecured claim is in the amount of $112,392.77.
25
19
26 While Debtors suggest that creditors may be paid in full
from the liquidation of Available Assets, they also acknowledge
27 that due to the uncertainty of the pending litigation, there is
also a potential likelihood that unsecured claims will not be
28 paid in full.

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 1 the six-month period20 preceding the filing of the schedule of
2 current income required by § 521(a). (Emphasis added).
3 Exceptions are then made for three categories of income:
4 (1) benefits received under the Social Security Act;
5 (2) payments made to victims of war crimes or crimes against
6 humanity; and (3) payments made to victims of terrorism. See
7 § 101(10A).
8 At the December 29, 2011 confirmation hearing, the
9 bankruptcy court found, without analysis or citation to
10 evidence, that Villalobos did not have disposable income. At
11 one point, referring to the disposable income requirement, the
12 bankruptcy court stated: “I’m told that there is none. Well, I
13 don’t know how Mr. Villalobos is going to live for the next five
14 years . . . .” On December 30, 2011, at the continued
15 confirmation hearing, the bankruptcy court stated again “[h]e
16 has no disposable income at this time.” However, nowhere in the
17 record do we find evidence of Villalobos’ CMI nor do we find
18 amounts that were reasonably necessary for the maintenance or
19 support of Villalobos and his dependents. Factual
20 determinations such as whether a debtor has disposable income
21 are clearly erroneous when the reviewing court is left with a
22 definite and firm conviction that a mistake has been committed.
23 In re Brotby, 303 B.R. at 184. Here, we are left with such an
24 impression.
25 Debtors maintain that it is undisputed that Villalobos had
26
20
27 Due to the sixth month period, the fact Villalobos
reported $100 million in gross income for the period from 1990
28 through 2008 is irrelevant.

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 1 no postpetition income or earnings from services. However, the
2 record shows that there has been postpetition income from exempt
3 sources. As Debtors acknowledge, the calculation of a debtor’s
4 projected disposable income must take into account any changes
5 in the debtor’s financial circumstances that are reasonably
6 certain to occur during the term of the plan. See Ransom v. FIA
7 Card Servs., N.A., __ U.S. __, 131 S.Ct. 716, 725 (2011);
8 Hamilton v. Lanning, 560 U.S. 505, 130 S.Ct. 2464, 2478 (2010).
9 Although Villalobos lost his earnings from his businesses
10 as an investment banker due to the State Court Action, in
11 amended declarations filed in lieu of monthly operating reports
12 prior to the March 19, 2013 hearing on confirmation of the
13 modified plan, Villalobos disclosed his postpetition income and
14 expenses for the time period December 2011 through January 2013.
15 The declarations show Villalobos paid his living and other
16 expenses21 with income from exempt sources - social security,
17 proceeds from retirement funds and distributions from his
18 defined benefit plan. While the definition of CMI does not
19 include benefits from social security, Drummond v. Welsh
20 (In re Welsh), 711 F.3d 1120 (9th Cir. 2013), the pension income
21 and proceeds from retirement funds received by Villalobos must
22 necessarily fall within the ambit of the definition of CMI which
23 includes income received by a debtor “from all sources.” “All”
24 can only be taken to mean “all,” exempt income or not. See
25 Diamond Z Trailer, Inc. v. JZ L.L.C. (In re JZ L.L.C.), 371 B.R.
26
21
27 In total, the amended declarations show that the amount
spent was over $500,000 for this time period. Therefore, it can
28 hardly be said that Villalobos does not have postpetition income.

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 1 412, 422–23 (9th Cir. BAP 2007) (“All means all.”); Moen v. Hull
2 (In re Hull), 251 B.R. 726, 732 (9th Cir. BAP 2000) (exempt
3 income is included when determining projected disposable
4 income).22
5 In short, Villalobos’ amended declarations show that he
6 had CMI from which reasonable amounts could be deducted in order
7 to calculate disposable income. Villalobos, as a proponent of
8 the plan, bore the burden of showing that the confirmation
9 requirements under § 1129(a)(15) were met. This he did not do.
10 Shifting the burden to a creditor to file a motion to modify, as
11 the Plan provides, does not satisfy this mandate of the Code.
12 Accordingly, the bankruptcy court erred in finding that the
13 requirements under § 1129(a)(15) had been met.
14 VI. CONCLUSION
15 For these reasons, the Plan does not comply with § 1129(a)
16 (9)(C), (11) and (15). We therefore REVERSE the confirmation
17 order on these grounds and REMAND for proceedings in accord with
18 this memorandum.
19
20
21
22
23
22
In connection with its argument under § 1129(a)(15), IRS
24 also mentions that the Plan runs afoul of § 1115. Section 1115
defines property of the estate for individual chapter 11 debtors
25 which includes, among other things, after acquired property and
26 earnings from services performed by the debtor after the
commencement of the case. However, whether property is property
27 of Villalobos’ estate has no impact on the disposable income
analysis because projected disposable income is not confined to
28 “property of the estate.” See In re Hull, 251 B.R. at 732.

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