Cunning v. Rucker,
No. 08-55652
U.S. 9th Circuit Court of Appeals, June 26, 2009
In an appeal from the Bankruptcy Court's order denying an
exemption for Debtor's assets in pension and 401(k) plans,
the order is affirmed, where the retirement plans were not
designed and used primarily for retirement purposes.
Facing a civil judgment
debt of more than $6.5 million, Lloyd Myles Rucker declared
bankruptcy and tried to exempt his assets as belonging to
private retirement plans under California Civil Procedure
Code (“CPC”) § 704.115. Rucker had previously placed the
assets in pension and 401(k) plans funded by his wholly
owned corporations. The bankruptcy court denied the
exemption on the explicit ground that Rucker’s retirement
plans were not designed and used primarily for retirement
purposes. The district court reversed, but 9th
Circuit upheld bankruptcy court.
In re: SCOTT LEE
EGEBJERG, 08-55301, CV-07-6850-PA (9th
Circuit 5-09) Debtor challenges dismissal of his Chapter 7
petition for abuse under 11 U.S.C. § 707(b)(3). Issue of
first instance: does a debtor’s repayment of a 401(k) loan
constitutes a “monthly payment on account of secured debts”
or an “[o]ther [n]ecessary [e]xpense” that can be deducted
from a debtor’s monthly income for purposes of calculating
the debtor’s disposable monthly income under § 707(b)(2). We
conclude it is not, because Debtor had sufficient means to
repay a meaningful portion of his debts, especially once his
401(k) loan was repaid in just over a year, leaving $525 a
month to repay unsecured creditors. Therefore, the debtor’s
filing in this case was presumptively abusive under the
“means test” of § 707(b)(2). Bankruptcy court’s dismissal of
Chapter 7 petition affirmed.
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