This court entered an order granting relief from stay to Alan Ma on October 13, 1995. On October 24, 1995, the debtor moved for reconsideration. After a review of the motion, IT IS ORDERED:

An evidentiary hearing on the debtor's motion for reconsideration will be held on Tuesday, November 7, 1995 at 9:00 a.m., in Courtroom 2 - Room 126, Historic Courthouse, 605 W. 4th Avenue, Anchorage, Alaska.

Discussion

After a hearing on a motion for relief from stay on October 4, 1995, this court granted relief from stay to Mr. Ma, the debtor's landlord. In reviewing the court file after the hearing, I found that the debtor had failed to file a chapter 13 plan, failed to file monthly financial reports, and had made no payments to the trustee after filing for Chapter 13 relief in July. I did not delve into the issue of lease termination as I found the debtor's violations of bankruptcy law and procedure sufficiently egregious to warrant relief from stay to Mr. Ma regardless of the termination of lease issue.

On October 24, 1995, the debtor filed a motion for reconsideration. The debtor noted that she had filed a chapter 13 plan on October 6, 1995. This statement is inaccurate. According to court records, the debtor's chapter 13 plan was filed October 11, 1995, not October 6, 1995. Moreover, the plan was filed 60 days late under Rule 3015(b) of the Federal Rules of Bankruptcy Procedure.

The debtor alleges that certain payments have been made to the debtor's attorney's trust account. That is not the same as making payments under 11 U.S.C. § 1326 to the trustee or making payments to a       4 ABR 174  landlord under 11 U.S.C. § 365(d)(3). Moreover, the debtor's delays in filing the plan results in delayed payments to creditors under 11 U.S.C. § 1326.

The debtor admits failing to file financial statements as required by the court and assures the court that she is working diligently toward complying with the Rules. Additionally, she states that she is continuing to negotiate with Mr. Ma. The parties have been negotiating without success for several months.

Even if all of the allegations contained in the motion for reconsideration are true and the debtor has cured all defects by the November 7th hearing, there still may be no grounds for modifying the order granting relief from stay. In addition to the other defects in the debtor's pleadings, the debtor's interest in the lease appears to have been terminated prepetition. Under the provisions of 11 U.S.C. § 365(c), a trustee cannot assume an unexpired lease of "nonresidential real property that has been terminated under applicable nonbankruptcy law prior to the order for relief."

A review of the pleadings in this case indicates that the lease was properly terminated prior to the filing of the petition on July 28. The lease provided, at page 7, section 17, paragraph four, that the lessor could terminate the lease upon default by giving written notice to the lessee of the intention to terminate for:

4. The failure to pay any rent or additional rental or utility payments for a period of thirty (30) days after those payments are due shall be a default by Lessee, and if not corrected within fifteen (15) days after written notice to cure the default thereafter, the lease shall terminate at the option of Lessor.

This paragraph constitutes a special provision for termination of the lease upon default. A judicial decree is not necessary to terminate the lease. In re Waterkist Corp., 775 F.2d 1089, 1091-1092 (9th Cir. 1985). Notice of default was sent on May 10, 1995. If the debtor failed to cure the default in accordance with the lease and pay the substantial past due rents, the lease was properly terminated in accordance with its terms. In re Windmill Farms, Inc., 841 F.2d 1467 (9th Cir. 1988). Here the landlord appears to have successfully instituted ejectment proceedings in accordance with his right to terminate the lease.

The debtor appears to have failed to cure the original default of $23,000 and may have continued to default as evidenced by her schedules and recent plan which call for payment of a $38,000 arrearage in rent over the plan term.

Despite the arrearage in rent, Ms. Lee's interest in the property is not necessarily forfeited, however. This court is to examine the equities of a breach to determine whether forfeiture is appropriate. Dillingham Commercial Co., Inc. v. Spears, 641 P.2d 1, 7-8 (Alaska 1982); Hendrickson v. Freericks, 620 P.2d 205, 212 (Alaska 1980). As the facts currently appear, I do not see how Ms. Lee would sustain a forfeiture. First, there was no substantial down payment on the lease. Rather, payments were to be made on a monthly basis in the amount of $6,500, later reduced to $5,000. Additionally, the debtor appears to have had the free use of the premises for several months. The debtor has never alleged that she made substantial improvements to the leasehold premises, such as the million dollars in improvements made by a tenant in the Waterkist case. If she has made such improvements and would sustain a forfeiture, evidence of such forfeiture must be presented at the hearing on November 7th.

In making my analysis, I have assumed a number of facts based on the affidavits and pleadings of the parties. The purpose of the evidentiary hearing is to give each party a full and complete opportunity to air their views of any disputed factual issues regarding the debtor's compliance with the bankruptcy code and associated rules, termination of the lease or the existence of a forfeiture.

DATED: November 2, 1995.

BY THE COURT
DONALD MacDONALD IV
United States Bankruptcy Judge