Don Novey, the former president of the California Correctional Peace Officers Association, will have to submit a new bankruptcy plan after a creditor and a trustee both objected to his first one.
Bankruptcy court Judge Thomas Holman's decision prolongs an proceeding that has highlighted Novey's bitter falling out with his former union, which fired him in 2009 over allegations he breached his consulting contract with the organization. Novey still owes CCPOA $20,000 from an arbitrated settlement, but he is seeking to shed that obligation and of others through bankruptcy.
Union attorney Barry Spitzer has vigorously challenged Novey's bankruptcy plan, implying that he and his wife, Carol, have hidden some of their assets and understated the value of others to shield them from the proceedings.
Holman rejected one CCPOA's objection to the Noveys listing their Arizona condo as an income-producing rental that shouldn't be seized by creditors. The bankruptcy trustee, Jan P. Johnson, also failed to see how the property is "reasonable and necessary for the health, maintenance, welfare and support of the debtors."
But there were enough questions about the bankruptcy plan that Holman tentatively ruled that it's not sufficient.The sides may debate the tentative ruling on Tuesday. Holman could finalize his tentative order or hold off and consider the arguments before issuing a final ruling.
The Noveys filed for bankruptcy protection in May, saying that they owed back taxes, secured and unsecured debts totaling about $600,000 against $355,000 in assets. Court documents show they claim a combined average monthly income of $10,600 against $7,600 in monthly expenses. Novey, who retired from state service in 2002, receives a net $6,500 from his pension each month and $3,500 monthly from "cslea foundation," according to court records.
Click here and scroll down to PDF page 30 to read the tentative ruling from Holman. The parties are set for a hearing in Sacramento's federal courthouse on Tuesday at 9:32 a.m.
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