The State Worker

A Sacramento bankruptcy court last week rejected Don Novey's second amended bankruptcy plan, saying that the proposal lacks sufficient documentation to allow less-than-full payment to his debtors.

The former president of the California Correctional Peace Officers Association last summer offered a bankruptcy plan to pay back a portion of the $600,000 Novey owed against $355,000 in assets. The plan would have let Novey skip most of the $20,000 he owes to CCPOA, money intended to settle a messy dispute over allegations he breached his consulting contract with the union.

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 creditors.

For an example, you can read Spitzer's Sept. 21 cross examination of Novey in the "Exhibits in Support of Motion to Confirm Debtor's Second Amended Plan" that we've embedded below and linked here. Scroll down to PDF page 70.

(You'll find an interesting bit of the testimony that addresses Novey's split from the California Statewide Law Enforcement Association. When Spitzer asked why Novey received severance pay from the union's foundation in June of 2011, Novey said, "Their president thought it would be best that we part ways.")

The State Worker reached Novey by cellphone this morning and asked if he had a comment about the case.

"I didn't open the floodgates," Novey said. When asked if he thought CCPOA had a vendetta against him or was focused on forcing him to give up a Scottsdale, Ariz,, condo to settle his debts, Novey answered, "I don't know" to both questions.

Novey tried and failed to get his declaration sealed. Had the court agreed, much of the information in his bankruptcy would have been out of public view.

Bankruptcy Judge Thomas Holman last week said that Novey failed to appropriately estimate his future earnings, since he may receive money "contingent on the approval of various state agencies" from unspecified sources that would boost his income more than the $16,000 per month estimated in the bankruptcy plan. And even if the court accepted that figure, Holman wrote, Novey's expenses aren't enough to warrant stiffing unsecured creditors.

Holman also rejected Novey's claim of higher-than-normal utility bills and ruled that a Scottsdale condo that Novey and his wife, Carol, own is a luxury property and not an income-producing rental that should be shielded from creditors.

The judge's decision means that Novey will have to submit another bankruptcy plan to the court.