Bankruptcy judge will permit Johnstown couple one more chance to file a confirmable plan

Editor’s note: A confirmation of the police investigation was added to this version.

DENVER — U.S. Bankruptcy Judge Joseph Rosania Jr. told parties in the Oldenburg bankruptcy action that he’ll use his discretion and give Sandra and Lee Oldenburg “one more chance” to present a Chapter 13 reorganization plan that has a chance of confirmation.

“But I’m very skeptical that the debtors can defeat the relief from stay and that they can put forward a plan that they can support and that is filed in good faith,” he said at the conclusion of a hearing on the matter Thursday morning.

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The case involves Sandra and Lee Oldenburg, Johnstown residents, who filed for bankruptcy protection Aug. 28, 2023. They’ve since filed three reorganization plans, but none have been confirmed by the court.

The plans have been challenged by PNC Bank, their mortgage holder, which said they were five months delinquent on monthly house payments as of January, and also by Carlson Farms Homeowners Association, which claims that Sandra Oldenburg in her role as part owner of the now defunct NoCo Real Estate Solutions Inc. can’t account for hundreds of thousands of dollars of HOA money. Other HOAs in the region that were managed by NoCo, previously known as Poudre Property Services, also have reported bank account anomalies and inability to get financial statements. NoCo closed its doors Jan. 26.

Attorneys at Thursday’s hearing confirmed that Sandra Oldenburg and perhaps the former property management company are under police investigation. 

David Serafin, counsel for the Oldenburgs, wrote in a “debtors’ objection” that he had been having difficulty reaching his clients and that “debtors have had very limited access to technology (particularly internet and email) since the local police recently arrived at debtors’ residence to confiscate debtors’ phones and computers…”

Judge Rosania asked if a criminal investigation was going on, and Serafin said, “I believe there is, but I don’t know what’s happening with that.”

A Loveland Police Department spokesman confirmed to BizWest that a multi-agency investigation is ongoing with the intent of presenting a case to the district attorney. No timetable was available.

Rob Cohen, attorney for Carlson Farms, said the HOA objects to the reorganization plan based on “good faith and feasibility.”

“There is a criminal investigation going on. I’ve heard from other HOAs, at least four other HOAs independent of this, alleging similar acts that my clients have alleged.

“I would note that I don’t see any other HOAs on the schedule (of creditors). … NoCo is no longer operating. That affects feasibility (of repayment of debt). If there are other creditors potentially out there, that would impact plan payments going forward and that should be disclosed. That would impact good faith (on the part of the Oldenburgs),” he said.

“Police just raided their home. They maybe should file a bankruptcy down the road. There is a lot in transition for these folks.”

Cohen said a civil case that Carlson Farms filed has been placed in abeyance because of the criminal investigation. Discovery “was chugging along,” but the Oldenburgs are concerned about Fifth Amendment incrimination if that were to continue during the criminal investigation.

The reorganization plan, which Serafin said the Oldenburgs plan to refile if permitted by the court, said that Sandra Oldenburg was earning $90,000 a year at NoCo. Since the closure of that company, Serafin said, she has secured other employment at about the same compensation. The new employer was not identified at the hearing, and Cohen said “we need to see pay stubs.”

Meanwhile, Lee Oldenburg, a business teacher in the Windsor school district, has added a coaching job in the school district in addition to his teaching position that will pay $5,000 in additional compensation, Serafin told the court. That will add $300 to $400 per month that could go to unsecured creditors, he said.

The Chapter 13 trustee assigned to the case said he is concerned about the ability to perform under a reorganization plan. 

“They’re already $15,000 behind on mortgage payments, and we’re only six months into the case,” the trustee’s attorney said.

“I’ve encouraged my clients to get current with the mortgage,” Serafin said. “They’ve made up half of the mortgage payments,” he said, citing Sandra Oldenburg as the source of that information. “They’ve asked for a loan modification. They want to keep the house and do whatever is possible,” he said.

Rosania said he would give the debtors another chance to file an acceptable reorganization plan. He set up a series of hearings, including one on Feb. 21 to consider objections and the debtors’ late-filed motion to stop PNC Bank from foreclosing on the couple’s home. The revised reorganization plan is due Feb. 29. 

The case is Sandra Oldenburg and Lee Oldenburg, Chapter 13 bankruptcy, case number 2023-13858, filed Aug. 28, 2023, in U.S. Bankruptcy Court for the District of Colorado.