Not so fast debtor!

Not so fast individual Chapter 11 debtor’s counsel! You might need a few days before reopening the case and discharging an individual chapter 11 debtor.

Before I start, you should know this is the kind of case only a civil and bankruptcy procedure nerd would love, which is precisely the category I fall in. And it’s definitely of interest to a small percentage of the bankruptcy bar. 

Today’s post and podcast is about In re Hill out of Southern District of Florida, Fort Lauderdale Division, 13-18344-PDR, filed yesterday on November 23. It’s an individual Chapter 11 case, which are pretty rare, although I got a unique opportunity to get exposed to them when I was clerking in bankruptcy in Arizona during the Great Recession.

As is fairly common, the case was temporarily closed while the debtor was making payments. This is a fairly common practice to avoid hefty quarterly United States Trustee payments.

Bankruptcy courts have routinely approved the practice in confirmed individual chapter 11 cases of administratively closing the case while the debtor makes payments under the plan progressing towards earning a discharge. This practice, approved by the United States Trustee, benefits the estate because the debtor need not bear the expense of filing operating reports or paying quarterly UST fees. In this case, after having made all plan payments, the Debtor seeks to simultaneously reopen the case, have his final report approved, obtain a discharge, and close the case all on the same date and in doing so avoid having to file operating reports and paying the associated UST fees. 

The debtor in this case got to the end of the payments, so he moved to reopen the case and obtain a discharge. 

The catch in this case is that he was trying to get all the relief on the same day: reopen the case and get a discharge. 

The US trustee objected because the creditors couldn’t object while the case was closed. 

The court agreed and ruled the case could be reopened but that the discharge hearing would have to wait until the creditors had thirty days to object. 

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Bankruptcy docket round up – November 23, 2021

Lobby of Bankruptcy Judges Kwan and Russell in the Central District of California

Got up early this morning on the hunt for a case or two to cover in my new podcast series. As always, even with bankruptcy cases at historic lows, there’s a lot going on!

In a new published case out of the Ninth Circuit BAP, Judges Lafferty, Faris, and Spraker affirmed trial court’s dismissal of an adversary proceeding against the debtor. Plaintiff failed to perfect its lien under California law. This court published because it wanted to clarify that 108(c) doesn’t toll filing notices under 546(b). Philmont Management v. 450 S. Western Ave. (2:20-bk-10264-ER).

Turning to the trial courts, there were two opinions out of the Eastern District of Michigan. A subchapter V case was dismissed for failing to file a plan. In re Back To Life Properties. In a different case, Judge Opperman granted summary judgment for a 523(a)(4) complaint over a construction dispute. Miller v. Safford.

Heading south to Kansas, Judge Somers wrote a fairly long and complex opinion regarding Summary judgment in a chapter 12 case regard a 363 sale. In re Parsons.

In a District of Nebraska court, a chapter 11 plan was denied because of concerns over a 1111(b) election. Those elections always confused the daylights out of me, so I think I’ll skip it for today’s podcast! In re Topp’s Mechanical.

Over in Delaware, the court denied cram down on a debtor’s primary residence. Pedicone v. Ajax Mortgage.

Nearby, in the District of Columbia, summary judgment was granted in dispute over the sale of a house and fraud claims under 523(a)(2). Johnson v Johnson.

In South Carolina, a “frequent” pro se litigant’s chapter 7 was dismissed. In re France.

In the case I’ll probably cover in the podcast, a Southern District of Florida court issued a decision about temporarily closing an individual chapter 11 case to avoid administrative fees. In re Hill.

Let’s head back West! Next door to California, in Arizona, Judge Collins who recently paneled an interesting conversation at the ABI’s Consumer Bankruptcy Extravaganza and who’s court I observed in person once, issued an amusing opinion about objections to proofs of claim under the Affordable Care Act. In re Vallejo.

Disclaimer: on these posts, I do not necessarily read the entire case. Often I don’t, in fact. I usually skim them briefly, so if you see anything I got really wrong or an important nuance I missed… please let me know by sending me an email!

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