55 F.4th 945
1st Cir.2022Background:
- Brown filed Chapter 13 in 2011, converted to Chapter 11 in 2012, and obtained confirmation of his Sixth Amended Plan in 2014.
- The confirmation order required Brown to pay quarterly fees under 28 U.S.C. § 1930(a)(6) and to serve quarterly disbursement reports on the U.S. Trustee while the case was "open."
- The case was administratively closed in 2016, reopened twice (Aug. 2017–May 2018 and Sept. 2018 onward), and Brown failed to serve quarterly reports or pay quarterly fees during numerous quarters after reopening.
- The U.S. Trustee moved to dismiss under 11 U.S.C. § 1112(b)(1), citing failure to comply with court orders (§ 1112(b)(4)(E)), failure to provide information (§ 1112(b)(4)(H)), and failure to pay fees (§ 1112(b)(4)(K)).
- The Bankruptcy Court granted dismissal on both the reporting and fee grounds; the District Court affirmed; the First Circuit affirmed, resting its decision on the reporting/"open" issue.
Issues:
| Issue | Plaintiff's Argument (Brown) | Defendant's Argument (U.S. Trustee) | Held |
|---|---|---|---|
| Whether the confirmation-order reporting requirement applied after the case was reopened (i.e., whether "open" includes "reopened"). | "Open" excludes "reopened" cases; reports were required only until the initial administrative closure. | A reopened case is an open case; the confirmation order required reports for all quarters the case remained open, including after reopening. | Held for U.S. Trustee: "open" includes reopened periods; Brown violated the order and that failure was cause for dismissal under § 1112(b)(4)(E). |
| Whether quarterly fees under pre-2021 § 1930(a)(6) were owed during reopened periods and warranted dismissal under § 1112(b)(4)(K). | Pre-2021 statutory text did not reference "reopened," so fees were not required during reopened periods. | Fees are owed for quarters while the case is open/reopened; failure to pay supports dismissal. | Court affirmed dismissal but relied on the reporting-order ground; it did not need to resolve the fee argument on the merits (though it did not foreclose the fee ground as sound). |
Key Cases Cited
- Oriental Bank v. Builders Holding Co., 43 F.4th 1 (1st Cir. 2022) (appellate standard for second-tier bankruptcy review)
- Hoover v. Harrington (In re Hoover), 828 F.3d 5 (1st Cir. 2016) (abuse-of-discretion review for § 1112(b) dismissal)
- Monarch Life Ins. Co. v. Ropes & Gray, 65 F.3d 973 (1st Cir. 1995) (deference to a bankruptcy court's interpretation of its own orders)
- Gupta v. Quincy Med. Ctr., 858 F.3d 657 (1st Cir. 2017) (bankruptcy court jurisdiction over motions to dismiss post-confirmation)
- Privitera v. Curran (In re Curran), 855 F.3d 19 (1st Cir. 2017) (preservation of arguments on appeal)
- Siegel v. Fitzgerald, 142 S. Ct. 1770 (2022) (Supreme Court: certain prior § 1930(a)(6) fee provision unconstitutional)
