In Re Farley
451 B.R. 235
Bankr. E.D.N.Y.2011Background
- Debtors filed a joint Chapter 7 petition on August 2, 2010; case discharged and closed November 2, 2010.
- Schedules list two vehicles including a 2010 Ford Edge; lease encumbered by Ford Motor Credit.
- Schedule D notes Ford lease; Schedule J states $475 monthly payment; Schedule B shows lease status.
- Statement of Intention states Debtors will retain the vehicle and assume the lease under 365(p)(2).
- On December 22, 2010 Debtors move to reopen to file an Assumption Agreement; no prior lease action by Trustee.
- Court sua sponte considers authority and opts to reopen solely to allow filing of a fully executed lease assumption.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authority to reopen under §350(b) for filing | Debtors claim 'cause' to administer assets and complete limited filing. | Court may reopen for good cause to permit filing of the Assumption Agreement. | Reopening granted in part for filing only; not an approval. |
| Leases and 365(p) approval necessity | Lease may be assumed by Debtors under §365(p)(2). | Statute does not require judicial approval of the assumption agreement. | Process acknowledged; no court-ordered approval required. |
| Timing relative to discharge | Discharge and case closure do not bar reopening for this purpose. | Not stated as opposition; timing deemed non-critical. | Cause exists to reopen; discharge timing does not preclude filing. |
| Signatures on the Assumption Agreement | Debtors should sign to bind themselves. | Counsel signed; Debtors should sign but no fatal defect noted. | Fully executed signatures from Debtors and lender required; 60 days provided to finalize. |
| Judicial approval of lease assumption | Court should approve the Assumption Agreement. | Court has no mandate to approve; not required by statute. | Court will not approve/disapprove; will reopen to enable filing only. |
Key Cases Cited
- State Bank of India v. Chalasani (In re Chalasani), 92 F.3d 1300 (2d Cir. 1996) (definition of 'cause' for §350(b) requests and standards)
- In re Rogers, 359 B.R. 591 (Bankr.D.S.C. 2007) (treatment of 365(p) lease assumptions and stays)
- In re Carberry, 186 B.R. 401 (Bankr.E.D.Va. 1995) (limits on reopening and preservation of resources; business judgment guidance)
- In re Mortensen, 444 B.R. 225 (Bankr.E.D.N.Y. 2011) (non-necessity of court-ordered approval under §365(p))
- In re Gaylor, 379 B.R. 413 (Bankr. D. Conn. 2007) (no mandatory court approval for 365(p) lease assumptions)