569 B.R. 40
Bankr. E.D.N.C.2017Background
- Debtor filed First Case under chapter 13 on Nov 12, 2015; Bio-Med Action preceded bankruptcy efforts.
- Bio-Med filed a claim in the First Case for $88,767.76 and alleged conversion and misappropriation of reimbursement funds.
- Debtor failed to list the State Court Action and vehicle transfers in schedules/SOFA in the First Case.
- Court granted multiple 341 meeting continuances; Debtor repeatedly delayed proceedings and failed to prosecute in good faith.
- Dismissal Order in the First Case found bad faith and resulted in dismissal for willful failure to abide by orders and to prosecute; no appeal was filed.
- Second Case filed Oct 27, 2016 (Chapter 7); Debtor attended 341 meetings; trustee and Bio-Med sought extensions and examinations to investigate assets and dischargeability issues.
- Court must determine whether Debtor was eligible under 11 U.S.C. § 109(g) at filing of the Second Case and thus whether dismissal is proper.
- Court concluded Debtor was ineligible due to willful defaults in the First Case, triggering a 180-day bar and warranting dismissal of the Second Case.
- Bio-Med’s motion to extend to object to discharge/dischargeability remained live and is effectively extended during appeal or related proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Debtor was eligible to file the Second Case under §109(g). | Trustee/ Bio-Med argued ineligibility due to prior bad faith. | Strongs contended eligibility, or timeliness/ prejudice concerns. | Debtor ineligible under §109(g); 180-day bar applies. |
| Whether the §109(g) bar can be determined in this second case. | Eligibility determination can be made when needed. | No prejudice from delay; no statutory time bar required. | Court may determine eligibility when called to rule on §109(g). |
| Whether the First Case’s dismissal for bad faith triggers §109(g)(1) willfulness prongs. | First Case showed willful failure to abide by orders and prosecute. | Debtor disputes characterization; argues lack of explicit prejudice. | Willfulness satisfied; both prongs triggered §109(g)(1). |
| Effect of the 180-day ineligibility on the Second Case. | Ineligibility bars filing within 180 days of dismissal. | Debtor challenges applicability; argues prejudice absence. | 180-day bar in effect; Second Case dismissed. |
| Status and effect of Bio-Med’s extension/dischargeability objections. | Extensions granted; Bio-Med can object to discharge/dischargeability. | Debtor’s challenges to extension and dischargeability objections. | Bio-Med Motion effectively allowed; time to object extended during appeal or interim period plus 30 days. |
Key Cases Cited
- Colonial Auto Ctr. v. Tomlin, 105 F.3d 933 (4th Cir. 1997) (limits on eligibility under §109(g) for prior dismissals and willfulness)
- In re Wen Hua Xu, 386 B.R. 451 (Bankr. S.D.N.Y. 2008) (flexibility in determining §109(g) eligibility; timeliness of determination)
- In re Ellis, 48 B.R. 178 (Bankr. E.D.N.Y. 1985) (willfulness defined as intentional disregard of duties)
- In re King, 126 B.R. 777 (Bankr. N.D. Ill. 1991) (case-wide evaluation of debtor’s good faith and duties)