M.P.I Ltd. Trust
17-00245
Bankr. D. Haw.Aug 17, 2017Background
- Debtor: M.P.I. Ltd. Trust filed a Chapter 12 case in the District of Hawaii; Standing Chapter 12 Trustee moved to dismiss.
- Statutory context: Section 1208 permits dismissal for "cause" (including failure to file plan timely, unreasonable delay, loss of estate, lack of rehabilitation).
- Plan deadline: Debtor failed to file a compliant Chapter 12 plan by the 90-day statutory deadline (expired June 7, 2017); debtor submitted a barebones document later that did not meet Chapter 12 requirements.
- Principal’s conduct: Debtor’s principal refused to answer trustee’s questions at the meeting of creditors, claiming the trustee was represented by counsel.
- Assets and claims: Court granted stay relief to landlord permitting lease termination and eviction of debtor (debtor’s principal’s primary asset); no creditors filed timely proofs of claim.
- Relief sought and disposition: Trustee sought dismissal; court found multiple independent grounds constituting "cause" and ordered dismissal.
Issues
| Issue | Trustee's Argument | Debtor/Locricchio's Argument | Held |
|---|---|---|---|
| Whether case should be dismissed for failure to file plan timely under §1221 | Deadline passed; plan not filed timely and later document fails Chapter 12 plan requirements | Trustee purportedly extended deadline; debtor cited principal’s concussion as cause | Dismissal: debtor failed to meet §1221; excusable neglect not shown; late submission inadequate |
| Whether debtor’s refusal to cooperate at meeting of creditors warrants dismissal as unreasonable delay | Principal refused to answer trustee’s questions, impeding trustee’s duties and confirmation process | Principal claimed he could not speak because trustee had counsel | Dismissal: refusal is unreasonable delay prejudicial to creditors and constitutes cause |
| Whether loss of estate assets and lack of claims justify dismissal | Stay relief allowed landlord to terminate lease (debtor’s key asset); no timely claims — reorganization serves no purpose | Debtor challenged stay relief (motion denied; appeal time lapsed) | Dismissal: continuing loss/diminution of estate and no reasonable likelihood of rehabilitation constitute cause |
| Whether debtor is an eligible "business trust" debtor | Trustee questioned debtor’s eligibility as a business trust | Debtor submitted the formation document (largely incomprehensible) | Not decided: court did not need to resolve eligibility because other grounds sufficed |