In Re: 381 Investments, Inc - Order Denying Reinstatement of Case

Apr 3, 2026
25-21809

ORDER DENYING REINSTATMENT OF CASE

This matter is before the Court on a Motion to Reinstate Case (the “Motion“) filed by the debtor, 381 Investments, Inc. (“Debtor“) on November 14, 2025. (Dkt. No. 32). For the reasons stated below, Debtor‘s Motion is denied.

On September 5, 2025, Debtor filed a petition for relief under Chapter 11 (Subchapter V) of the United States Bankruptcy Code. Subsequently, the Court entered an order on September 17, 2025, finding that Tremaine Hemingway, the principal and CEO of Debtor, signed and filed the petition for relief on behalf of Debtor. (Dkt. No. 15). However, the Local Rules of this Court and federal law provide that a corporation cannot appear pro se (without an attorney) and, therefore, the Court gave Debtor until September 24, 2025 to appear by counsel or else the case would be dismissed (the “September Order“). No attorney timely appeared and on October 3, 2025, the Court entered an order of dismissal. (Dkt. No. 29).

On November 14, 2025, Debtor, by counsel, filed its Motion requesting that the order of dismissal be vacated pursuant to Federal Rule of Civil Procedure 60(b) and that the case be reinstated. On December 21, 2025, creditors Lake Falls, LLC and Miller Revitalize, LLC (the “Creditors“), by counsel, filed anobjection to the Motion. The Court held a final hearing with respect to the Motion on January 8, 2026. At that hearing, Debtor appeared by attorney Shawn Cox and the creditors appeared by attorney Richard Dawson. Arguments were heard and Debtor‘s president and CEO, Tremaine Hemingway, testified.

The sole issue before the Court is whether Debtor‘s failure to timely comply with the September Order is excusable. According to Debtor‘s schedules, Debtor owns approximately 31 parcels of real estate. Prior to filing its chapter 11 petition for relief, Debtor fell in arrears on its property tax obligations with respect to a number of these properties. On or about September 10, 2024, the Lake County (Indiana) Auditor held a tax sale, at which time a number of these properties were ostensibly sold. And, under Indiana law, the redemption period would expire one year after the sale. See Indiana Code § 6-1.1-25-4(a)(1).

Mr. Hemingway began searching for bankruptcy counsel in summer 2025. At one point, he believed that he had secured counsel for Debtor. However, within days of the redemption period expiring, prospective counsel declined representation. According to Mr. Hemingway, he then had no alternative but to file a petition for relief on Debtor‘s behalf. Debtor argues that its neglect in failing to secure counsel pursuant to the Court‘s September Order is excusable because it believed that it had retained bankruptcy counsel and should not be punished for counsel‘s last-minute decision to decline representation. Moreover, according to Debtor, although it could have started searching for counsel sooner, there is a dearth of chapter 11 bankruptcy practitioners that practice before this Court and it therefore took longer to find replacement counsel. Finally, Debtor assertsthat the 42 days that passed between the dismissal of this case and the filing of the Motion is not unreasonable.

The Creditors argue that Debtor failed to weigh all the relevant factors in its analysis and only focused on its difficulties in finding bankruptcy counsel. In addition, according to the Creditors, many of the properties listed by Debtor in its schedules are not owned by Debtor, and they assert that if the Motion is granted, they will be prejudiced by having to litigate the ownership of these properties and getting relief from the automatic stay. Finally, Creditors point out that Debtor failed to request an extension of time prior to the expiration of the deadline in the September Order.

Under Federal Rule of Civil Procedure 60(b)(1), made applicable to this proceeding by Federal Rule of Bankruptcy Procedure 9024, the court can relieve a party from a final order for “mistake, inadvertence, surprise, or excusable neglect.” The movant must first show that its actions constituted “neglect.” In re O‘Shaughnessy, 252 B.R. 722, 731 (Bankr. N.D. Ill. 2000). “Neglect can be established either by (1) circumstances otherwise beyond the movant‘s control; or (2) the movant‘s inadvertence, mistake or carelessness.” Id. The test as to whether the neglect is “excusable” is an equitable one, and the court should consider all the relevant circumstances surrounding the movant‘s omission. United States v. Cates, 716 F.3d 445, 448 (7th Cir. 2013) (internal citations omitted). The factors to be balanced in making this equitable determination include “the danger of prejudice [to the non-moving party], the length of the delay and its potential impact on judicial proceedings, the reason for the delay,including whether it was within the reasonable control of the movant, and whether the movant acted in good faith.” Id. (internal citation omitted). The burden of proving that the neglect was excusable rests with the party seeking relief. Helm v. Resolution Trust Corp., 84 F.3d 874, 878 (7th Cir. 1996).

First, Debtor‘s stated reason for the delay in hiring an attorney and complying with the Court‘s September Order is that it was difficult to secure suitable representation because there are very few chapter 11 attorneys in the area that practice before this Court. The Court agrees that there are only a handful of chapter 11 practitioners located in Northwest Indiana. In the Court‘s opinion, however, this automatically narrows the prospective field considerably and, arguably, should have made it easier for Debtor to find a local attorney. In fact, Debtor ultimately hired Attorney Shawn Cox, a local practitioner. Further, the Court is also aware that there are plenty of chapter 11 practitioners located in the City of Chicago and the surrounding suburbs, many of whom have practiced before this Court with some frequency. Consequently, the Court fails to understand why locating counsel took so long (approximately two months).

The record also reflects the fact that Debtor, through its president and CEO, waited until summer 2025 to begin its search for bankruptcy counsel. Although the Court is sympathetic to the fact that Debtor‘s prospective counsel declined representation at the last minute, this delay was completely within Debtor‘s control, as Debtor could have begun its search sooner. Finally, Debtor did not explain, in the Motion or at the final hearing, why it failed to respond to the September Order or request an extension of time to comply with that orderprior to the deadline expiring. Therefore, the Court finds that Debtor‘s reason for the delay, and whether that delay was within the reasonable control of Debtor (the movant), weighs against the Court granting the Motion.

The next factors the Court will consider are the length of the delay, along with its potential impact on these proceedings, and the danger of prejudice. Debtor states in its proposed findings that “42 days between dismissal [of this case] and the filing of the Motion to Reinstate is not an unreasonable amount of time to seek reinstatement of this case.” (Dkt. No. 45). Debtor further states that “[t]he reinstatement of this case, and the reimposition of the automatic stay, will create claims of prejudice by 381‘s creditors and novel issues of law may arise due to reinstatement at this point, given the dismissal order was entered more than three months ago . . . .” (Dkt. No. 45). The Court agrees.

Several threshold Subchapter V deadlines have expired in the time since Debtor filed this case. 11 U.S.C § 1188(a) requires the court to hold a status conference not later than 60 days after the entry of the order for relief to “further the expeditious and economical resolution of a case under this subchapter.” In addition, pursuant to § 1188(c), the debtor is required to file a report, no later than 14 days prior to the foregoing status conference, detailing the efforts it has undertaken or plans to undertake to attain a consensual plan of reorganization. Next, § 1189(b) provides that the debtor shall file a plan no later than 90 days after the petition for relief is filed. All these deadlines have expired, and the Court is unaware of any procedure by which it can reinstate these deadlines.Notably, Debtor did not address this issue either in its Motion or at the final hearing.

The purpose of Subchapter V is to streamline the bankruptcy process; unfortunately, the deadlines that accomplish this goal have all expired and if reinstated, the case would potentially be subject to immediate dismissal by a creditor. Obviously, the length of the delay and its impact on these proceedings is substantial. But equally important, the Court finds that the reinstatement of this case would not only confuse creditors but may dissuade them from participating in this case altogether. The bottom line is that considering both the length of delay and the fact that this is a Subchapter V case, the Court finds that vacating the order of dismissal and reinstating the case is both impractical and prejudicial to the creditors of this estate. Obviously, these factors weigh against the Court granting Debtor‘s Motion.

Finally, although the record does not suggest that Debtor acted in bad faith in filing the Motion, this factor does not outweigh the other factors that all weigh against the finding of excusable neglect. For the reasons stated, the Court finds that Debtor failed to carry its burden and the Motion should be denied.

IT IS THEREFORE ORDERED that Debtor‘s Motion to Reinstate Case is DENIED.

Dated at Hammond, Indiana, this 3rd day of April 2026.

JAMES R. AHLER

JUDGE, U.S. BANKRUPTCY COURT