In Re Gould
Memorandum and Order on Debtor’s Motion for Final Decree
Pеter J. Gould has filed a motion for a final decree to which the United States Trustee has objected. The resulting controversy is motivated by Gould’s intention to terminate his obligation to pay post-confirmation quarterly fees and the Unites States Trustee’s determination to collect them. For the reasons that follow, the motion is granted.
Background
On August 22, 2003, Gould commenced this chapter 11 case. His second amended plan of reorganization was confirmed on November 29, 2004 (doc. # 195). Thereafter, the management of the case was consumed by litigation which is caused the case to remain open.
On Octоber 1, 2009, the United States Trustee (“UST”) filed a motion to compel Gould to pay post-confirmation chapter 11 quarterly fees pursuant to
On March 31, 2010, Gould filed the instant motion, captioned as an “Application” (hereafter, “Finаl Decree Motion”), which stated, inter alia, that “[a]ll payments have been made in accordance with the Plan,” and “[a]ll other distributions due under the confirmed Plan will be made in accordance with its terms.” Final Decree Motion at ¶¶ 2-3. On April 13, 2010, the UST filed an objection, claiming that Gould failed to pay all required post-confirmation quarterly fees and failed to file all required MORs and a final report in accordance with Local Bankruptcy Rule 3022-1 (doc. # 386).
I
The issue addressed here is whether, as the UST argues, the “[p]ayment of outstanding [post-confirmation] Chapter 11 Quarterly Fees is a prerequisite to the entry of a final decree” (UST’s Objection at 3.) so that a failure to satisfy that requirement would prevent the entry of a final decree closing the case. In support of her objection, the UST cites to several cases which, in addition to being non-binding precedent, do not specifically support that proposition. 2
For example, in
In re Boulders on the River, Inc.,
In
In re Gates Community Chapel of Rochester, Inc.,
The court does not agree with the UST’s parenthetical characterization of
In re Huff,
The analysis of this issue begins with the text of the relevant provisions of the Bankruptcy Code and Rules.
After an estate is fully administered ..., the court shall close the case.
After an estate is fully administered in a chapter 11 reorganization case, the court, on its own motion or on motion of a party in interest, shall enter a final decree closing the case.
Entry of a final decree closing a chapter 11 case should not be delayed solely because the payments required by the plan have not been completed. Factors that the court should consider in determining whether the estate has bеen fully administered include (1) whether the order confirming the plan has become final, (2) whether deposits required by the plan have been distributed, (3) whether the property proposed by the plan to be transferred has been transferred, (4) whether the debtor or successor of the debtor under the plаn has assumed the business or the management of the property dealt with by the plan, (5) whether payments under the plan have commenced, and (6) whether all motions, contested matters, and adversary proceedings have been finally resolved.
The court should not keep the case open only because of the possibility that the court’s jurisdiction may be invoked in the future. A final decree closing the case after the estate is fully administered does not deprive the court of jurisdiction to enforce or interpret its own orders and does not prevent the court from reopеning the case for cause pursuant to§ 350(b) if the Code....
The Editors’ Comment provides a further explanation of
This Rule was amended in 1991 to set forth a flexible Rule to permit the court to determine that an estate is fully administered and should be closed even though payments or other activities involving the debtor and its creditors might continue. The rule requires that the estate be fully administered, and the court may close the case on its own motion or on the motion of a party in interest. For example, a party in interest may wish to close a case to remove the threat of an avoiding action. As is evident by the Committee note, the Advisory Committee interprets “fully administerеd” very loosely and encourages courts to use substantially more discretion in deciding whether to close a Chapter 11 case then Code § S50 and the Rule literally read.
Some guidance is also provided by case law. For example, in
In re Kliegl Brothers Universal Electrical Stage Lighting Company, Inc.,
at a minimum, the concept [of “fully administered”] must mean that administrative claims have been provided for at least to the extent that assets exist out of which administrative claims can be partly or wholly paid. While we have not been able to find a case specifically holding that “fully administered” requires that administrative creditors be provided for, we note that § 507(a)[ (2) ] administrative expenses are required by § 1129(a)(9) to be provided for in full in the plan as a prerequisite to confirmation except to the extent that the holder of such claim has otherwise agreed.
Id. at 542-43. The Kliegl court also observed that “the entry of a final decree is essentially an administrative task ... ”. Id. at 541.
Our sister bankruptcy court in Vermont has recently provided additional guidance when it observed that a confirmation order “... signal[s] the legal conclusion of [a] case,” and “is generally regarded as the final court determination in a chapter 11 case,” while the final decree “simply delineates on the docket that the case is closed; it represents the administrative conclusion оf a case for record keeping purposes.”
In re Fibermark, Inc.,
In
In re Indian Creek Limited Partnership,
In a similar vein, in
In re Jay Bee Enterprises, Inc., a/k/a Bass Master Boats,
Rule 3022 allows the court flexibility. It does not require that a chapter 11 case be kept open until all awarded fees and allowed claims have been paid in accordance with the confirmed plan or until the statutory fees here involved[ie., the UST’s quarterly fees] have been paid.
.... There is no provision of law that prevents dosing a chapter 11 case before payment of the [UST’s quarterly fees].
Id. at 589 (emphasis added).
While there is no debate that the January and September 1996 amendments to
It is concluded that neither the text of Code
II
As to the UST’s objection on the basis of reporting issues,
see supra
p. 2, for substantially the same reasons, the court declines to impose a requirement that all MORs be filed as a condition precedent to the entry of the Final Decree.
5
In accordance with the discretion afforded it, the court waives compliance with Local Bankruptcy
(a) Unless the court orders otherwise, within thirty (30) days following substantial consummation of a Chapter 11 plan, the debtor-in-possession, trustee, distributor, or plan proponent shall file with the clerk and the United States Trustee a closing report[ 6 ] which shall: (1) contain a breakdown of the disbursements, as applicable from the inception of the case, for fees of the debtor’s attorney, other professional fees and expenses, the trustee’s fees, and fees for the trustee’s attorney; (2) state the percentage of dividend paid and to be paid, or whether the future dividend percentage is not yet determinable; and (3) state the steps taken to consummate theplan and whether the initial plan distribution is complete.
(Emphasis added.)
Despite the fact that the court’s order confirming Gould’s plan concludes by ordering Gould “to file a Final Report with an Application for Final Decree ... ”. (Confirmation Order (doc. # 195) at 2, Nov. 29, 2004 (emphasis added)), thе court notes that the Administrative Office (“AO”) no longer requires the reporting of the statistical information collected in that report. See Memorandum from Steven R. Schlesinger, Chief, Statistics Div., Administrative Office of the United States Courts to Clerks, United States Bankruptcy Courts (May 29, 2008) (on file with Chief Deputy Clerk). Thus, under the AO’s 2008 directive, cases in this court are routinely closed without filing a closing report. Therefore, the court will not require Gould to file a closing report as a condition of entry a final decree.
Conclusion
Finding that the confirmation order is final, all payments have been made in accordance with Gould’s second amеnded plan, all other distributions due under the plan have been made, and there are no outstanding motions, contested matters or adversary proceedings, it is determined that the estate has been fully administered.
Accordingly, IT IS ORDERED that Gould’s motion for a final decree is granted, a final decree shall еnter, and this case shall be closed.
Notes
. Under the terms of the Compel Order, if the Debtor failed to comply with the deadlines for filing MORs and/or paying quarterly fees, there was a mechanism for the court to hold a hearing on the non-compliance or for the court to convert the case. The UST hаs not sought to employ the remedies available to her under the Compel Order.
. During the hearing on this motion, Attorney Mackey for the UST’s Office referenced the Second Circuit's
Schwartz v. Aquatic Development Group, Inc. (In re Aquatic Development Group, Inc.),
[W]e conclude that the Bankruptcy Court abused its discretion in concluding that [the debtor] was entitled to nunc pro tunc relief. Consequently, we need not—and do not— decide whether Congress’ 1996 amendment to [28 U.S.C.]§ 1930 strips bankruptcy courts of their equitable authority to grant nunc pro tunc relief where doing so would allow debtors to avoid paying quarterly trustee fees that the debtors would otherwise be required to pay.
Id. Gould does not seek nunc pro tunc relief.
In her written Objection to the Final Decree Motion, Attorney Claiborn conspicuously did not rely upon
Aquatic Development
for that position.
See Objection
at 3. Rather, she cited to
In re Boulders on the River, Inc.,
. In her citation to
Huff,
.The Second Circuit noted:
[although the statute does not specifically state that the closing of a bankruptcy case cuts off the accrual of the [UST]'s fees, courts interpreting the statute have uniformly held that "closure of a case after entry of a final decree is also an event that terminates quarterly fees because the existence of a cаse is a statutory precondition to the assessment of such fees.”
Aquatic Development,
. Although not articulated in her Objection, the requirement for filing MORs arises primarily out of the UST's Guidelines and Operating Requirements, which were implemented by the UST pursuant to
. The "closing report” is also called a "final report” or a “SARD Report”.