In Re Stecklow
- Reporters:
- Before:
- Mannes
MEMORANDUM OF DECISION
Before the court is the motion of the debtors, Arthur Stecklow and Marion Stecklow, to reopen this bankruptcy case filed under Chapter 7 on May 9, 1991. The rule in the Fourth Circuit is that “the right to reopen a case depends upоn the circumstances of the individual case ... the decision whether to reopen is committed to the court’s discretion.”
Hawkins v. Landmark Finance Co.,
Therefore, the first issue for the court in determining whether or not to reopen this case on the debtors’ motion is whether any relief would be accorded to the debtors. For the reasons explained hereinafter, the motion will be denied, because no additional relief is accorded the debtors by adding previously unscheduled and unnoticed creditors to Schedule F — Creditors Holding Unsecured Nonpriority Claims, in this “no asset” Chapter 7 case. The creditors’ claims sought to be added to the debtors’ schedules have either been dischargеd by virtue of
On May 20, 1991, the office of the Clerk of the Bankruptcy Court prepared and caused to be mailed to all parties in interest Form 16A, Order and Notice of Chapter 7 Bankruptcy Filing, Meeting of Creditors, and Fixing of Dates. That оrder states, “THERE APPEAR TO BE NO ASSETS AT THIS TIME FROM WHICH PAYMENT MAY BE MADE TO CREDITORS. DO NOT FILE A PROOF OF CLAIM UNTIL YOU RECEIVE NOTICE TO DO SO.” This preliminary decision by the Clerk was made pursuant to Fed.R.Bank.P. 2002(e) that provides:
Rule 2002. Notice to Creditors, Equity Security Holders, United States, and United States Trustee
(e) Notice of No Dividend. In a chapter 7 liquidation cаse, if it appears from the schedules that there are no assets from which a dividend can be paid, the notice of the meeting of creditors may include a statement to that effect; that it is unnecessary to file сlaims; and that if sufficient assets become available for the payment of a dividend, further notice will be given for the filing of claims.
The Chapter 7 trustee’s investigation disclosed nothing to cause a change in the Clerk’s prediction. He filed the trustee’s report of no distribution. Following the entry of the discharge of the debtor, a final decree was entered, closing the case. Using the vernacular, this was a “no asset” case.
It is useful to set out the аpplicable segments of sections of the Bankruptcy Code and the Bankruptcy Rules.
*316 § 350. Closing and reopening cases.
(a) After an estate is fully administered and the court has discharged the trustee, the court shall close the case.
(b) A case may bе reopened in the court in which such case was closed to administer assets, to accord relief to the debtor, or for other cause.
§ 523 . Exceptions to discharge.
(a)A discharge undersection 727 , 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt—
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(3) neither listеd nor scheduled under section 521(1) of this title, with the name, if known to the debtor, of the creditor to whom such debt is owed, in time to permit—
(A) if such debt is not of a kind specified in paragraph (2), (4), or (6) of this subsection, timely filing of a proof of claim, unless such creditor had notice or actual knowledge of the case in time for such timely filing; or
(B) if such debt is of a kind specified in paragraph (2), (4), or (6) of this subsection, timely filing of a proof of claim and timely request for a determination of dischargeability of such debt under one of such paragraphs, unless such creditor had notice or actual knowledge of the case in time for such timely filing and request;
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(c)(1) Except as provided in subseсtion (a)(3)(B) of this section, the debtor shall be discharged from a debt of a kind specified in paragraph (2), (4), or (6) of subsection (a) of this section, unless, on request of the creditor to whom such debt is owed, and after notice аnd a hearing, the court determines such debt to be excepted from discharge under paragraph (2), (4), or (6), as the case may be, of subsection (a) of this section.
(2) Paragraph (1) shall not apply in the case of a Federal depository institutions regulatory agency seeking, in its capacity as conservator, receiver, or liquidating agent for an insured depository institution, to recover a debt de-
scribed in subsection (a)(2), (a)(4), (a)(6), оr (a)(ll) owed to such institution by an institution-affiliated party unless the receiver, conservator, or liquidating agent was appointed in time to reasonably comply, or for a Federal depository institutions regulatory agency acting in its corporate capacity as a successor to such receiver, conservator, or liquidating agent to reasonably comply, with subsection (a)(3)(B) as a creditor of such institution-affiliated party with rеspect to such debt.
§ 727 . Discharge.
(b)Except as provided insection 523 of this title, a discharge under subsection (b) of this section discharges the debtor from all debts that arose before the date of the order for relief under this chapter, and any liability on a claim that is dеtermined under section 502 of this title as if such claim had arisen before the commencement of the case, whether or not a proof of claim based on any such debt or liability is filed under section 501 of this title, and whether оr not a claim based on any such debt or liability is allowed under section 502 of this title.
Rule 4007 . Determination of Dis-chargeability of a Debt.
(b) Time for Commencing Proceeding Other Than Under§ 523(c) of the Code. A complaint other than under§ 523(e) may be filed at any time. A case may be reopened without payment of an additional filing fee for the purpose of filing a complаint to obtain a determination under this rule.
(c) Time for Filing Complaint Under§ 523(c) in Chapter 7 Liquidation, Chapter 11 Reorganization, and Chapter 12 Family Farmer’s Debt Adjustment Cases; Notice of Time Fixed. A complaint to determine the dischargeability of any debt pursuant to§ 523(e) оf the Code shall be filed not later than 60 days following the first date set for the meeting of creditors held pursuant to § 341(a). The court shall give all creditors not less than 30 days notice of the time so fixed in the manner provided in Rule 2002. On motion of any party in *317 interest, after hearing on notice, the court may for cause extend the time fixed under this subdivision. The motion shall be made before the time has expired.
Rule 5010. Reopening Cases.
A case may be reopened on motion of thе debtor or other party in interest pursuant to § 350(b) of the Code. In a Chapter 7, 12, or 13 case a trustee shall not be appointed by the United States trustee unless the court determines that a trustee is necessary to protect the interests of creditors and the debtor or to insure efficient administration of the case.
Rule 9006. Time.
(b) Enlargement.
(1) In General. Except as provided in paragraphs (2) and (3) of this subdivision, when an act is required or allowed to be done at or within a specified period by these rules or by a notice given thereunder or by order of court, the court for cause shown may at any time in its discretion (1) with or without motion or notice order the period enlarged if the request therefor is made before the expiration of the period originally prescribed or as extended by a previous order or (2) on motion made after the expiration of the specified period permit the act to be done where the failure to act was the result of excusable neglect.
(2) Enlargement Not Permitted. The court may not enlarge the time for taking action under Rule 1007(d), 1017(b)(3), 1019(2), 2003(a) and (d), 7052, 9015(f), 9023, and 9024.
(3) Enlargement Limited. The court mаy enlarge the time for taking action under Rules 1006(b)(2), 3002(c), 4003(b), 4004(a), 4007(c), 8002, and 9033, only to the extent and under the conditions stated in those rules.
It is futile to reopen this bankruptcy case on debtors’ motion to “allow Debtors to amend Schedulе F — Creditors Holding Unsecured Nonpriority Claims.” The primary focus of this opinion is upon
The unlisted and unscheduled creditor without knowledge holds a claim that either is or is not of a kind specified in
The reason for this conclusion is that no bar date has been established for the filing of proofs of claim by the creditor body. The case has been closed. As
Put another way, in a “no asset” case, the claim of an unscheduled unsеcured creditor is discharged unless the creditor falls within the provisions of one of the exceptions to discharge described above. The debtor may plead the discharge in bankruptcy court as a defense in thе state court action. The defense is every bit as applicable to scheduled creditors as unscheduled creditors. While this decision is limited to “no asset” cases, the same reasoning would apply were this an asset case and distribution had taken place.
There have been extensive discussions of this proposition in the cases of
In re Thibodeau,
There are two other observations that are pertinent.
The bankruptcy court, by virtue of the order of reference from the district court, entered pursuant to