Closing an Individual Chapter 11 Case Before Discharge

Court

Minnesota Bankruptcy Case: Whether to Close Individual Chapter 11 Case Before Discharge is Within Court’s Discretion

The following is a summary of a Minnesota bankruptcy case or a case relevant to Minnesota bankruptcy law.

Minnesota Bankruptcy Case:

Shotkoski v. Fokkena (In re Shotkoski), 420 B.R. 479 (B.A.P. 8th Cir. (S.D.) 11/24/09) (Saladino, J.).

Case Summary:

Whether to Close Individual Chapter 11 Case Before Discharge is Within Court’s Discretion

The Eighth Circuit BAP affirms the bankruptcy court’s denial of debtors’ motion for entry of a final decree in their individual Chapter 11 case, because the decision was not an abuse of the bankruptcy court’s discretion. The debtors’ confirmed plan called for long term payment of more than $1.7 million in real estate and other loans. Following confirmation, the debtors moved for the decree that would allow the case to be closed (and the quarterly U.S. Trustee fees to cease), but the bankruptcy court denied the motion, apparently under the impression that the rules do not contemplate closing the case until the discharge is entered, after the plan payments are complete. The BAP rejected the appellant’s characterization of the question as one of statutory interpretation, and so declined to apply a de novo standard of review. It applied an abuse of discretion standard and held that because the lower court was most familiar with the circumstances of the case, it did not abuse its discretion in concluding that the case was not “fully administered,” as required by Rule 3022, before closing. The BAP did, however, make clear that it was not holding that every individual Chapter 11 case has to remain open until all plan payments are completed and discharge is entered. The issue is within the court’s discretion.

Credit: The preceding was a summary of a case relevant to Minnesota bankruptcy law. The case summary was prepared by the U.S. Bankruptcy Court through Judge Robert J. Kressel & attorney Faye Knowles.