Gilboy v. Reukema

Docket No. 14-2538-bk (2d Cir. April 29, 2015) (Summary Order)
AFFIRMING the district court’s judgment affirming the bankruptcy court’s dismissal of the bankruptcy case for cause under 11 U.S.C. § 707(a), the Court of Appeals for the Second Circuit held that there was no clear error in the bankruptcy court’s factual findings under the circumstances and the bankruptcy court did not abuse its discretion.
Procedural context:
Appeal from a judgment of the United States District Court for the Northern District of New York (Sharpe, C.J.) affirming the dismissal of the debtor’s bankruptcy case for cause by the United States Bankruptcy Court for the Northern District of New York (Littlefield, J.). The Court affirmed the district court’s judgment.
The Court reviewed the bankruptcy court’s decision for abuse of discretion and concluded that there was no abuse of discretion based on the circumstances of the case. In reaching that conclusion, the Court held that the analysis in a for-cause dismissal can consider whether the debtor is able to repay his debts as part of the larger inquiry into whether dismissal of the case would be in the best interest of all parties in interest. Here, Peter David Gilboy (“Gilboy”) filed for bankruptcy relief days before the start of a jury trial to adjudicate the merits of a claim asserted by Kent R. Reukema (“Reukema”). Gilboy admitted that he filed for bankruptcy in order to avoid the pending trial or the risk of a default judgment against him. Gilboy made no showing that he was unable to meet his financial obligations. Gilboy had no debts at the time of the filing and in the event Gilboy lost in the litigation with Reukema, Gilboy could refile for bankruptcy at that time. Reukema, on the other hand, was Gilboy’s only creditor and had an interest in adjudicating his claims before a jury in his chosen venue. Under the circumstances, the Court held there was no clear error in the bankruptcy court’s factual findings and that it was not an abuse of discretion to dismiss the bankruptcy case under section 707(a) for cause because it was in the best interest of all the parties.
Sack, Droney (Circuit Judges), and Stanceu (Chief Judge of the U.S. Court of International Trade, sitting by designation)

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