Hecker v. Seaver (In re Hecker)

Eight Circuit Court of Appeals, No. 11-3523 (January 11, 2013)
Where the debtor failed to assert an exemption in an asset prior to a hearing to consider a motion filed by the chapter 7 trustee for approval of a global settlement of the asset, the bankruptcy court did not abuse its discretion by refusing to continue the hearing to permit the debtor to file a motion to amend his schedules.
Procedural context:
Appeal from bankruptcy order refusing to continue a hearing on a motion to approve a settlement and approving the settlement.
The debtor was a party to a sales-commission agreement. The debtor filed chapter 7 and listed the agreement as a non-exempt asset worth $6 million. Over a two-year period, the debtor twice amended his schedules but never claimed an exemption in the agreement. The trustee negotiated a global settlement with the other pary to the agreement and certain secured creditors that provided for payments of money to both the estate and the secured creditors in exchange for a complete release. On the last day for objections to the motion, the debtor objected, arguing that the some of the settlement proceeds were exempt. At the hearing, the debtor acknowledged that no claim of exemption had been scheduled, but requested a continuance to file a motion to amend the schedules. The bankruptcy court refused. The Court of Appeals held the bankruptcy court did not abuse its discretion, citing the debtor's lack of diligence and prejudice to other parties. The Court further noted that the debtor was not precluded from attempting to modify his schedules to assert an interest in the settlement proceeds received by the trustee.
Loken, Beam, and Smith

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