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Alan Halperin v. Mark Richards

Summarizing by Amir Shachmurove

In re Paul Francis

Case Type:
Case Status:
19-9011 (1st Circuit, Apr 27,2021) Published
A bankruptcy court's authority to enforce its own orders gives the court power to dismiss a bankruptcy petition, and to deny the debtor a discharge, if the debtor willfully fails to comply with the court's orders. Thus, a debtor does not have an absolute right to have its case dismissed without prejudice when the debtor fails to comply with the bankruptcy court's orders. Additionally, § 521(i)(1) does not prohibit a bankruptcy court from denying the debtor a discharge upon dismissal of the debtor's case.
Procedural context:
The debtor appealed the order of the bankruptcy court dismissing his bankruptcy case and denying him a discharge to the BAP. The BAP affirmed, and the debtor appealed to the Court of Appeals.
The debtor and his wife own five properties that are encumbered by more than $2 million in mortgages and taxes. The debtor filed a Chapter 13 petition in April 2017. This case was dismissed by the bankruptcy court because the debtor failed to file required documents. The debtor filed a second Chapter 13 petition in July 2017. Because the debtor's liabilities exceed the current secured debt cap, the debtor converted his case to a Chapter 11. The bankruptcy court granted the requested conversion in late September 2017. About a week later, the debtor consented to a court order that required him to file a plan and disclosure statement by late January 2018. After the debtor failed to comply with this order, the US Trustee moved to convert the case to a Chapter 7 proceeding. The US Trustee alleged that the debtor not only failed to comply with the consent order, but the debtor also failed to pay fees and to provide the US Trustee with requested information. In March 2018, the bankruptcy court granted the US Trustee's motion and converted the case to Chapter 7. The bankruptcy court also ordered the debtor to file, by early April, a list of post-petition creditors or a verification that there were none. The court also ordered the debtor to file a statement of intention (Fed. R. Bankr. P. 1007(b)(2)) within 30 days. The bankruptcy court's order also stated, "the case MUST be automatically dismissed under 11 U.S.C. § 521(i) if certain documents are not filed" (emphasis in original). A first meeting of creditors was set for April 26. The debtor failed to appear at the § 341 meeting or to file the documents required by the March 2018 order. On July 5, 2018, the court ordered to the debtor to file missing documents by July 19. This order stated that "refusal to obey a lawful order of the court is grounds for denial of discharge." The order was mailed, by first-class mail, to the debtor's residence. After the debtor failed to file the missing documents, the court entered a show cause order that required the debtor to show cause "why he should not be denied a discharge for refusal to obey a lawful order of the court." The debtor's lawyer responded on August 27. She stated that she had not received the statement of intention or list of post-petition creditors, but expected to be able to do so by August 30. Nothing was filed on August 30. The court then entered an order requiring the debtor to appear. The hearing was rescheduled, at the debtor's request, until September 25. On September 21, the debtor filed a statement asserting that he had no post-petition creditors. On September 23, the debtor filed the statement of intention that was due in April. The debtor appeared for the show-cause hearing on September 25 and admitted that he had received the orders and notices from the court. He then claimed that he had not opened the mail while his wife had been away. The bankruptcy court did not find the debtor credible and referred to his prior, dismissed, Chapter 13 case and denied the debtor a discharge.
Thompson, Selya, and Kayatta

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