In re Yonish

In re Yonish, Case No. 15-8006, (6th Cir. BAP March 3, 2016) (unpublished)
Limiting the precedential effect to the parties, the Sixth Circuit Bankruptcy Appellate Panel (BAP) reversed the decision below denying the Debtors' motion to reopen their case in order to avoid judgment liens. The BAP held that delay and an unsupported assumption that the delay was prejudicial was insufficient to deny a motion under Section 350, and the court below had no evidence any creditors changed their position or relied on the failure to avoid liens during the interim period. The BAP also noted that neither Code Section 350 nor Bankruptcy Rule 5010 had a time limitation.
Procedural context:
Debtors filed a motion to reopen their chapter 7 case over two years after their discharge to seek avoidance of judgment liens noted on their initial bankruptcy schedules. The bankruptcy court for the Northern District of Ohio denied the motion, and the Debtors timely appealed.
The Debtors filed chapter 7 on October 31, 2011, and listed pre-petition judgment liens in favor of Discover Bank and Chase Bank, along with a residence which was claimed exempt. No attempt was made to avoid the judgment liens, the Debtors received a discharge in March, 2012, and the case was closed in September, 2012. In July, 2014, the Debtors moved to reopen their case to avoid the judgment liens in order to refinance their mortgage. Debtors' counsel candidly admitted the failure to avoid the liens was his error. No creditor objected, and no evidence of prejudice to creditors was introduced. The bankruptcy court ruled that the delay was too long, and that it "didn't want to open the door for these cases."
Delk, Harrison and Lloyd; opinion by Harrison

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