Summary:
Following the confirmation of its Chapter 11 plan and closure of the bankruptcy, the Debtor was sued in state court for a pre-petition debt by a creditor that was unknown at the time of filing of the bankruptcy and unlisted in the schedules. The state court directed the Debtor to re-open the bankruptcy case for a determination of whether the debt was discharged. Facing dismissal for failure to pay quarterly fees, the Debtor argued that it should not be required to pay such fees as they were forced to reopen the case.
The court quickly rejected the argument that the Debtor, which had filed a voluntary Chapter 11, was forced to appear again. Further reviewing both the Bankruptcy Code and public policy, the court held there was no basis for not requiring payment of quarterly fees.
Commentary:
Keep in mind that there is no fee for re-opening a case for enforcement of the discharge order and no quarterly fees in Chapter 7 or Chapter 13 cases. Whether the conversion of this case to a Chapter 7, several years after the Chapter 11 Confirmation Order and discharge were entered, could have revoked the Confirmation Order (which pursuant to Rule 7001 would have required an Adversary Proceeding and would likely have been subject to the one year limitation of Rule 60(b) in granting relief from a Final Order) is questionable. Perhaps the Debtor should have just happily played B’rer Rabbit and been thrown into the Chapter 7 briar patch, since that my have increase the likelihood of discharging this debt.
For a copy of the opinion, please see:
Barbetta, L.L.C.- Quarterly Filing Fees for Re-opened Chapter 11
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