Summary:
Bio-Med obtained a default judgment against Ms. Strongs for breach of contract and conversion, alleging that she had improperly retained insurance reimbursement checks totaling $88,767.75, using those funds to purchase two luxury vehicles, which were subsequently transferred to family members. Ms. Strongs filed a Chapter 13 bankruptcy, but after her §341 Meeting of Creditors was continued four times, the Trustee moved to dismiss the case, alleging a lack of good faith in prosecuting the case and failure to disclose either the Bio-Med lawsuit or the vehicle transfers. After initially contesting the dismissal, Ms. Strongs withdrew her opposition and the case was dismissed.
Just shy of three months later, Ms. Strongs filed a Chapter 7 bankruptcy and did attend the §341 Meeting of Creditors. The Chapter 7 Trustee obtained an extension of time to object to discharge and conducted a 2004 Exam. The Trustee subsequently sought dismissal of the case under both 11 U.S.C. § 109(g), arguing that she was ineligible to be a debtor as her previous case had been dismissed for willful failure to abide by court orders, or, alternatively, pursuant to 11 U.S.C. § 707(b) for abuse of the bankruptcy system.
Confining itself to 11 U.S.C. § 109(g), the bankruptcy court began by holding that, absent a showing of prejudice caused by the delay, there is no time limit for moving to dismiss. Continuing, the bankruptcy court noted that “willful” is not defined in the Bankruptcy Code and should be determined on a case-by-case basis. Although the dismissal order in the previous case did explicitly provide for dismissal with prejudice, it did dismiss the case as a “bad faith filing” due to the repeated continuances, inaccurate schedules, etc. As such the court found that Ms. Strongs was ineligible under § 109(g) to file the present case for a period of 180 days from that dismissal.
Commentary:
The withdrawal by Ms. Strongs of her opposition to the Motion to Dismiss the Chapter 13 case “at the proverbial eleventh hour” and failure to appear at the hearing, was clearly an irritant to the bankruptcy court.
For a copy of the opinion, please see:
Strongs- Ineligibility under 11 U.S.C. § 109(g) for Willful Failure to Abide by Court Orders
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