No. 09-6063 (8th Cir. BAP 11/24/09)
The Eighth Circuit Bankruptcy Appellate Panel comprised of Judge Saladino, Judge Kressel, and Judge Schermer affirmed the South Dakota bankruptcy court’s decision denying the individual Chapter 11 debtors’ request for a final decree. The appellants were in the business of managing and operating residential rental properties and an order confirming their plan of reorganization was entered on September 16, 2008. Approximately one year later, appellants sought to obtain entry of a final decree in their chapter 11 case and argued that the plan had been substantially consummated. In evaluation of this issue on appeal, the BAP largely adopted the same approach as set forth by the Tenth Circuit BAP in Union Home & Industrial, Inc. In applying these factors, the court applied the abuse of discretion standard and noted the deferential nature of the review. The BAP further explained that the only guidance in the Bankruptcy Code on the issue was the Advisory Committee Note to Rule 3022. The BAP held that the Advisory Committee Note now bears little weight as it does not account for BAPCPA’s provisions which preclude debtors from receiving a discharge prior to completion of all plan payments. Ultimately, the 8th Circuit BAP held that the determination of whether a case has been fully administered falls within the ambit of the bankruptcy court’s discretion and that there was an absence of abuse of this discretion in this case. In so holding, the BAP expressly stated that the ability to close individual Chapter 11 cases prior to discharge remained within the realm of the bankruptcy court’s discretion as the act of closing is largely a ministerial task without impact to the court’s continuing jurisdiction.