California Court Discusses Reopening of Closed Bankruptcy Cases

Not all bankruptcy petitions that are filed are granted. Instead, in some cases, the court will deny a petition or dismiss a case. Fortunately, however, the law allows for appeals, and in many instances, a petitioner can persuade a court to reverse its ruling and allow a bankruptcy action to proceed. In a recent California bankruptcy case, a court discussed the process of reopening a bankruptcy proceeding, highlighting the importance of following the proper procedure.  If you live in California and wish to seek relief from your debts, you should speak to a trusted California bankruptcy attorney regarding your options.

Procedural History of the Case

It is reported that the petitioner filed a motion to reopen his bankruptcy case, which was filed in 2010. The bankruptcy court denied his motion, and he appealed. He had difficulties complying with the deadlines set forth under the scheduling order for the appellate process, and the bankruptcy court’s decision was affirmed without consideration of the petitioner’s brief. He then filed a motion to reinstate his appeal so that the court could consider his brief. The court granted his motion to reinstate the appeal but, upon reviewing the materials submitted by the petitioner, the court nonetheless denied his appeal.

Reopening a Bankruptcy Case

A bankruptcy court’s denial of a motion to reopen a bankruptcy case will be reviewed by an appellate court for abuse of discretion. In assessing whether an abuse of discretion has occurred, the appellate court will conduct a two-part inquiry. First, it will review whether the bankruptcy court applied the proper legal rule to the question presented. If so, the appellate court will then consider whether the bankruptcy court applied the legal standard in a manner that is illogical, implausible, or without support, based on inferences that can be drawn from the facts of record.

In the subject case, the appellate court found that the bankruptcy court did not abuse its discretion in denying the petitioner’s motion to reopen his case for several reasons. First, the appellate court explained that the petitioner’s bankruptcy case had been dismissed, not closed, and therefore could not be reopened. Rather, the petitioner was required to file an appeal or motion under Rules 9023 or 9024. However, the deadline for filing such an appeal or motion lapsed several years prior.

Additionally, the defendant did not refer to or cite grounds under Rule 9024 as to why the bankruptcy court should grant his motion to reopen his case, which the appellate court deemed a fatal flaw. The court also stated that the bankruptcy court set forth numerous other reasons for its decision to deny the plaintiff’s motion. Thus, the bankruptcy court’s ruling was affirmed.

Speak with a Trusted California Bankruptcy Attorney

If a bankruptcy case is closed or dismissed, the petitioner may still be able to seek relief. If you have business or personal debts you cannot pay, you should speak to an attorney regarding what measures you can take to protect your financial health. Matthew D. Roy is a trusted California bankruptcy attorney who can instruct you regarding your options and assist you in seeking reprieve from your debts.  You can contact Mr. Roy at (916) 361-6028 or through the form online to set up a meeting.