In Re Brookover

259 B.R. 884, 2001 Bankr. LEXIS 287, 2001 WL 303814
CourtUnited States Bankruptcy Court, N.D. Ohio
DecidedMarch 26, 2001
Docket19-60071
StatusPublished
Cited by4 cases

This text of 259 B.R. 884 (In Re Brookover) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Brookover, 259 B.R. 884, 2001 Bankr. LEXIS 287, 2001 WL 303814 (Ohio 2001).

Opinion

MEMORANDUM OF OPINION AND ORDER

MARILYN SHEA-STONUM, Bankruptcy Judge.

On February 16, 2001, the Motion To Reconsider this Court’s Order of November 28, 2000, filed on December 7, 2000, by Donald M. Robiner, United States Trustee, Ohio/Michigan Region 9, (the “UST”), together with his Memorandum in Support of the Motion to Reconsider, filed on January 28, 2001, came on for hearing. Present at the hearing were Dean Wyman, Acting Assistant UST; John L. Daugherty, Trial Attorney for the Executive Office of United States Trustees; and, Michael V. Demczyk, standing chapter 12 Trustee for the Eastern Division of the Northern District of Ohio (the “Trustee”).

At issue was the purported resignation of the Trustee from the above-captioned chapter 12 cases presently pending before this Court and the proper procedure to be followed by a trustee in resigning from a pending case. The issue is not whether the UST has initial power to appoint a standing or ad hoc chapter 12 trustee, as that appointment power is created by statute and plainly is that of the UST in this District, 28 U.S.C. § 586, but what the respective roles of the UST, the chapter 12 trustee and the Court are in the oversight of pending cases. In one sense, this appears to be a narrow issue. However, it raises central questions of the roles of various statutory players on the bankruptcy stage.

This proceeding arises in a case referred to this Court by the Standing Order of Reference entered in this District on July 16, 1984 and is determined to be a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), over which this Court has jurisdiction pursuant to 28 U.S.C. § 1334.

I. BACKGROUND

This issue arose subsequent to the following correspondence:

On November 7, 2000, the UST sent a letter to the Trustee, with copies to the Bankruptcy Judges, Clerk and Deputy Clerks in Charge of the four court locations for the Northern District of Ohio, Eastern Division, and certain individuals in the UST’s office in Cleveland. In the letter, the UST purported to accept the resignation of the Trustee using the following language:

I have received your letter of resignation as Chapter 12 Standing Trustee dated October 31, 2000 which indicates that the resignation will be effective November 30, 2000. I accept your resignation and thank you for your years of service as the Chapter 12 Standing Trustee for the Eastern Division of the Northern District of Ohio. There have been insufficient Chapter 12 case filings over the past few years to support a Standing Trustee operation, and we appreciate your willingness to administer these cases for minimal compensation. Notice will be filed with the Bankruptcy Court in each case of your resignation and my appointment as Chapter 12 interim trustee. My staff will be in contact with you regarding the transition of funds and files to our office. We anticipate your full cooperation in this regard and in the filing of your final annual report....

On the same date, November 7, 2000, the UST sent a letter to me 1 , with a copy *887 to Joyce Garner, Deputy Clerk in Charge in Akron, stating:

Enclosed for your information is a copy of my letter accepting the resignation of Michael Demczyk as Chapter 12 Standing Trustee for the Eastern Division of the Northern District of Ohio. There are no longer sufficient Chapter 12 cases to justify a Standing Trustee under 28 U.S.C. § 586(b). On the active Chapter 12 cases, we anticipate appointing successor individual case trustees under 11 U.S.C. § 1202(a). These will be administered in a similar manner as Chapter 7 cases.

Copies of each of these letters were filed by this Court in the three above-captioned Chapter 12 cases pending before this Court. In re Guilitto [docket ## 56, 57], In re Montgomery Farms [docket ## 74, 75], In re Dale and Cynthia Brookover [docket ## 14, 15].

The UST did not file the letters with the Court, and did not serve them on any parties or attorneys having an interest in the above-captioned cases. The letters were not made a part of the Court record, except by the Court itself. (See n.1 supra). In this regard, this Court has repeatedly stated its strong view of the importance of transparency in the records of bankruptcy proceedings. The parties in interest have a right to review the files to ascertain what is happening in cases that affect them. Such transparency is a central factor in assuring that debtors, creditors and others involved have faith in the bankruptcy system and can make sense of its procedures.

The Court was presented only with these two, short and not very informative letters. It was given no additional information concerning the circumstances under which the purported resignation was tendered and little information on the UST’s plan to name a successor trustee. Thus, the Court, and certainly the parties in interest, were left in the dark regarding how these cases were to go forward and with whose help in the meantime. It was within this informational vacuum, and the suppositions that such a vacuum could allow, that the Court was left to act.

On November 28, 2000, this Court issued an identical Order in each of the above-captioned cases which was served on the Trustee, the UST and the attorneys for the chapter 12 debtors, stating, in pertinent part:

Michael V. Demczyk is the Standing Chapter 12 Trustee in this case. The Court recently received correspondence from Donald M. Robiner, United States Trustee, Ohio/Michigan Region 9, which consists of two letters dated November 7, 2000 (the “Letters”) ... The Letters raise a question about whether Mr. Demczyk wishes to continue to serve as the Chapter 12 Trustee. If a change is requested, the Court will await a motion filed and served on all parties in interest. See 11 U.S.C. § 324. Mr. Demczyk is to continue to carry out his responsibilities in this case, absent a Court Order to the contrary. 2

On December 7, 2000, the UST filed his Motion to Reconsider 3 and on January 23, *888 2001, he filed a Memorandum In Support of the Motion to Reconsider (“Mem. in Supp.”). A hearing on the Motion to Reconsider was held on February 16, 2001. At the hearing the Court was shown, for the first time, the Trustee’s letter of October 31, 2000, to the UST purporting to resign as Trustee. The letter stated:

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Bluebook (online)
259 B.R. 884, 2001 Bankr. LEXIS 287, 2001 WL 303814, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-brookover-ohnb-2001.