In re Colón Martinez

472 B.R. 137, 2012 WL 1674180
Bankruptcy Appellate Panel of the First Circuit·Decided May 14, 2012·No. BAP No. PR 11-100; Bankruptcy No. 10-09746-EAG·Published·Cited by 21 cases

Opinion

BOROFF, Bankruptcy Judge.

Angel Luis Colón Martinez (“the Debt- or”) appeals from an order of the United States Bankruptcy Court for the District of Puerto Rico dated November 22, 2011 (the “Order”). By the Order, the bankruptcy court both dismissed the Debtor’s chapter 11 case and disqualified him from filing a new case for 180 days pursuant to § 109(g).2 For the reasons set forth below, the Order is AFFIRMED.

BACKGROUND

The Debtor owns a home, residential rental property, unimproved land, and a commercial building (collectively, the “Properties”) in Puerto Rico. On October 18, 2010 (the “Petition Date”), he filed a voluntary petition for chapter 11 relief, pro se. In his schedules, the Debtor reported that, as of the Petition Date, the total value of the Properties was $1,975,000. He also identified his largest secured creditor as Allied Financial, Inc. (“Allied”), holding secured claims totaling $665,000.3

Shortly after case commencement, Allied filed a motion to dismiss the case, claiming that it was filed in bad faith (the “Motion to Dismiss”).4 The bankruptcy court responded by scheduling a status conference for December 2, 2010. Following that conference, the court entered an order providing the Debtor with an opportunity to obtain counsel by January 18, 2011, and giving that counsel until February 1, 2011, to oppose the Motion to Dismiss. Not long thereafter, the Debtor filed applications to retain counsel and an accountant, both of which applications the bankruptcy court approved on January 14, 2011. The Debtor’s new counsel filed an opposition to the Motion to Dismiss on February 5, 2011, albeit four days after the court-ordered deadline. Ultimately, the bankruptcy court denied the Motion to Dismiss.

On February 9, 2011, Allied filed a motion to “confirm termination or absence of stay” (the “Stay Termination Motion”). The Debtor’s counsel filed a response on February 22, 2011, and Allied timely replied. The bankruptcy court set the Stay Termination Motion for hearing on April 7, 2011. On April 4th, however, the Debtor, reportedly without the consent or even knowledge of his attorney, filed a motion with certain documents, asking that they be maintained under seal.5 Counsel for the Debtor apparently found this development troubling and immediately followed with a motion seeking to withdraw, arguing that he was not able to effectively communicate with his client. Allied re[140] sponded just as quickly by opposing the withdrawal and complaining that these developments were just another strategy by the Debtor to delay the proceedings.

All of the foregoing matters were before the bankruptcy court on April 7, 2011, and it acted decisively. The court: (1) confirmed the ruling in Jumpp v. Chase (In re Jumpp), 356 B.R. 789 (1st Cir. BAP 2006), that any termination of the stay by dint of § 362(c)(3) had no impact on property of the estate; (2) returned the motion under seal to the Debtor; (3) ordered the Debtor and his counsel to confer with respect to the motion under seal and motion to withdraw; (4) ordered counsel for the Debtor to inform the court within ten days as to whether he wished to pursue the motion to withdraw; and (5) advised the Debtor that the 300-day deadline to file a chapter 11 plan was August 15, 2011.

The opportunity granted by the court to the Debtor and his counsel to mend fences came to naught. On April 26, 2011, the Debtor’s counsel renewed his request for withdrawal. That request was granted on June 1st.6

On June 22, 2011, Allied filed a motion to convert the case to one under chapter 7 (the “Motion to Convert”). On July 29, 2011, the bankruptcy court denied the Motion to Convert without prejudice. At the same time, the court scheduled a status conference in the case for August 4th.

On August 4, 2011, the court conducted the promised status conference, but then ordered it continued to August 10th because the Debtor, who did appear by telephone, claimed not to have received appropriate notice of the hearing. The court did take the opportunity to urge the Debtor to retain counsel who was allowed to practice in the bankruptcy court.

The August 10th hearing was later continued to August 30, 2011 at the request of Allied’s counsel. On August 11th, however, Allied filed a motion for reconsideration (the “Reconsideration Motion”) of the court’s July 29 order denying the Motion to Convert. The Debtor opposed and the Reconsideration Motion was also set for hearing on August 30th.

At the rescheduled status conference on August 30, 2011, the court recommended to the Debtor that he take advantage of publicly available information regarding the bankruptcy process, but warned him that he was “required to know the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and the Puerto Rico Bankruptcy Rules.” At the conclusion of the status conference, the court granted the Debtor another 15 days to obtain new counsel, directed him to file a disclosure statement and plan by October 3, 2011, and set the hearing on the approval of the disclosure statement for November 3, 2011 (“the August 30, 2011 Order”). The court took the Motion for Reconsideration under advisement, but denied same shortly thereafter.

On September 6, 2011, the Debtor filed a motion requesting an additional 90 days to obtain counsel, representing that he was in the midst of negotiations with a prospective attorney and would then require the retention of an accountant. In its opposition to the motion, Allied argued that a further extension was not justified.

The Debtor failed to file either a plan or disclosure statement by October 3, 2011. On October 5, 2011, Allied filed another motion to dismiss the case (the “Second [141] Motion to Dismiss”). At a November 3, 2011 hearing on the Second Motion to Dismiss, the bankruptcy court continued the matter to November 22, 2011, but directed the Debtor to show cause by November 21, 2011 why the case should not be dismissed for failure to comply with the August 30, 2011 Order (“Order to Show Cause”). The “minutes of proceeding and order” memorializing the Order to Show Cause specifically provided, in pertinent part:

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In re Colón Martinez, 472 B.R. 137, 2012 WL 1674180 (bap1 2012).

472 B.R. 137 (In re Colón Martinez) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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