In Re Wren

315 B.R. 921, 2004 Bankr. LEXIS 1611, 2004 WL 2369961
CourtUnited States Bankruptcy Court, M.D. Georgia
DecidedOctober 8, 2004
Docket18-10059
StatusPublished
Cited by1 cases

This text of 315 B.R. 921 (In Re Wren) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, M.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Wren, 315 B.R. 921, 2004 Bankr. LEXIS 1611, 2004 WL 2369961 (Ga. 2004).

Opinion

*922 MEMORANDUM OPINION

JOHN T. LANEY, III, Bankruptcy Judge.

On August 23, 2004, the court held a telephonic hearing on the Motion of David and Vicki Wren to close the case nunc pro tunc. At the conclusion of the hearing, the court took the matter under advisement. After considering the parties’ briefs and oral arguments, as well as applicable statutory and case law, the court makes the following findings of fact and conclusions of law.

PROCEDURAL HISTORY

The Wrens filed a Chapter 11 Bankruptcy proceeding May 13, 1993, which was confirmed on June 27, 1994. A final decree was entered on October 28, 1994. The Debtors asked the court to re-open the case in June 1996, but later withdrew the motion. The Debtors again moved to re-open the case January 2, 2002. The case was then re-opened on February 27, 2002, specifically to address an adversary proceeding against Sallie Mae Servicing, L.P. There have been no other actions besides the adversary proceeding in connection with this case since it was reopened.

Since the plan was reopened, the Wrens have not paid the Trustee any fees in accordance with the statute. The United States Trustee filed a motion to convert the case to a Chapter 7 on July 21, 2004. The Trustee cited the Wrens’ failure to perform under 28 U.S.C. § 1930(a)(6) by not paying fees or submitting monthly operating reports in compliance with the statute as the basis for bringing the motion. In response, on July 23, 2004 the Wrens filed a motion to close the case nunc pro tunc to January 2, 2002, contending the fees and monthly reports were not necessary because the case was only opened for the filing of the adversary proceeding.

CONCLUSIONS OF LAW

The Eleventh Circuit defined nunc pro tunc in Cypress Barn. Inc. v. Western Electric Co., 812 F.2d 1363 (1987) as retroactive relief that “merely recites court actions previously taken but not properly or adequately recorded.” Id. at 1364 (citations omitted).

This district has addressed the high burden placed on a party seeking a nunc pro tunc order in In re Brown, 251 B.R. 916 (Bankr.M.D.Ga.2000). In Brown the creditor seeking the retroactive relief had the burden to show that, if granted, the action “would injure no other interest... [which] could be a difficult burden to satisfy in some cases in that it requires proof of a negative circumstance.” Id. at 919.

A. There are not extraordinary circumstances

The Middle District Bankruptcy Court has applied a requirement of extraordinary circumstances to grant retroactive relief. In In re Camp Lightweight, Inc., 76 B.R. 855 (Bankr.M.D.Ga.1987), a nunc pro tunc order was not granted because the debtor failed to establish extraordinary circumstances warranting retroactive relief. In that case, the attorney for a Chapter 11 debtor in possession neglected to have the have the debtor apply for authorization to employ counsel. The court declined to approve the appointment of counsel nunc pro tunc because “retroactive approval of appointment of a professional may be granted by the bankruptcy court in its discretion but that it should grant such approval only under extraordinary circumstances.” Id. at 857 (citing In re Arkansas Co., 798 F.2d 645, 650 (3d Cir.1986)). In Camp Lightweight the attorney’s “mere oversight” to seek appoint *923 ment did not meet the burden of extraordinary circumstances. Id.

In re Aquatic Development Group, Inc., 352 F.3d 671 (2d Cir.2003) also addressed the extraordinary circumstances requirement. Like the present case, the debtor in Aquatic wanted to close its Chapter 11 case nunc pro tunc to avoid paying United States Trustee fees. The fees were assessed when 28 U.S.C. § 1930(a)(6) was amended to require quarterly Trustee fees until a case is either converted or dismissed. Prior to that, § 1930(a)(6) discontinued payments when a plan was confirmed in addition to converted or dismissed cases. The Aquatic case had been confirmed and the debtor contended it was “substantially consummated.” Id. at 675.

The debtor’s motion to close the case nunc pro tunc was granted by the bankruptcy court and affirmed by the district court under a two prong test: “(i) if the application had been timely, the court would have authorized the [relief], and (ii) the delay in seeking [the relief requested] resulted from extraordinary circumstances.” Id. at 676. The court found that the “prolonged nature of this plan and the timing of the amendment of ... § 1930; the consequences of that change; and the failure of the parties to adequately monitor the progress of this case” constituted extraordinary circumstances. Id.

The Second Circuit Court of Appeals reversed and found the bankruptcy court had abused its discretion. “First, the unusual length of time required to consummate the reorganization plan ... may well have been extraordinary, but there is no evidence in the record that the time required to consummate the plan caused [the debtor] to delay its request to close the bankruptcy case.” Id. at 678-79 (emphasis added). Next, the court addressed the timing of the amendment to the Code. The court concluded that although this may have lead to unfortunate and unanticipated financial consequences to the debt- or, it was not the cause of the delay in moving to close the case. Indeed, the court notes that such a change should have spurred the Debtor “to act diligently in seeking closure.” Id. at 679. Finally the court discussed the parties’ failure to adequately monitor the closure of the case. The court stated that simple neglect did not constitute extraordinary circumstances. Further, “characterizing [the debtor’s] neglectful conduct as extraordinary circumstance justifying nunc pro tunc relief mistakes cause for effect — [the debt- or’s] failure to act was itself the delay, rather than a ‘circumstance’ leading to it.” Id.

In the present case, extraordinary circumstances have not been presented. Like the debtor in Aquatic, the Wrens seek to avoid paying fees to the Trustee, but have failed to show extraordinary circumstances to justify granting such a motion nunc pro tunc. Although the Wrens have reopened their ten year-old case, which may be out of the ordinary, the delay in seeking this relief was not a result of “any circumstances sufficiently extraordinary to justify the rare and powerful relief of retroactive closure.” Id.

B. There is no previous action by this court

In

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Bluebook (online)
315 B.R. 921, 2004 Bankr. LEXIS 1611, 2004 WL 2369961, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-wren-gamb-2004.