In re GUI-MER-FE, Inc.
| Decision Date | 25 April 2022 |
| Docket Number | 21-01659 (ESL) |
| Parties | IN RE: GUI-MER-FE, INC. Debtor |
| Court | United States Bankruptcy Courts. Tenth Circuit. U.S. Bankruptcy Court — District of Puerto Rico |
This case came before the court upon the Debtor's Report of Payments under the Plan and Request for Final Decree Pursuant to F.R.B.P 3022 by which the Debtor requested that a final decree be entered given "that the Plan is effective and that the estate has been fully administered", thus administratively closing the case. (Docket No. 65). The court entered an Order stating that the Debtor's request for an administrative closing of the case may contradict the dispositions in the confirmation minutes. The court ordered the Debtor, the Subchapter V trustee, the U.S. Trustee, and any party in interest who so wishes, to further clarify within twenty-one days why a final decree may be entered at this juncture. (Docket No. 74).
The Debtor filed a Motion in Compliance of Order and in Request of Administrative Closing of the Case withdrawing its request for entry of final decree and clarifying that its request is for the "administrative closing of the case" as it is customarily done in chapter 11 cases and, thus, will result to the benefit of the estate because it would save the Debtor from having to incur additional expenses for post-confirmation professional services. Debtor's position is that the administrative closing of the case does not contradict the dispositions of the confirmation minutes. (Docket No. 76).
The United States Trustee for Region 21 (hereinafter referred to as "U.S. Trustee") filed a Motion in Compliance with Court's Order at Docket No. 74 opposing the entry of an order closing the case at this time because there is no distinction between an order entering a final decree and an order directing the "administrative closing of the case." The U.S. Trustee argues that the entry of an order closing the case is premature, given that the subchapter V trustee has not been discharged from her duties. Moreover, pursuant to the Court's Confirmation Order, the trustee will not be discharged until after the Debtor completes all plan payments, and thus entry of an order closing the case before said time is proscribed by section 350(a). (Docket No. 77). For the reasons stated herein, the Court denies the Debtor's Motion in Compliance of Order and in Request of Administrative Closing of the Case.
The Court has jurisdiction pursuant to 28 U.S.C. §§ 1334(b) and 157(a). This is a core proceeding pursuant to 28 U.S.C. §§157(b)(1) and (b)(2)(A). Venue of this proceeding is proper under 28 U.S.C. §§1408 and 1409.
The Debtor filed a bankruptcy petition under Subchapter V of Chapter 11 of the Bankruptcy Code on May 27, 2021 (Docket No 1). On May 28, 2021, Diana Torres Cancel was appointed as subchapter V trustee (Docket No. 6). The 341 creditors' meeting was scheduled and held on July 2, 2021 (Docket Nos. 6 & 35). On July 13, 2021, a status conference was held in conformity with 11 U.S.C. §1188(a). (Docket No. 36). On August 25, 2021, the Debtor filed the Plan of Reorganization (Docket No. 44). On September 25, 2021, the Debtor filed its Statement Pursuant to 11 U.S.C. §1129(a) Requirements as modified by 11 U.S.C. §§1181 and 1191 which shows that the Plan of Reorganization dated August 24, 2021, complies with the plan confirmation requirements of the above referenced sections and thus requests the Court enter an Order confirming the plan. (Docket No. 54). On September 28, 2021, the confirmation hearing was held in which the chapter 11 subchapter V plan dated August 24, 2021, was confirmed pursuant to 11 U.S.C. §1191(b). (Docket No. 55). An order confirming the subchapter V plan was entered on the same date (Docket No. 56).
On November 04, 2021, The Debtor filed its Report of Payments under the Plan and Request for Final Decree Pursuant to F.R.B.P. 3022 (Docket No. 65). On December 12, 2021, the Court's Order stated in pertinent part as follows:
Consequently, on January 7, 2022, the Debtor filed a Motion in Compliance of Order and in Request of Administrative Closing of the Case (Docket No. 76). On January 12, 2022, the U.S. Trustee filed a Motion in Compliance with Court's Order at Docket No. 74. (Docket No. 77)
The Debtor withdrew its request for entry of a final decree and clarified that its request is for the "administrative closing" of the case as is customarily done in chapter 11 cases. The Debtor argues that the costs of administration of the case will be reduced by minimizing the need for post confirmation services to be rendered by the professionals of the case, including the Trustee, debtor's attorney and the accountant, reducing the amount of fees to be paid for those services, thus increasing the availability of funds to assure payments to creditors under the terms of the confirmed plan. Article X of the confirmed plan of reorganization provides that the Debtor will make direct payments to its creditors pursuant to 11 U.S.C. §1194(b). Direct payments to creditors by Debtor will allow for a more expeditious and economical form of administration of the case than making payments through the subchapter V Trustee. After all the payments are completed throughout the life of the confirmed plan, the Debtor will request the Trustee to file the Final Report. After the Final Report has been filed, then the Debtor will file its request for Final Decree and request for entry of order of corporate discharge pursuant to §1192 and §350(a) and for the final closing of the case in compliance with this Court's order included in the minutes of confirmation. Debtor contends that the administrative closing does not contradict the dispositions of the confirmation minutes, therefore resulting in a benefit to the estate.
The U.S. Trustee opposes the "administrative closing" of the case based upon the following arguments: (i) it is not aware of any distinction between an order entering a final decree, and an order directing the "administrative closing of the case." Usually after a chapter 11 case is confirmed, the Court signals the administrative closing of the case through the approval of the final decree pursuant to 11 U.S.C. §350(a) and Fed.R.Bankr.P. 3022 or the Court may enter an order dismissing or converting the case; (ii) section 350(a) provides that, "[a]fter an estate is fully administered and the court has discharged the trustee, the court shall close the case." 11 U.S.C. §350(a). In the instant case, the entry of an order closing the case is premature, as the subchapter V trustee has not been discharged under §1191(b); (iii) Debtor's plan was confirmed under §1191(b), thus the service of the subchapter V trustee was not terminated upon the substantial consummation of the Plan, as provided by §1183(c)(1). The subchapter V trustee continues in place, not just to make payments to creditors under the Plan, but also to appear at any hearing requesting the modification of the plan after confirmation in conformity with 11 U.S.C. §1183(b)(3)(C). The Trustee has the duty of monitoring the plan payments made by the Debtor if, as in this case, the Plan provides for Debtor to make such payments under 11 U.S.C. §1183(b)(4). Only after the subchapter V trustee files the final report and accounting may the Debtor be entitled to request the entry of a final decree. Thus, under the Court's Confirmation Order, the trustee will not be discharged until after the Debtor completes all plan payments. Therefore, entry of an order closing the case before said time is proscribed by 11 U.S.C. §350(a).
The issue before the Court is whether a Debtor whose plan was confirmed under 11 U.S.C. §1191(b) may request the "administrative closing" of the case without having a final decree entered prior to the closing of the case.
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