Beruflich Dokumente
Kultur Dokumente
2d 779
5 Bankr.Ct.Dec. 158, Bankr. L. Rep. P 67,128
The issue presented on this appeal is whether a bankruptcy court, prior to the
time that the bankruptcy case has been closed, may deny an application made
by the bankrupt to amend his petition. We hold that, in the circumstances of
this case, Bankruptcy Rule 1101 Required the bankruptcy court to allow an
amendment listing an additional creditor. We therefore reverse the district
court, which refused to permit the amendment.
On March 6, 1978, Sol Brown brought an action in the Superior Court of New
Jersey, claiming that $10,000 was due and owing to him under two promissory
II
6
The district court concluded that the bankruptcy court has discretion to grant or
to deny leave to amend a petition in bankruptcy. Finding that Gershenbaum had
not set forth facts revealing an abuse of discretion by the bankruptcy court, it
affirmed. If the Bankruptcy Rules placed amendments within the discretion of
the bankruptcy court, we might be persuaded to affirm the district court's order.
But Rule 110 provides that a petition may be amended by the bankrupt "as a
matter of course at any time before the case is closed," and therefore we must
reverse.
This view was not adopted in Bankruptcy Rule 110, which in 1973 superseded
General Order 11 and the interpretive case law.4 The first sentence of Rule 110
provides that:
10
The comment of the Advisory Committee on Bankruptcy Rules reveals that the
rule was intended to end the discretion exercised by the bankruptcy courts
under General Order 11:
11
General
Order 11, from which this rule is principally derived, has required an
application for leave to amend a petition or schedule. While the first sentence of this
rule (Rule 110) adopts a permissive approach to amendment of a voluntary petition,
schedule, or statement of affairs, it contemplates that every amendment shall be
brought to the attention of the court so that it may determine who, if anyone, should
be notified of the amendment.
12
13
14
Gershenbaum's voluntary petition in bankruptcy was filed long after the date on
which Rule 110 became effective,6 and the bankruptcy court was therefore
obliged to allow the amendment "as a matter of course."
B
15
Brown contends, however, that the second sentence of Rule 110 gives the
bankruptcy court discretion to deny such an amendment to the petition:
The construction of Rule 110 which we adopt today is that the first sentence of
the rule (pertaining to amendments made by The bankrupt ) allows
amendments as a matter of course, whereas the second sentence (pertaining to
amendments proposed by Persons other than the bankrupt ) is subject to the
discretion of the bankruptcy court.7
C
19
Bankruptcy Rule 110 permits the bankrupt to amend his petition "at any time
before the case is closed." Bankruptcy Rule 514 describes the procedure by
which a case is closed:
Here, we must assume that the administration of Gershenbaum's estate had not
been completed when the order denying his amendment was entered, nor had
an order closing the estate been entered. Insofar as we can tell from the briefs
and from the record before us, Gershenbaum's estate still had not been closed
when this appeal was taken.
22
Nonetheless Brown argues that the case should be treated as if it were closed,
contending that the estate is of such little value that the Trustee is unlikely to
undertake the expenses necessary either to make a distribution or to close it.
Therefore, Brown would have us hold that the case is "practically", if not
"formally", closed. The district court agreed, concluding:
The procedure established under 11(a)(8) has not been followed in this case.
27
Brown has not advanced any cogent justification for giving "a closed case" a
different interpretation in the context of Rule 110 than the one provided by the
draftsmen in Rule 514. Brown argues that it is unfair to a creditor to permit the
bankrupt to amend his petition at this late date and thereby broaden the scope
of the original discharge. However, Brown has not pointed to any prejudice
which he will suffer as a result of the amendment, which he would not have
incurred if his debt had been listed in the petition for bankruptcy. He has not
indicated that he has changed his position during the twenty-one months which
elapsed between the bankruptcy and the amendment, nor has he alleged that he
was damaged by the loss of an opportunity to participate in the bankruptcy
proceeding.
28
Even had Brown explained how permitting the amendment would prejudice
him, we would nonetheless have reservations about his argument because it is
premised on a misconception of the effect of the amendment. Amendment of
the petition will not, of itself, work a discharge of Gershenbaum's debts to
Brown. The Advisory Committee's comment states that "(i)f a schedule is
amended to include an additional creditor, the effect on the dischargeability of
the creditor's claim is governed by the provisions of 17 of the Act (see
particularly 17a(3))."
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30
The order of the district court dated September 22, 1978 will be reversed and
30
The order of the district court dated September 22, 1978 will be reversed and
the case remanded with a direction that an order be entered permitting the
amendment sought by Gershenbaum.
The district court's order of September 22, 1978 recites that "the appeal . . . is
dismissed." In light of the record, we assume that the district court by that order
intended to affirm the order of the bankruptcy court
11
Amendments
The court may allow amendments to the petition and schedules on application
of the petitioner. Amendments shall be printed or written, signed and verified,
like original petitions and schedules, and filed in triplicate. If amendments are
made to separate schedules, the same must be made separately, with proper
references. In the application for leave to amend, the petitioner shall state the
cause of the error in the paper originally filed.