Debtor’s Right to Amend Extends to Reopened Cases

Posted by NCBRC - March 12, 2019

A debtor may amend his schedules as a matter of right “without limitation of whether the case is open or reopened after closing.” Mendoza v. Montoya, No. 18-19, Dollman v. Montoya, No. 18-30 (B.A.P. 10th Cir. Feb. 5, 2019).

In two similar cases, the chapter 7 debtors obtained a discharge and sought to reopen their cases under section 350(b) to amend their schedules to include causes of action that arose prior to their bankruptcy petitions and to claim exemptions in those causes of action. In both cases, the bankruptcy courts found that Rule 1009, which provides that the debtor may amend his bankruptcy schedules “as a matter of course at any time before the case is closed,” created a deadline for amendment that expired when their cases were originally closed. The bankruptcy courts then applied Rule 9006(b), which provides that when a party has failed to act within a “specified period” designated for performance of that act, the court may permit an extension if the failure to act was a result of excusable neglect. In both cases, the courts found that the debtors failed to meet this burden. In re Dollman, 583 B.R. 268 (Bankr. D.N.M. 2017); In re Mendoza, 584 B.R. 355 (Bankr. D.N.M. 2018).

On appeal, the Bankruptcy Appellate Panel for the Tenth Circuit found that the bankruptcy courts erred as a matter law when they interpreted Rule 1009(a) to establish a specific deadline for amendments. The panel noted that the phrase “before the case is closed,” does not specify a time and does not distinguish between an original case and one that has been reopened. The panel found that by requiring the debtors to show excusable neglect before allowing them to amend their schedules, the bankruptcy courts erroneously shifted the burden of claiming exemptions in the causes of action. The debtors’ right to amend does not preclude objections to any claimed exemptions.

The panel reversed and remanded.

MendozaDollman 10th BAP Feb 2019


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