California Court Discusses Grounds for Dismissing Bankruptcy Cases

People saddled with unbearable debts are often able to take advantage of the United States bankruptcy laws and seek relief by filing a petition for bankruptcy. If they do, however, they must be cognizant of any procedural rules; otherwise, their bankruptcy petitions may be dismissed. For example, the Bankruptcy Code provides, among other things, that people cannot seek simultaneous relief for the same debt in different courts by filing multiple bankruptcy petitions. This principle was highlighted in a recent ruling issued by a California court in a bankruptcy case, in which the court ultimately affirmed the dismissal of the debtor’s bankruptcy petition filed in California court. If you have substantial debt and you have questions about what relief may be available, it is in your best interest to contact a California bankruptcy lawyer to discuss your options.

History of the Case

It is reported that the debtor initiated a voluntary Chapter 11 petition in the United States Bankruptcy Court for the Central District of California in June 2023. Five days later,  the Bankruptcy court issued an order dismissing the case on the grounds that the debtor had another bankruptcy action pending in Oregon. The debtor then appealed.

Grounds for Dismissing Bankruptcy Cases

On appeal, the court considered the Supreme Court ruling in Freshman v. Atkins, which established that a debtor cannot have concurrent bankruptcy cases involving the same debts. The court cited precedent supporting this principle, emphasizing that only one bankruptcy case may be pending for a debtor at a given time. Consequently, the court found that the Bankruptcy court properly dismissed the case because the debtor already had an open Chapter 7 bankruptcy proceeding in the United States Bankruptcy Court for the District of Oregon.

In doing so, the court found that the debtor’s arguments on the basis that the bankruptcy action did not involve the same debts and regarding procedural errors by the Bankruptcy court lacked merit.

The court noted that the debtor failed to demonstrate how the California bankruptcy action differed from the Oregon bankruptcy action and that there was no legal requirement for the Bankruptcy court to provide an opportunity to respond before dismissal. Additionally, the debtor’s claim of not being served with the dismissal order was refuted by court documents. Consequently, the District Court affirmed the Bankruptcy court’s order of dismissal.

Talk to a Dedicated California Bankruptcy Attorney

The Bankruptcy Code provides options for many people dealing with unmanageable debts to seek relief and regain control of their finances, but there are limitations as to what respite is available. If you have questions about your rights with regard to bankruptcy, it is smart to talk to an attorney about your options and what steps you can take to protect your interests.  Matthew D. Roy is a dedicated California bankruptcy lawyer who possesses the skills and experience needed to help you seek a favorable outcome, and if you hire him, he will advocate tirelessly on your behalf. To set up a meeting with Mr. Roy, you can reach out by using our form online or calling us at (916) 361-6028.