A debtor in an involuntary Chapter 7 bankruptcy case has made several unsuccessful attempts to dismiss the case, with the most recent attempt drawing a mild rebuke from the court. In re Viola, No. 4:11-cv-00817, order (N.D. Cal., Mar. 19, 2014). The district court held that the debtor lacked standing to challenge some parts of the case in that forum, and should have raised the issues in the bankruptcy court. It further found that he had not shown cause for relief from the bankruptcy court’s judgment or its own prior orders.
The court notes in its most recent order that the debtor is a “convicted fraudster.” A creditor filed an involuntary bankruptcy petition against him in March 2010. Creditors may file a petition against a person under either Chapter 7 or Chapter 11, provided that the creditors and the debtor meet various criteria set out at 11 U.S.C. § 303. The debtor commenced the present case in U.S. District Court almost a year later, in February 2011. He filed a motion to withdraw the reference from the bankruptcy court. District courts, by law, have original jurisdiction over bankruptcy proceedings, but generally refer them to the bankruptcy courts. A district court can withdraw the reference for cause, and it must do so if it determines that a case mixes questions of law involving bankruptcy and other areas. 28 U.S.C. § 157(d).
Several months later, the debtor filed a motion to stay the bankruptcy court’s order allowing the sale of certain vehicles that he owned, but the district court held that he lacked standing to bring that claim in district court. The debtor filed a motion for relief from judgment under Federal Rule of Civil Procedure 60(b) in November 2011. The court denied both the motion to withdraw the reference and the motion for relief from judgment in an order dated September 28, 2012. It held that his motion to withdraw the reference was untimely, coming almost a year after the commencement of the bankruptcy case. Since the bankruptcy court had handled numerous proceedings in the case, the district court held that withdrawing the reference would “likely have an adverse impact on judicial economy and the administration of justice.” Viola, order at 2, n. 1. Continue reading