Central Trust Co. v. Creditors' Comm.
Annotate this Case
454 U.S. 354 (1982)
U.S. Supreme Court
Central Trust Co. v. Creditors' Comm., 454 U.S. 354 (1982)
Central Trust Co., Rochester, N.Y. v. Official Creditors' Committee
of Geiger Enterprises, Inc.
Decided January 11, 1982
454 U.S. 354
Geiger Enterprises, Inc. (Geiger), filed a petition in Federal District Court seeking relief under Chapter XI of the Bankruptcy Act. Geiger continued operating its business as a debtor-in-possession, and numerous creditors filed claims. Thereafter, the Bankruptcy Reform Act of 1978 (New Code) became effective, and several of Geiger's wholly owned subsidiaries and affiliate corporations filed petitions for relief under Chapter 11 of the New Code. Geiger then moved in the Bankruptcy Court to dismiss its Chapter XI petition so that it could file a petition under Chapter 11 of the New Code. Petitioner secured creditor and the United States, which had a claim for unpaid taxes, opposed the motion on the ground that a dismissal was prohibited by § 403(a) of the New Code, which provides that a case commenced under the Bankruptcy Act "shall be conducted and determined under such Act as if [the New Code] had not been enacted" and "shall continue to be governed" by the Bankruptcy Act. The Bankruptcy Court, however, granted the motion, relying primarily on Bankruptcy Rule 11-42(a), which provides that a debtor may file a motion to dismiss a petition under Chapter XI of the Bankruptcy Act or to convert it to bankruptcy. The District Court reversed, but was in turn reversed by the Court of Appeals, which held that Rule 42(a) must be read in conjunction with § 403(a) to permit dismissal and refiling in certain cases, and that the operative test was whether the estate's interest would be served by such a procedure.
Held: The Court of Appeals' decision conflicts with § 403(a)'s plain meaning as well as its legislative history. Section 403(a) makes no exception for petitions to be refiled under the New Code. Nor does Rule 11-42(a) provide authority for the procedure. That Rule's language clearly contemplates a voluntary dismissal which results in an adjudication of bankruptcy or revests title of all property in the debtor and removes from it the protection of the bankruptcy laws. It does not contemplate a dismissal, such as the one here, which neither declares the debtor bankrupt nor restores the creditors' rights against the debtor's property, but simply holds matter in abeyance while the debtor files a petition under the New Code.
Certiorari granted; 635 F.2d 106, reversed.
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