Debtors implemented their confirmed Plan for 52 months (8 months to go), but they failed to pay a few unsecured creditors. On Motion by the unpaid creditors, bankruptcy judge reopened the case, and found there was “cause” under 1112(b)(4)(N) to dismiss the case (rather than convert).
The Debtors were apologetic, and said they would immediately pay all the creditors what they are owed rather than facing the harsh consequence of a dismissal after 52 months of plan payments. Section 1112(b)(2) allows an exception whereby if there is “unusual circumstances” to permit the court not to dismiss/convert. Bankruptcy judge was not moved by Debtors excuses, and dismissed the case. The B.A.P. affirmed (unpublished).
Lesson: Road to discharge begins (not ends) at plan confirmation.
Link: http://cdn.ca9.uscourts.gov/datastore/bap/2015/05/28/Warren%20Memo%2014-1390.pdf