In re Draisey: 707(b) Motions Governed By Thirty Day Deadline, Minnesota Bankruptcy Court Says

Yet another bankruptcy court has issued a ruling recognizing what should have been obvious all along: the U.S. Trustee must file its “ten day statement” regarding supposed abuse of chapter 7 as a prerequisite to any 707(b) motion, whether the motion is based upon the means test (707(b)(2)) or the “totality of the circumstances” (707(b)(3)).  What’s more, any 707(b) motion must be filed within thirty days of the filing of the ten day statement, rather than within sixty days as Interim Bankruptcy Rule 1017 provides.  See In re Draisey, 2008 WL 943721 (Bky.D.Minn. April 8, 2008) (Kishel, J.).

For the court, the decision was easy: section 704(b) of the bankruptcy code requires that a ten day statement be filed as a prerequisite to any 707(b) motion.  The court rejected the argument that the ten day statement was required only for 707(b)(2) means test dismissal motions.  More importantly, the court found that Interim Rule 1017, which establishes a sixty day deadline for 707(b) motions, contravened the plain language of section 704 of the bankruptcy code, which sets a thirty day deadline from the filing of the ten day statement for 707(b) motions.  Because the bankruptcy code takes precedence over the bankruptcy rules, the rule allowing sixty days was invalid and had to be ignored. 

This case reaffirms that bankruptcy courts will follow the code over the rules where they are in conflict, and that the courts will enforce deadlines strictly in 707(b) litigation.