looking at another one of these arcane provisions in chapter eleven and try and how to fit those provisions into a case that involves individuals as opposed to corporations specific sections that w the case that this happened because you missed the deadline on five twenty three is that right essentially so well you know i mean it's probably relevant to the fact of there is no reason to start you know so you you can't that remedy is lost that remedy is lost and that has been decided by the bankruptcy court dismissing that on as as untimely so i and you know you haven't you haven't challenge that ruling on appeal  no no nobody pursued that after it was dismissed subsequently that the chapter eleven trustee filed their plan of reorganization and sarwan brought the complaint to deny the discharge under this eleven forty one the three so i know you make two arguments for four you forget that you know your clients are exactly situated the same are they not you're not making a separate you argue that there's not a liquidation and you argue that because your clients have jobs in effect they don't meet the statutory requirement those two points you're making would alter the two arguments yeah right or lack the focus on the third one for me for a second let's assume there was a liquidation it strikes me it was it would be a strange statutory scheme and i understand this usually applies to corporations and that's why we're in that the very restrictive reading that out sarwan the bankruptcy court in the district court applied was this grout case out of the fourth circuit that just says you know earning wages is insufficient i corporations but if you're going to if you continue conducting the same business if you're the doctor who who reopens your office there afterwards then then you qualify but it has to be the same business and if you're in a different business there after you don't qualify and that does seem odd but it talks about basic employment is the language that crowd's uses so how that part i struggle with i think the odd reading that you could reach if you take that literal interpretation is that the for example the the couple in duncan who ran their company called done corps and they were fine they were entitled to get a discharge but helpful in general to try and figure out what this whole thing is about why i gather what it's mostly about is precluding and runs around chapter seven that was correct that was the original idea that was about seven twenty seven a well essentially if you're being if you're reorganize in some sense in which chapter eleven recognizes reorganization then you can get the discharge but if you're if you're using chapter eleven to get a sampling of what you would get in chapter seven i e just disappear then you are subject to the discharge defenses up chapter seven is that basically what's going on here well so along those lines what was really being concerned congress in these two provisions was this trafficking in corporate cells like well that that as far as i can tell was actually taken i'm not saying i'm not arguing technically that it was i'm just saying effectively what happened was their individual debtors and all their assets were going to be liquidated to pay off creditors correct so the chapter eleven trustees plan said that and this ties and also to the liquidation idea that chapter eleven plan filed by the chapter eleven trustee said that there was a definition in the plan that's out of state assets which is different from the requirement under the code no i understand that but i was leading up to defer the question judge birds on i think you her questions lead me to this question if your clients had filed a chapter seven would they be entitled to a as well of corporations as most corporations the french yeah as well as corporations but but we're dealing with individual debtors here who was meant to doesn't that argue that the discharge ought to be denied here also except that i don't believe that there was in fact  denied no i don't but in this particular case because the rules in chapter eleven for individuals have now changed and now you have this requirement of debtors to submit five years of their disposable monthly income to a chapter eleven plan and so now you have this anomalous situation where the debtor is required because of a new section eleven twenty three a which was introduced in two thousand and five to commit this five years of disposable monthly disposable monthly income requirement but it's as really there is no such you're not liquidating i mean you maybe look at it in some assets but you still are required to work and no one under that argument there is this this statute is now become illusory because under under every chapter eleven play and there will not be a liquidation if the continuing the obligation to put in income is makes it not a liquidation so there's a couple different ways that but it did not happen appropriately so in terms of whether there is a hole that needs to be  individual chapter eleven plans as well as we all know a debtor is required to get the requisite votes in order to confirm a plan so creditors can just vote no i mean in terms of how is it eleven twenty three when what interpretation would make it illusory now because there would never be a liquidation under eleven twenty three right so the next step though in the process is all eleven to eleven forty one to three does is what sets the standards by which had been discharged can focusing on your liquidation argument and this is the plan says it's a plan of liquidation it's got to join it and as a practical matter although it doesn't liquidate everything on day one that would be a silly thing because then you would have  a fire sale so it calls for a staged or or thoughtful plan of liquidation but you're saying even if that so it's not a liquidation because of this requirement  know of in forty three of putting five years and that's what huff is is talking about that bankrupt right so that but therefore that would mean there was never a liquidation in a chapter eleven right arguably that is the case under the way these new provisions liquidating them but the trustee did in fact liquidate for example so i like to look at this liquidation idea as sort of a beautiful fortier cake up at the top is the trustee in the bankruptcy estate and our next layer is property  because eleven forty one d three a speak specifically of property of the estate and that is those l l c interests of these parent companies you have the next layer down in our cake is all these seventy some subsidiary c and then the bottom layer of our cake is all of the assets that are owned by those subsidiaries which are in turn owned by this property estate which the trustee controls and what the trustee is doing is selling our bottom layer and then using our corporate structure and sort of upstream mean the funds from selling an asset selling mr prizes house which was in turn owned by an entity called queen high full house which was turned on by the trustee so what he did is he sold down here resold the real stuff he sold the real stuff know the real stuff and didn't bother selling the corporate structure to sell the corporate structure because he couldn't there would be no way that took out this layer of the of the cake you could not get up to the trustee and the bankruptcy mistake that suggests that exactly the same interests that pertain in a corporate resuscitation of the corporation after liquidation is was the reason for this business requirement that you would have the same issue here that is if you still have this l l c shell presumably  a business or i mean why then don't you look at the shell and say is the shell staying in business no it isn't and we're saying the same business because otherwise you could start generating something out of the shel folks i thought your whole argument was that it was the fact that the highest level was not being liquidated in some sense that made it not  no i believe that because those are the property of the estate which is what the statute requires to beast liquidated was not being liquidated so the debtor i have isn't that exactly what i said a formal property of the estate was you call it a corporate structure that's fair estate which is what eleven forty one d three but isn't that ayers basically and maybe i'm missing a step here what happens in a corporate reorganization and what and reason why the statute is set up the way it is which is not to get distracted by the continuing sister and serves a corporate structure i think there are a couple of these different cases of look at this that now correct i'm sorry let me i mean is it aren't you sending up an argument in which  set up the way it buddy you're also saying the purpose of the statute is not to let anybody profit off the existence of the corporate structure and therefore to look at whether they business of the corporate structure continues and i would direct and look at the redstone i'm sorry the enron and the redstone case ok cited those were very complex corporate structures a lot like this and and what the courts works and those plans like ours are like the trust bankruptcy court decisions contrary do you have something in your favor i believe the duncan case really fits us which case it's right duncan it's a bankruptcy case out of arizona two thousand and twelve which we assign and  greenlee i want to go back to a question i think that was asked of mr tracy right at the beginning and that is the reason that the seven twenty eight the reason that the objection to discharge was filed was because somehow the court dismissed an action to determine the discharge ability of the debt under section five twenty three these are entirely two entirely different sections the grounds for no the five twenty three it contains objections to the discharge ability for things like fraud in giving a false financial statement drunk driving  at things that relate particularly to a creditor section seven twenty seven which obtain which contains the objections to discharge are things that deal with well that's right yeah they're not the same they they're not the same thing you can't say that the they're mutually exclusive in some cases most cases most cases  because we're talking about debtors destroyed records filed false oaths in their bankruptcy schedules and by a weighted court orders to preserve records things that have to do with how you relate to the bankruptcy system russet but i'm just want to understand your argument is a five twenty three and applications are five twenty three wouldn't cover necessarily cover all the things that seven twenty seven exactly like and so that they may actually exclusive ok well not mutually swell but different yes so demi be some overlap and in this case is your argument that the reason that reasons that seven twenty seven am satisfied are not the reasons that would have been the basis of a fake sac wishing exactly so either is my problem with the statutory structure and we all recognize it was mostly designed for corporations if there is a liquidation of a business how could it ever be continued well that's a very good point thank you but and i think the system is set up to say even th own debtor who would be denied a discharge under section twenty seven twenty seven can still receive a discharge under section eleven forty one d three if it's a plan that tries to rehabilitate the debtor no i understand that i'm just trying to figure out the statutory structure here as it applies to individuals so we have three requirements the fraud requirement is stipulated here assume we have a liquidation right and assume and the fourth circuit says well what the third requirement is that you continue essentially in the same business if there was a liquidation of the business how can you continue in it you might be able and i think th has a doctorate who in effect his his is his office you know he files a chapter he gets to the end of the chapter and he just opens another office and right and the court says you've continued in the same business same profession and you're going to and you and your earning money to give people so why do we care we have that now doubt you're getting to my next question why do we care way for if that's the goal that you're earning money to pay off the creditors why do we care whether it's the same profession since eleven forty three now requires you to put that money into the  plan i think you're ok i think i'm maybe right so you're talking about different sections right right so for earnings right now we're now obviously not all to a show where where your earnings over the next for some portion of your earnings over the next five years have to go into the it's not the same thing because even the definition of disposable earnings under section which is taken from the chapter thirteen definition has an x exception or exclusion who were there preposition creditors out of the operation of that business is now i'm not clear what your position is the fourth circuit says it must essential it must be essentially the same business so  making the effort to pay the creditors out of their salaries out in the open and be in business or salaries as much as it would be the income from that operation so so in other words they're making an effort to reach you i don't see where you get that out of the statute i mean either business is the same business or a ten dollars this and if it's any business then you may have a problem don't you yes i admit but i think that the whole purpose of it was business if you set up a grocery store that isn't gaijin business and therefore that's the cut off i think business is ambiguous i think it doesn't mean there's a nexus between well you vote your preposition quoters from teller would i be engaged in banking if i may or a mechanic of my engaged in the auto mechanic business yes even if i don't own the oh i'm sorry i know i understand it the fourth circuit would say that he wasn't a geisha business but you but might say he was but you would say he was another is it is it is it all the cases you cite say this was meant to apply to somebody who went into the same business right or doing of the same type of thing and i think duncan was even correctly decided by duncan duncan in the end it was a court sense that you're the trustee has an didn't find having having denoted all the assets from the car for action he didn't see any reason to to then sell the the shares of the corporation and that's a sort of worthless us right so what if these guys use the existing corporation to open the same to do the same sort of things they were doing in the past the non fraudulent things they were doing in the past real estate it's  and the assets best revestive now don't get numb forget about the assets there's nothing here about the assets in this section i just want to know whether that would be the same business probably yes ok so so maybe maybe it's just there to make sure that people don't go back to the same old shop where if people do go back to the same old shop then then they're going to be entitled to it history they're going to be able to me if this time they use tell me why we should read same dead now i understand how that structure works why should we put the words same or similar or preexisting into the statute that there's something in the legislative history that suggests that's what congress intended yeah we're we're told you time to time by the supreme court you know legislative history may be unreliable so other than a legislative history what is there that tells us that we had a limited this to the same business because you want to you're dealing with the same creditors the idea of a reorganization process in this context is i've dealt with all these people i  to be liquidated right so if it's liquidated that and the creditors are only getting paid out of the monetize money then what difference does it matter  mean how are they any pay anybody well because maybe they're going to pick up the ashes and continue on because they are going to repay their creditors going forward out of their future earnings because they that we just that you just that was the subject of the chapter even though you're an individual debtor in that case we're going to require you to keep a debtors and about we're not going to require you to keep paying the debtors if you get employed bias a similar business that's right because you're not right you know doing with the same people again but the reference to prepare titian if we were to read that into the statute what that's sort of an arbitrary qualifier is not if the idea is that if you get up back on your feet and go and get into business and start earning money you have the wherewithal to pay off these creditors so why do we give you a discharge so why is it limited just preposition the pre partition business on the one hand it's pre partition on the other hand your other example is mcdonald's isn't there a lot of room in between where somebody could be gauged in business without a qualifier and how would the wherewithal to pay the creditors makes sense and that doesn't require adding words for the statute but adding pre partition business for same business which isn't necessary in this case anyway as i understand it cause they're not engage in business in the usual sense of the term are they implemented tomorrow they did exactly what judge bers on said they went in and let's assume it's the same business just so we're we're out of the fight about whether it's a sale or any business what if tomorrow they went out and read i forgot with the name of the c is reopened it went into the real estate business again would they then with the situation change which would would this you would they then be entitled to a discharge but have to pay money from the business to creditors that's sort of a strange way to run the railroad is now i think that was that that's the balance that the statute i take your pay because if they were and according to you know the words are there anyway there is a how is this different i mean we're we're talking about the debt or being a manager of this company and therefore it that makes i mean business but they're still earning their income through being an employee of that company that's no different than the person who's out but it's not the ordinary meaning or any meaning i don't think of the term engaging business is no and i think the way we get it from well i think that's a good question what we've  had a number of different views on what engaging businesses what the flint code case and if i can it said basically some sort of ongoing operation used to fund your plan and and in flint coat and that's a really interesting case because that talks about this whole pre partition business remember flint cote was a manufacturer of asbestos products and the comment of why would we want this company to continue to make a deadly products to fit within this prepare prepare to business concept don't we want this company to change that format in fact that's what it did it became mostly a real estate holding company which was simply not what it was doing but that's why i say may or may not be right but in that case the company continued it was a corporate case was a corporate company continue to engage in business and what w think when i understood your question to be but certainly what i'm interested in is are you engaging in business simply because you're an employee of a company isn't our goal in chapter eleven a mac no i want to know whether anybody in ordinary english when say that somebody working at mcdonald's is a geisha business i don't believe they would know i don't believe they would but on the other hand what we're trying to do in chapter eleven is to maximize our recovery for creditors thus this new five year program that you're entitled to do and we want to encourage and incentivize people to try to make that change if i can if if i am a mcdonald's worker and suddenly i become through the magic of the world become entitled to be a software engineer why shouldn't i be able to change my job why should i be able to do that and do something which is going to increase my distribution to creditors butts and sun if i is that as opposed to punish people for making them stay in the same job as opposed to switching around and being able to