07-0090-bk

In re: Shayna H. Zarnel

1 UNITED STATES COURT OF APPEALS

2 FOR THE SECOND CIRCUIT

3

4 August Term 2008

5

6

7 Argued: October 14, 2008 Decided: August 26, 2010

8

9

10 Docket Nos. 07-0090-bk(L); 07-0091-bk(Con); 07-0092-bk(Con); 

11 07-0097-bk(Con); 07-0098-bk(Con); 07-0099-bk(Con)

12

13 _____________________________________

14

15 In re: Shayna H. Zarnel, Diana M. Finlay, Lena M. Elmendorf

16

17 DIANA G. ADAMS, United States Trustee

18

19 Petitioner-Appellant,

20

21 -v.-

22

23 SHAYNA H. ZARNEL, DIANA M. FINLAY, LENA M. ELMENDORF,

24

25 Respondents-Appellees.

26 _____________________________________

27

28 Before: LEVAL, KATZMANN, and LIVINGSTON, Circuit Judges.

29

30 On appeal from the November 8, 2006 final judgment of the United States District Court for

31 the Southern District of New York (Brieant, J.), petitioner-appellant Diana G. Adams, United States

32 Trustee, argues that she has standing to appeal bankruptcy court orders striking the bankruptcy

33 petitions of respondents-appellees and that, under the strictures of the Bankruptcy Code, the

34 bankruptcy court was compelled to dismiss the cases of these debtors upon finding that they were

35 ineligible for bankruptcy due to their failure to comply with credit counseling requirements. We

36 conclude that the Trustee has standing to bring the appeal; that the appeal is not moot; and that the

37 filing of a bankruptcy petition by a debtor who has failed to satisfy credit counseling requirements
2

1 commences a bankruptcy case and invokes the automatic stay. 

2 VACATED and REMANDED.

3 STEPHANIE R. MARCUS, U.S. Department of Justice,

4 Civil Division, Appellate Staff (Peter D. Keisler, Assistant

5 Attorney General, Michael J. Garcia, United States Attorney,

6 Danna Drori, Assistant U.S. Attorney, Roberta A. DeAngelis,

7 Acting General Counsel, P. Matthew Sutko, Lisa A. Tracy,

8 Sean E. Martin, Office of the General Counsel, of counsel,

9 William Kanter, U.S. Department of Justice, Civil Division,

10 Appellate Staff, on the brief), for Petitioner-Appellant.

11

12 SANFORD I. WEISBURST (William B. Adams, on the

13 brief), Quinn Emanuel Urquhart & Sullivan, LLP, New York,

14 NY, Court-Appointed Amicus Curiae on Behalf of Pro Se

15 Debtors.

16

17 LIVINGSTON, Circuit Judge:

18 This case requires us to interpret the interplay of provisions of the Bankruptcy Code that

19 arises when an individual or entity files a petition for bankruptcy without complying with the credit

20 counseling requirements created by the Bankruptcy Abuse Prevention and Consumer Protection Act

21 of 2005 (“BAPCPA”), Pub. L. No. 109-8, 119 Stat. 23. In the course of our analysis, we interpret

22 the credit counseling requirement, 11 U.S.C. § 109(h), the provisions that govern the commencement

23 of bankruptcy cases, 11 U.S.C. §§ 301, 302, and 303, and the statutory section governing automatic

24 stays, 11 U.S.C. § 362. 

25 Petitioner-appellant Diana G. Adams, United States Trustee (“Trustee”), appeals from a final

26 judgment entered November 8, 2006 in the United States District Court for the Southern District of

27 New York (Brieant, J.) dismissing her appeal for lack of standing and in the alternative affirming

28 the bankruptcy court’s decision to strike the bankruptcy petitions filed by respondents-appellees
3

1 (“debtors”) rather than to dismiss their cases. We determine that the Trustee has standing to bring

2 this appeal; that the appeal is not moot; and that the filing of a bankruptcy petition by a debtor who

3 has failed to satisfy credit counseling requirements commences a bankruptcy case and invokes the

4 automatic stay. We do not, however, pronounce on the question of what action a bankruptcy court

5 may take with respect to such a petition given these determinations. 

6 

7 BACKGROUND

8 The appeal before this Court is of a consolidated matter, generated by three unrelated filings

9 of bankruptcy in the United States Bankruptcy Court for the Southern District of New York. As the

10 facts are not in dispute, we take them largely from the bankruptcy court’s opinion. See In re

11 Elmendorf, 345 B.R. 486 (Bankr. S.D.N.Y. 2006). 

12 Lena Elmendorf, represented by counsel, filed a voluntary Chapter 7 petition on November

13 29, 2005. Although this proceeding was her first bankruptcy filing and her petition was

14 accompanied by the correct schedules, she neither filed a credit-counseling certificate, see 11 U.S.C.

15 § 521(b), nor sought an extension of time to do so, see id. § 109(h)(3)(A). The United States

16 Trustee’s Office (“Trustee”) moved to dismiss the case on February 1, 2006. In re Elmendorf, 345

17 B.R. at 491. 

18 Diana Finlay filed a Chapter 13 petition on April 3, 2006, as a pro se debtor, attaching none

19 of the requisite schedules. She sought an extension of time to file her credit-counseling certificate,

20 which the bankruptcy court denied for failure to state that the debtor sought counseling within five

21 days of filing. Id. at 492. Finlay had recently filed two prior Chapter 13 petitions: one on August
4

1 31, 2005, and one on November 28, 2005. Both were dismissed for failure to file the appropriate

2 bankruptcy schedules. Id. The Trustee filed a motion to dismiss the case on May 3, 2006. 

3 Shayna Zarnel, the third relevant debtor, filed a Chapter 13 petition on March 13, 2006.

4 Although this was Zarnel’s first bankruptcy filing, her husband had filed five bankruptcy petitions

5 with the court since January 2004. Id. She sought an extension of time to file her credit counseling

6 certificate but failed to allege exigent circumstances meriting a waiver; the bankruptcy court

7 therefore denied the extension. Id. at 493. On April 3, 2006, nonetheless, Zarnel filed a credit

8 counseling certificate attesting that she had received counseling on March 21, 2006. The Trustee

9 then moved to dismiss the case. 

10 After holding a hearing on the motions in the Elmendorf and Zarnel proceedings, and

11 reserving decision on the motions in all three cases, the bankruptcy court determined in a July 18,

12 2006 opinion to “strike” the case of each debtor rather than to dismiss each case as requested by the

13 Trustee. Id. at 504-05. It arrived at this decision by examining the credit-counseling requirement

14 codified at 11 U.S.C. § 109(h). The court observed that the provision, which it said “was intended

15 to provide debtors with education as to all of their options when experiencing financial difficulty,

16 before a resort to bankruptcy protection was necessary,” had as a policy matter “not proven to be

17 of assistance to debtors in seeking relief outside of the bankruptcy context.” Id. at 490. The court

18 nonetheless concluded that compliance with § 109(h)’s requirement that a debtor seek credit

19 counseling before obtaining bankruptcy relief was “an absolute pre-requisite to individual

20 bankruptcy eligibility.” Id. at 495. The court acknowledged that debtors may in certain

21 circumstances obtain an extension of time to receive counseling under § 109(h)(3)(A). The court
The court noted that before an extension of time to receive credit counseling may be 1

granted, “a debtor must submit to the court (1) a certification (2) describing exigent

circumstances that (3) merit a waiver of the requirement, (4) states that the debtor requested

credit counseling from an approved nonprofit budget and credit counseling agency, but was

unable to obtain services during the five day period beginning on the date that debtor made the

request and (5) which is satisfactory to the Court.” Id. at 496 (footnotes omitted).

11 U.S.C. § 105(a) provides as follows: 2

The court may issue any order, process, or judgment that is necessary or

appropriate to carry out the provisions of this title. No provision of this title

providing for the raising of an issue by a party in interest shall be construed to

preclude the court from, sua sponte, taking any action or making any

determination necessary or appropriate to enforce or implement court orders or

rules, or to prevent an abuse of process.

5

1 noted, however, that the difficulties of satisfying each of the statutory factors necessary to have a

2 request for extension granted are substantial, particularly for a pro se debtor. Id. at 496. 1

3 Relying on its reasoning in a previous case, In re Rios, 336 B.R. 177 (Bankr. S.D.N.Y.

4 2005), the bankruptcy court found that the statutory language of § 109(h), which provides that an

5 individual “may not be a debtor” without prior credit counseling, bars such filers from commencing

6 a case under 11 U.S.C. § 301. In re Elmendorf, 345 B.R. at 497. Moreover, if a case is not

7 commenced, the court determined, the automatic stay against creditor actions provided for in 11

8 U.S.C. § 362 does not operate to protect the ineligible filer. Id. at 497-98. Nonetheless, it found that

9 it still had jurisdiction over the matter even if a case was not properly commenced by the filing. Id.

10 at 499. Therefore, under the equitable powers granted by 11 U.S.C. § 105(a), the bankruptcy court

11 determined that because Congress had not explicitly directed the action a court should take in

12 response to a bankruptcy petition failing to commence a case, it had the power to strike the petitions

13 before it rather than to dismiss the cases, as urged by the Trustee. Id. at 503. The court noted that

2
6

1 in its view dismissal, which has the potential effect of limiting access to or the duration of § 362’s

2 automatic stay in a subsequent filing, is for the most part “an inappropriate remedy for a debtor’s

3 innocuous failure to obtain counseling, prior to filing a bankruptcy petition,” id. at 491, and it

4 concluded that it could always strike a case with prejudice to future filings if it found such a measure

5 to be warranted by a filer’s bad faith or other such circumstances, id. at 504. 

6 Because Elmendorf had not filed any previous bankruptcy petitions nor were there other

7 indications of bad faith, the court ordered her case stricken without prejudice. Id. In the case of

8 Finlay, the bankruptcy court noted that the debtor had filed “three back-to-back bankruptcy

9 petitions,” and that she “sought, and obtained, an extension of time to file her credit counseling

10 certificate in her prior case,” and was thus “not ignorant of the requirement.” Id. Noting that “[t]he

11 circumstances in Ms. Finlay’s filings are indicative of a pattern of delay and an abuse of the

12 provisions of Section 362,” relating to the automatic stay, the court suggested that it might have been

13 “inclined to grant some sort of preclusive relief,” but because the Trustee had not requested any

14 relief other than dismissal, the court merely struck the case without prejudice. Id. at 504-05.

15 Finally, it also struck Zarnel’s case without prejudice on the ground that, although her husband had

16 repeatedly filed for bankruptcy, this was Zarnel’s first filing. Id. at 505. Acting on its own volition,

17 the bankruptcy court then certified its orders for direct appeal to this Court under 28 U.S.C. §

18 158(d)(2). On November 17, 2006, we consolidated and dismissed those appeals because no party

19 had filed a petition for permission to appeal under Federal Rule of Appellate Procedure 5(a). 

20 The Trustee appealed the bankruptcy court’s decision in each instance to the district court
7

1 on the issue of whether the bankruptcy court had erred in ruling that the petitions of ineligible

2 debtors had not commenced cases and that the petitions could thus be struck rather than dismissed.

3 Adams v. Finlay, No. 06 civ. 6039, 2006 WL 3240522 (S.D.N.Y. Nov. 3, 2006). In its opinion of

4 November 3, 2006, the district court sua sponte raised the issue of the Trustee’s standing to appeal

5 the denials of its motions to dismiss. Applying the bankruptcy standing test of this Court that

6 requires an appellant to be a “person aggrieved,” meaning “a person ‘directly and adversely affected

7 pecuniarily by’ the challenged order of the bankruptcy court,’” Int’l Trade Admin. v. Rensselaer

8 Polytechnic Inst., 936 F.2d 744, 747 (2d Cir. 1991) (quoting In re Cosmopolitan Aviation Corp., 763

9 F.2d 507, 513 (2d Cir. 1985)), the district court found that the Trustee was not aggrieved because

10 no creditor’s rights were affected by these decisions and no substantive actions had been taken

11 between the filing and the striking of the cases. Therefore, it held, the Trustee lacked standing to

12 appeal. It nonetheless proceeded to decide the merits in the alternative after confessing that it had

13 “no great confidence” in its standing determination. Finlay, 2006 WL 3240522, at *4. 

14 The district court concluded that the bankruptcy court’s interpretation of the interplay

15 between §§ 109(h), 301, and 362(a) was the correct one – that a case is not commenced nor does the

16 automatic stay come into existence when a bankruptcy petition is filed by an individual who fails

17 to fulfill the credit-counseling requirement. It then expounded on the court’s equitable powers,

18 noting that motions to strike pleadings, although fallen from favor, were once common in the federal

19 courts and have not since that time been prohibited. Furthermore, it added, Federal Rule of Civil

20 Procedure 12(f) permits a court to strike a pleading, as do Bankruptcy Rules 7012(b) and 9011.

21 Given the latitude provided the bankruptcy court under § 105(a), the district court found it was not
8

1 beyond the bankruptcy court’s judicial powers to strike the petition of a debtor who has not satisfied

2 the credit counseling requirement and thus has not commenced a case. Therefore, in the alternative

3 to dismissing the appeals for want of standing, it affirmed the bankruptcy court’s orders in all

4 respects. 

5 The Trustee timely appealed the district court’s decision to this Court. In order to assist in

6 the development of arguments on appeal, this Court appointed Sanford I. Weisburst, Esq. amicus

7 curiae on behalf of the pro se debtors (“Amicus”). The debtors have not appeared in this appeal. 

8

9 DISCUSSION

10 Before reaching the merits of this appeal, we must first determine whether we have

11 jurisdiction. Issues arise both from the Trustee’s standing to take this appeal and its potential

12 mootness. We review these legal issues de novo. N.Y. Civil Liberties Union v. Grandeau, 528 F.3d

13 122, 128 (2d Cir. 2008); Cent. States Se. & Sw. Areas Health & Welfare Fund v. Merck-Medco

14 Managed Care, L.L.C., 433 F.3d 181, 197 (2d Cir. 2005). 

15

16 I. Standing

17 Section 307 of the Bankruptcy Act authorizes the Trustee to “raise and [ ] appear and be

18 heard on any issue in any case or proceeding under this title.” 11 U.S.C. § 307. Despite that broad

19 authorization, cf. In re Columbia Gas Sys., 33 F.3d 294, 296 (3d Cir. 1994) (“[i]t is difficult to

20 conceive of a statute that more clearly signifies Congress’s intent to confer standing”), the district

21 court concluded that the Trustee did not have standing to appeal the denial of its motions to dismiss.
9

1 We disagree with that determination. 

2 As the district court correctly noted, in determining whether a party has standing to appeal

3 from a particular ruling of a bankruptcy court, we have frequently looked to whether an appellant

4 is a “person aggrieved” that is, “a person ‘directly and adversely affected pecuniarily by’ the

5 challenged order of the bankruptcy court.” Int’l Trade Admin., 936 F.2d at 747 (quoting In re

6 Cosmopolitan Aviation Corp., 763 F.2d at 513); see also 11 U.S.C. § 67(c) (1976) (repealed 1978)

7 (permitting appeal by a “person aggreived by an order of a referee”). Applying that standard, the

8 district court determined that the Trustee had no direct pecuniary interest in the outcome of this

9 litigation and accordingly lacked standing. We disagree. 

10 While the “pecuniary interest” formulation is an often used and often useful test of standing

11 in the bankruptcy context, it “is not the only test.” In re Revco D.S., Inc., 898 F.2d 498, 499 (6th

12 Cir. 1990). Instead, even absent a direct pecuniary interest in the litigation, “a public interest may

13 also give a sufficient stake in the outcome of a bankruptcy case to confer appellate standing.” Id.

14 (emphasis in original); see also In re Clark, 927 F.2d 793, 796 (4th Cir. 1991) (“[S]tanding to appeal

15 under the Bankruptcy Act as a ‘party aggrieved’ may arise from a party’s official duty to enforce

16 the bankruptcy law in the public interest”). The Supreme Court has thus determined, for instance,

17 that the Securities and Exchange Commission’s interest in “the maintenance of its statutory authority

18 and the performance of its public duties” was sufficient to give the Commission standing to pursue

19 a bankruptcy appeal. SEC v. U.S. Realty & Improvement Co., 310 U.S. 434, 459-60 (1940). 

20 Applying U.S. Realty and the “public interest” standard, several of our sister circuits have

21 concluded that the U.S. Trustee has just such an interest and thus standing to pursue bankruptcy
10

1 appeals. As the Sixth Circuit explained in reasoning adopted by the First and Third Circuits, “the

2 U.S. trustees are responsible for ‘protecting the public interest and ensuring that bankruptcy cases

3 are conducted according to law.’ That is the interest the U.S. trustee has pursued in this case, and

4 that interest gives him standing to appeal.” In re Revco D.S., Inc., 898 F.2d at 499 (internal citation

5 omitted); see also In re United Artists Theatre Co., 315 F.3d 217, 225 (3d Cir. 2003) (“U.S. Trustees

6 are officers of the Department of Justice who protect the public interest by aiding bankruptcy judges

7 in monitoring certain aspects of bankruptcy proceedings.”); In re Plaza de Diego Shopping Center,

8 Inc., 911 F.2d 820, 824 (1st Cir 1990) (standing derives from “the U.S. Trustee’s interest from his

9 statutory responsibility to represent and protect the public”). The Fourth Circuit similarly

10 concluded, in reliance on U.S. Realty, that the U.S. Trustee had standing in the matter before that

11 court because the “trustee [was] attempting, as was the SEC in United States Realty, to enforce the

12 law in the public interest–in this case the interest of the public in avoiding substantial abuse of the

13 bankruptcy process.” In re Clark, 927 F.2d at 796. 

14 We find the reasoning of those courts to be persuasive and conclude that the U.S. Trustee’s

15 responsibility to represent and protect the public interest affords it a substantial interest in, and

16 therefore standing to proceed with, this appeal.

17

18 II. Mootness

19 Mootness is a doctrinal restriction stemming from the Article III requirement that federal

20 courts decide only live cases or controversies; a case is moot if “the parties lack a legally cognizable

21 interest in the outcome” of the case. Fox v. Bd. of Trustees of State Univ. of N.Y., 42 F.3d 135, 140
With regard to both of these provisions, the debtor may seek relief from the bankruptcy 3

court, which is authorized to institute or extend an automatic stay, as appropriate, if the debtor

demonstrates that the filing of the later case was in good faith as to the creditors to be stayed. 11

11

1 (2d Cir. 1994) (quoting County of L.A. v. Davis, 440 U.S. 625, 631 (1979)) (internal quotation marks

2 omitted). This occurs “when interim relief or events have eradicated the effects of the defendant’s

3 act or omission, and there is no reasonable expectation that the alleged violation will recur.” Irish

4 Lesbian & Gay Org. v. Giuliani, 143 F.3d 638, 647 (2d Cir. 1998). A bankruptcy case may also be

5 mooted based on “jurisdictional and equitable considerations” related to difficulty in fashioning “fair

6 and effective judicial relief.” AmeriCredit Fin. Servs., Inc. v. Tompkins, 604 F.3d 753, 755 (2d Cir.

7 2010) (quoting In re Sasso, 409 B.R. 251, 254 (B.A.P. 1st Cir. 2009)) (internal quotation marks

8 omitted). 

9 The debtors, by failing to appeal the bankruptcy court’s order striking their cases, have

10 waived any argument that they have satisfied the credit counseling requirements of 11 U.S.C.

11 § 109(h) and should have been allowed to proceed with their bankruptcies. Therefore, neither party

12 has a legally cognizable interest in this appeal related to its effect on the proceedings that initiated

13 the case. However, the effects of the bankruptcy court’s decision to strike the petitions rather than

14 dismissing the cases, the question on appeal, extend beyond the matter immediately at hand. Under

15 11 U.S.C. § 362(c)(3), the automatic stay protecting the debtor’s assets, which comes into being

16 when a petition is filed, terminates after thirty days if “a single or joint [bankruptcy] case of the

17 debtor was pending within the preceding 1-year period but was dismissed.” Similarly, if the debtor

18 has had two bankruptcy cases pending within the preceding year that were dismissed, the automatic

19 stay does not go into effect upon a third filing. Id. § 362(c)(4). Because, under the plain language 3
U.S.C. § 362(c)(3)(B), (c)(4)(B).

12

1 of § 362(c)(3) and (c)(4), only the “dismiss[al]” of a prior bankruptcy case triggers these

2 provisions,” the manner in which the bankruptcy court disposes of the matter appears likely to affect

3 whether the limitations on the automatic stay for subsequent proceedings take effect. Within a year

4 of the striking of their petitions, therefore, the debtors clearly had a legally cognizable interest in the

5 outcome of this appeal, as did the Trustee, whose duty to protect the public interest is affected by

6 debtors avoiding what it alleges are the appropriate legal consequences of their actions. 

7 The bankruptcy court struck the petitions at issue here on July 28, 2006. More than a year

8 has passed since that decision. Both the Trustee and Amicus argue that the case is nonetheless not

9 moot, but provide different reasons. The Trustee suggests that the word “pending” in § 362(c)(3)

10 and (c)(4) encompasses the time during which the case is on appeal, and hence that the year period

11 given in the statute has not yet even begun. The debtors and the Trustee would therefore maintain

12 their legally cognizable interests in the outcome for the duration of the appeal. Amicus, however,

13 argues that “pending” covers only the period in which the case is pending in the bankruptcy court

14 and that the automatic stay repercussions for a debtor end a year after the case is dismissed, even

15 if that dismissal is appealed. It invokes the exception to mootness for cases “capable of repetition,

16 yet evading review.” Van Wie v. Pataki, 267 F.3d 109, 113 (2d Cir. 2001) (quoting Knaust v. City

17 of Kingston, 157 F.3d 86, 88 (2d Cir. 1998)) (internal quotation marks omitted). This exception

18 applies when “(1) the challenged action [is] in its duration too short to be fully litigated prior to its

19 cessation or expiration, and (2) there [is] a reasonable expectation that the same complaining party

20 [will] be subjected to the same action again.” Id. at 114 (alterations in original) (quoting Weinstein
13

1 v. Bradford, 423 U.S. 147, 149 (1975)) (internal quotation marks omitted). 

2 We conclude that we need not interpret § 362(c) at the present time. The parties present the

3 only two logical possibilities for the meaning of the word “pending” in this context, and we agree

4 with each party that under its interpretation of the statute the case is not moot. If a case is pending

5 for the purpose of § 362(c)(3) and (c)(4) during the period on appeal, then each party continues to

6 have a legally cognizable interest because the manner in which the bankruptcy court disposed of the

7 debtors’ cases is likely to affect any subsequent proceedings in which they may be involved for a

8 year after this appeal is concluded. If, on the other hand, the year period delineated in the statute

9 has already expired, then we conclude that the “capable of repetition, yet evading review” doctrine

10 applies. The first element is clearly fulfilled under this interpretation, because a year is too short to

11 pursue an appeal to its conclusion. The second element is also satisfied because the bankruptcy

12 court will apply its interpretation of the relevant statutory provisions in future cases. See Storer v.

13 Brown, 415 U.S. 724, 737 n.8 (1974) (“[T]his case is not moot, since the issues properly presented,

14 and their effects on independent candidacies, will persist as the California statutes are applied in

15 future elections.”) Thus, the bankruptcy court will persist in striking petitions rather than dismissing

16 cases, causing repeated injury to the Trustee’s interest. This indicates that under Amicus’s

17 interpretation of the statute, the appeal is not moot. Because we need only assure ourselves that we

18 are deciding a live case or controversy, and because Article III jurisdiction exists under both

19 interpretations of the statute, we pass on to the merits of the appeal before us. 

20

21 III. Whether a Case is Commenced
14

1 The question before us arises primarily from the interplay of two statutory sections of the

2 Bankruptcy Code: 11 U.S.C. § 301 and 11 U.S.C. § 109(h). Section 301(a), part of the subchapter

3 entitled “Commencement of a Case,” reads as follows: “A voluntary case under a chapter of this title

4 is commenced by the filing with the bankruptcy court of a petition under such chapter by an entity

5 that may be a debtor under such chapter.” Section 109, titled “Who may be a debtor,” contains a

6 list of requirements that must be satisfied before an entity or individual, as the case may be, is

7 eligible for bankruptcy. As part of BAPCPA, Congress amended § 109 to add subsection (h). Pub.

8 L. No. 109-8, § 106, 119 Stat. 23, 37 (2005). Subsection (h) begins as follows: “Subject to

9 paragraphs (2) and (3), and notwithstanding any other provision of this section, an individual may

10 not be a debtor under [the Bankruptcy Code] unless such individual has, during the 180-day period

11 preceding the date of filing of the petition by such individual, received [credit counseling].” 11

12 U.S.C. § 109(h)(1). The remaining paragraphs provide exceptions for debtors who reside in areas

13 where there is no such available credit counseling, for debtors who can certify that they have exigent

14 circumstances and have made appropriate efforts to obtain counseling, and for those incapacitated,

15 disabled, or on active military duty in a combat zone. Id. § 109(h)(2)-(4). 

16 As the bankruptcy court’s decision noted, these two provisions may be read to suggest that,

17 since an individual “may not be a debtor” unless he has received credit counseling congruent with

18 the requirements of § 109(h) and under § 301 he may not commence a case unless he “may be a

19 debtor,” a debtor who fails to obtain pre-petition credit counseling and yet files a bankruptcy petition

20 has not actually commenced a case. In re Elmendorf, 345 B.R. at 497. Informed by this conclusion,

21 the bankruptcy court reasoned further that striking the petition was the appropriate procedural
Section 707 provides that a bankruptcy court “may dismiss a case” for cause after notice

4

and a hearing. 11 U.S.C. § 707(a).

15

1 method to dispose of the filing, rather than “dismiss[ing] the case” as provided for in 11 U.S.C. §

2 707. Amicus argues for this interpretation on appeal; the Trustee contends instead that a case is 4

3 commenced when an ineligible individual files for bankruptcy, and that the case must be dismissed.

4 An additional twist arises from the automatic stay provision. Section 362(a) of the Code

5 states that “a petition filed under section 301, 302, or 303 of [the Bankruptcy Code] . . . operates as

6 a stay.” Section 362(c)(3)-(4), in turn, sets forth limitations on the automatic stay applicable to

7 subsequent cases by the same petitioner. Under § 362(c)(3), where a “case of the debtor was

8 pending

9 within the preceding 1-year period but was dismissed,” the automatic stay is limited to 30 days

10 unless the debtor is able by clear and convincing evidence to rebut a presumption that the later case

11 was not filed in good faith. Moreover, § 362(c)(4) states that “if 2 or more . . . cases of the debtor

12 were pending within the previous year but were dismissed, . . . the stay . . . shall not go into effect

13 upon the filing of the later case,” and the debtor may obtain a stay only if he is able to demonstrate

14 that the filing of the later case is in good faith. The bankruptcy court, interpreting the interplay

15 among §§ 109(h), 301, and 362(a), concluded “that the automatic stay comes into existence only

16 when a case is filed in accordance with §§ 301, 302, or 303 of the [Code].” In re Elmendorf, 345

17 B.R. at 498. Under this reading, when a petition is filed but no case is commenced, the automatic

18 stay does not come into effect. Amicus urges us to reject this interpretation and instead find that the

19 filing of the petition, not the commencing of a case, is sufficient to institute the automatic stay. 
16

1 Of the bankruptcy and district courts to consider this statutory tangle so far, a majority have

2 sided with the Trustee and found that debtors such as the ones in the case at bar should have their

3 cases dismissed. See, e.g., In re Crawford, 420 B.R. 833, 838 & n.7 (Bankr. D.N.M. 2009)

4 (collecting cases); In re Jones, 352 B.R. 813, 821 (Bankr. S.D. Tex. 2006) (same); In re Seaman,

5 340 B.R. 698, 703, 706 n.3 (Bankr. E.D.N.Y. 2006). Of the minority of courts that recognize the

6 option of striking the petition of a debtor ineligible under § 109(h), some agree with the bankruptcy

7 court in this case that such a petition “does not trigger the protections of the automatic stay” under

8 § 362(a), In re Elmendorf, 345 B.R. at 498-502. See, e.g., In re Salazar, 339 B.R. 622, 632-33

9 (Bankr. S.D. Tex. 2006). Finally, some courts have ruled in line with Amicus’s conclusion that the

10 petition’s filing does trigger an automatic stay but does not commence a dismissible case when the

11 petitioner is ineligible under § 109(h). See In re Thompson, 344 B.R. 899, 905-08 (Bankr. S.D. Ind.

12 2006), vacated as moot by 249 F. App’x 475 (7th Cir. 2007). 

13 In constructing its argument, Amicus places emphasis on the language of § 301, which

14 provides that a “voluntary case under a chapter of [the Bankruptcy Code] is commenced by the filing

15 with the bankruptcy court of a petition under such chapter by an entity that may be a debtor under

16 such chapter.” 11 U.S.C. § 301(a) (emphasis added). Amicus suggests that the phrase “may be a

17 debtor” should be interpreted as barring a debtor ineligible for bankruptcy under § 109(h) from

18 commencing a “case.” The Trustee, citing authority rejecting this position, counters that “the word

19 ‘may’ as used in the § 301 of the Bankruptcy Code means ‘might’ or is meant to express a

20 ‘possibility.’” In re Tomco, 339 B.R. 145, 159 (Bankr. W.D. Pa. 2006). We conclude that § 301,

21 as well as §§ 302 and 303 (“Voluntary cases,” “Joint cases,” and “Involuntary cases,” respectively),
17

1 define the prerequisites for relief under particular chapters of the Bankruptcy Code, rather than the

2 existence in a jurisdictional sense of a voluntary, joint, or involuntary case. We thus reject the

3 position of Amicus that a debtor ineligible for bankruptcy pursuant to § 109(h) does not commence

4 a case by filing a petition pursuant to § 301. 

5 Each of the three parallel sections implicated here contains limiting language indicating that

6 it is referencing a particular type of case, whether voluntary, joint, or involuntary, that in turn is

7 treated in a separate chapter of the Bankruptcy Code. Sections 301, 302 and 303 thus each provide

8 that a case under a given chapter is commenced by the filing of a petition by a petitioner “that may

9 be a debtor under such chapter.” See 11 U.S.C. §§ 301-03 (emphasis added). This limiting

10 language in all three sections suggests that the sections are not concerned with determining the

11 existence of a “case” in the broader sense — i.e., “[a] civil or criminal proceeding, action, suit, or

12 controversy at law or in equity.” BLACK’S LAW DICTIONARY 243 (9th ed. 2009) (defining “case”).

13 Rather, they clarify that, when a debtor commences a case, the debtor is not eligible for relief under

14 a particular chapter of the Bankruptcy Code unless it meets the requirements to be a debtor under

15 that chapter. Other provisions in the Code place similar emphasis on the existence of chapter16 specific requirements for debtors. See, e.g., 11 U.S.C. §§ 706(d), 1112(f), 1307(g) (“[A] case may

17 not be converted to a case under another chapter of this title unless the debtor may be a debtor under

18 such chapter.”); see also H.R. Rep. 95-595, at 380, 406, 428 (Sept. 8, 1977), 1978 U.S.C.C.A.N.

19 5963, 6336, 6362, 6384 (providing that the limitations on conversion are meant to reinforce § 109).

20 The reading of § 301 proposed by Amicus, moreover, is inconsistent with other provisions

21 of the Bankruptcy Code. While claiming that the interpretation of § 301 permitting dismissal
18

1 “ignores the distinction between ‘case’ and ‘petition,’” Amicus itself ignores the Bankruptcy Code’s

2 definition of petition: “The term ‘petition’ means petition filed under section 301, 302, 303, or 304

3 of this title, as the case may be, commencing a case under this title.” 11 U.S.C. § 101(42) (emphasis

4 added). Thus, a petition filed under §§ 301, 302, or 303 both “operates as a stay,” id. § 362(a), and

5 commences a bankruptcy case, id. § 101(42). See, e.g., Michael Newman, Comment, BAPCPA’s

6 New Section 109(h) Credit Counseling Requirement: Is It Having the Effect Congress Intended?,

7 2007 UTAH L. REV. 489, 511. And while Amicus’s theory that the automatic stay may come into

8 effect upon the filing of a petition, even though a case is not commenced, is superficially plausible

9 pursuant to the language of § 362(a) (providing that “a petition filed under section 301, 302, or 303

10 . . . operates as a stay”), this theory falls apart when one attempts to determine the date that such a

11 stay terminates. Under § 362(c)(2), most actions remain stayed under § 362(a) “until the earliest of

12 (A) the time the case is closed; (B) the time the case is dismissed; or (C) if the case is a case under

13 chapter 7 of this title concerning an individual or a case under chapter 9, 11, 12, or 13 of this title,

14 the time a discharge is granted or denied.” 11 U.S.C. § 362(c)(2) (emphasis added). We determine,

15 therefore, that although an individual may be ineligible to be a debtor under the Bankruptcy Code

16 for failure to satisfy the strictures of § 109(h), the language of § 301 does not bar that debtor from

17 commencing a case by filing a petition; it only bars the case from being maintained as a proper

18 voluntary case under the chapter specified in the petition. 

19 Although our conclusion in this respect comes into conflict with the reasoning in this Court’s

20 decision in In re BDC 56 LLC, 330 F.3d 111 (2d Cir. 2003), which held that the eligibility

21 requirements of § 303 were jurisdictional in nature, we conclude that as a result of recent Supreme
19

1 Court precedent, that case is no longer good law. Section 303 provides, in relevant part, as follows:

2 (a) An involuntary case may be commenced . . . only against a

3 person, except a farmer . . . that may be a debtor under the chapter

4 under which such case is commenced. 

5 (b) An involuntary case against a person is commenced by the filing

6 with the bankruptcy court of a petition . . . by three or more entities,

7 each of which is either a holder of a claim against such person that is

8 not contingent as to liability or the subject of a bona fide dispute as

9 to liability or amount . . . .

10 (c) After the filing of a petition under this section but before the case

11 is dismissed or relief is ordered, a creditor . . . may join in the petition

12 with the same effect as if such joining creditor were a petitioning

13 creditor under subsection (b) of this section. 

14 . . . 

15 (h) If the petition is not timely controverted, the court shall order

16 relief against the debtor in an involuntary case under the chapter

17 under which the petition was filed. . . . 

18 . . .

19 (j) Only after notice to all creditors and a hearing may the court

20 dismiss a petition filed under this section — (1) on the motion of a

21 petitioner; (2) on consent of all petitioners and the debtor; or (3) for

22 want of prosecution.

23

24 11 U.S.C. § 303. As discussed above, under the interpretation we grant to the language “may be a

25 debtor under the chapter under which such case is commenced,” a case is commenced under § 303

26 even if the debtor is ineligible by virtue of, for example, being a farmer. Similarly, the ineligibility

27 of creditors under the restrictions in § 303(b) does not prevent the case from being commenced.

28 This reading is supported, moreover, by the provisions of § 303(c), (h), and (j). Under § 303(c), a

29 creditor may join in the petition after it is filed — before the case is dismissed — with the effect

30 being as if the creditor had been part of the initial filing. Were there no case in existence because

31 of an insufficiency of eligible creditors at the outset, it would be impossible for new creditors to join

32 it by joining the petition. Moreover, § 303(h) and (j) provide for the bankruptcy court to order relief
20

1 or dismiss a case based on whether debtors and creditors take given actions. Surely relief cannot

2 be so granted, or the matter not dismissed in the absence of a motion to do so, if a case did not exist

3 in the first place. 

4 Subject matter jurisdiction under title 11 proceedings in the bankruptcy courts is provided

5 by 28 U.S.C. § 1334(a), which states that, with some given exceptions, “the district courts shall have

6 original and exclusive jurisdiction of all cases under title 11.” District courts may, under 28 U.S.C.

7 § 157(a), “provide that any or all cases under title 11 . . . shall be referred to the bankruptcy judges

8 for the district.” The most straightforward reading of these provisions is that if a case exists under

9 title 11, the district court (and the bankruptcy court, if so invoked by § 157(a)) has jurisdiction over

10 it. The contrapositive of this statement, then, is also true: if the court has no jurisdiction, then there

11 is no case under the Bankruptcy Code. In In re BDC 55 LLC, we stated:

12 At least one circuit . . . has held that the requirement that a petitioning

13 creditor’s claim not be subject to a bona fide dispute[, found in §

14 303(b),] is not jurisdictional, but is “an element that must be

15 established to sustain an involuntary proceeding.” 

16 We believe the more sound view is that the requirement is

17 subject matter jurisdictional, and now so hold. Whether an alleged

18 debtor is properly before the bankruptcy court in an involuntary case

19 is a threshold determination that should be made at the earliest

20 possible stage of the proceedings. One of the requirements to

21 bringing such a petition is that the petitioning creditors’ claims are

22 free from bona fide dispute. Any creditor wishing to invoke the

23 bankruptcy court’s jurisdiction in an involuntary case should be

24 required to demonstrate at the earliest practicable point that its

25 petition satisfies this requirement. Otherwise, creditors could, on the

26 basis of relatively untested claims, haul a solvent debtor with whom

27 they have legitimate disputes into bankruptcy court and force it to

28 defend an involuntary proceeding while the bankruptcy court leaves

29 for a later merits determination whether the debtor is even properly

30 before it.
 In addition, prior to filing this opinion has been circulated to all the judges of this Court. 

5

See Shipping Corp. of India Ltd. v. Jaldhi Overseas Pte Ltd., 585 F.3d 58, 67 & n.9 (2d Cir.

2009); United States v. Crosby, 397 F.3d 103, 105 n.1 (2d Cir. 2005). 

21

1

2 330 F.3d at 118-19 (quoting In re Rubin, 769 F.2d 611, 615 (9th Cir. 1985)) (internal citations and

3 footnote omitted). This holding, then, necessarily indicates that if the requirements of § 303 are not

4 met, no case exists — nor, presumably, was commenced — under title 11. 

5 This panel is “bound by the decisions of prior panels until such time as they are overruled

6 either by an en banc panel of our Court or by the Supreme Court.” United States v. Wilkerson, 361

7 F.3d 717, 732 (2d Cir. 2004). However, if “there has been an intervening Supreme Court decision

8 that casts doubt on our controlling precedent,” one panel of this Court may overrule a prior decision

9 of another panel. Gelman v. Ashcroft, 372 F.3d 495, 499 (2d Cir. 2004) (quoting Union of

10 Needletrades, Indus. & Textile Employees v. U. S. I.N.S., 336 F.3d 200, 210 (2d Cir. 2003)) (internal

11 quotation marks omitted). The intervening decision need not address the precise issue decided by

12 the panel for this exception to apply. Wojchowski v. Daines, 498 F.3d 99, 106 (2d Cir. 2007).5

13 Since our holding in In re BDC 56 LLC, the Supreme Court has clarified the distinction between

14 “two sometimes confused or conflated concepts: federal-court ‘subject-matter’ jurisdiction over a

15 controversy; and the essential ingredients of a federal claim for relief.” Arbaugh v. Y&H Corp., 546

16 U.S. 500, 503 (2006). In a unanimous decision, the Court held that a clear statement by Congress

17 was required to construe a threshold limitation on the scope of a statute as jurisdictional. Id. at 515-

18 16. “But when Congress does not rank a statutory limitation on coverage as jurisdictional, courts

19 should treat the restriction as nonjurisdictional in character.” Id. at 516. Therefore, a limitation on
The Fifth and Eighth Circuits held that the requirements of § 303(a) were not 6

jurisdictional pre-Arbaugh; the Ninth Circuit similarly so held for § 303(b). See In re Marlar,

432 F.3d 813, 814-15 (8th Cir. 2005) (per curiam); In re McCloy, 296 F.3d 370, 375 (5th Cir.

2002); In re Rubin, 769 F.2d 611, 615 (9th Cir. 1985). 

22

1 Title VII claims based on whether the defendant-employer had a particular number of employees

2 was nonjurisdictional because the limitation “does not speak in jurisdictional terms or refer in any

3 way to the jurisdiction of the district courts,” the statute contains an express jurisdictional provision

4 in a different portion from the limitation, there was no evidence in the statutory text that Congress

5 intended the requirement to be sua sponte monitored by the courts, and consideration of the

6 limitation after a judgment on the merits would be unfair and wasteful. Id. at 514-16; see also In

7 re Trusted Net Media Holdings, LLC, 550 F.3d 1035, 1043 (11th Cir. 2008). This “readily

8 administrable bright line,”Arbaugh, 546 U.S. at 516, now guides our consideration of whether § 303

9 contains restrictions on the bankruptcy court’s jurisdiction. 

10 We find that, in light of Arbaugh, In re BDC 56 LLC can no longer be considered good law

11 on this point. As the Eleventh Circuit noted in evaluating the same question, § 303 “contains no

12 explicit reference to its requirements being jurisdictional in nature and never uses the word

13 ‘jurisdiction.’” In re Trusted Net Media Holdings, LLC, 550 F.3d at 1043. Nor does the text of the 6

14 statute suggest that the bankruptcy court should sua sponte raise the issue of whether the

15 requirements of § 303 are satisfied; in fact, § 303(h) provides the opposite, since the bankruptcy

16 court should order relief if the petition is not timely controverted. Moreover, the Bankruptcy Code

17 is governed by a separate jurisdictional provision, 28 U.S.C. § 1344, which contains other

18 restrictions and exclusions. In sum, the restrictions of § 303 fall decisively on the nonjurisdictional
23

1 side of Arbaugh’s bright line. 

2 Similarly, we find that the restrictions of § 301 and § 109(h) are not jurisdictional, but rather

3 elements that must be established to sustain a voluntary bankruptcy proceeding. Restricting whether

4 an individual may be a debtor either under the Bankruptcy Code in general or under a given chapter

5 does not speak in jurisdictional terms or invoke the jurisdiction of the district court, delineated in

6 28 U.S.C. § 1344 as discussed above. Certainly, consideration of these limitations after other

7 decisions on the merits have taken place would be wasteful and unfair; because bankruptcy is a

8 swift-moving process involving multiple parties, “creditors and other parties in interest have a

9 considerable interest in being able to rely on the existence of a case, the bankruptcy court’s

10 jurisdiction, and the validity of actions taken in the case” in order to facilitate asset-preserving

11 transactions. In re Ross, 338 B.R. 134, 140 (Bankr. N.D. Ga. 2006). This decision, moreover, is

12 in line with pre-BAPCPA decisions from our sister circuits and in this circuit finding that other

13 provisions of § 109 are not jurisdictional. See, e.g., Rudd v. Laughlin, 866 F.2d 1040, 1042 (8th Cir.

14 1989) (“Nor do we believe that 11 U.S.C. § 109 is meant to restrict the jurisdiction granted under

15 [28 U.S.C. §§ 1334, 157].”); In re Phillips, 844 F.2d 230, 235 n.2 (5th Cir. 1988) (finding § 109(g)

16 nonjurisdictional); In re Flores, 291 B.R. 44, 52-53 (Bankr. S.D.N.Y. 2003) (same), superseded by

17 BAPCPA, Pub. L. No. 109-8, § 303(b), 119 Stat. at 78. 

18 Some additional support for our conclusion that a case has been commenced when debtors

19 ineligible for relief under § 109(h) file a bankruptcy petition may be gleaned from cases interpreting

20 11 U.S.C. § 342(b), which provides that “[b]efore the commencement of a case under this title by

21 an individual whose debts are primarily consumer debts, the clerk shall give to such individual
24

1 written notice containing . . . a brief description of” bankruptcy proceedings, credit counseling

2 services, and legal consequences from fraudulent findings. If we were to interpret the language

3 regarding commencement of a case in this section as the bankruptcy court did the language of § 301

4 and § 109(h), the provision would suggest that a case is not commenced if the would-be debtor is

5 not given the statutorily required notice. Courts considering the question have not so held. See, e.g.,

6 In re Guth, No. 02-02121, 2002 WL 31941460, at *4 (Bankr. D. Idaho Nov. 8, 2002); In re Bryant,

7 51 B.R. 729, 731-32 (Bankr. N.D. Miss. 1985). 

8

9 IV. Whether the Automatic Stay is Triggered

10 Having determined that a case is commenced, we turn to the question whether the automatic

11 stay takes effect when a petition is filed by a debtor ineligible under § 109(h). We conclude that it

12 does. Section 362, which outlines the basic commencement, effect, and termination of the automatic

13 stay, provides significant indications to that effect. As an initial matter, the section contains

14 language suggesting that the stay accompanies a commenced case: 

15 [A] petition filed under section 301, 302, or 303 of this title . . .

16 operates as a stay . . . of — (1) the commencement or continuation .

17 . . [of an] action or proceeding against the debtor that was or could

18 have been commenced before the commencement of the case under

19 this title, or to recover a claim against the debtor that arose before the

20 commencement of the case under this title; (2) the enforcement,

21 against the debtor . . . , of a judgment obtained before the

22 commencement of the case under this title.

23

24 11 U.S.C. § 362(a). Section 362(b) lists circumstances under which the filing of a petition does not

25 operate as a stay, but the debtor’s ineligibility is not among them. Moreover, none of the

26 mechanisms outlined in the remainder of the statute for confirming the existence of a stay or for
Section 109(g) provides as follows:

7

Notwithstanding any other provision of this section, no individual or family

farmer may be a debtor under this title who has been a debtor in a case pending

under this title at any time in the preceding 180 days if —

(1) the case was dismissed by the court for willful failure of the debtor to abide by

orders of the court, or to appear before the court in proper prosecution of the case;

or 

(2) the debtor requested and obtained the voluntary dismissal of the case

following the filing of a request for relief from the automatic stay provided by

section 362 of this title. 

25

1 granting relief from one address anything related to the ineligibility of a debtor. 

2 In addition, the bankruptcy court’s interpretation of § 362 renders a nullity BAPCPA’s

3 enactment of § 362(b)(21)(A). Section 362(b)(21)(A) provides that certain actions against real

4 property are not stayed when “the debtor is ineligible under section 109(g) to be a debtor in a case

5 under this title.” As In re Ross notes, if an action by a person ineligible under § 109(g) were “void 7

6 ab initio and did not result in an automatic stay under existing law, such an amendment would not

7 have been necessary.” 338 B.R. at 139; see also In re Racette, 343 B.R. 200, 203 (Bankr. E.D. Wis.

8 2006). As discussed above, no such exception is provided for debtors ineligible under § 109(h),

9 which leads us to the conclusion that the automatic stay commences in such cases. The bankruptcy

10 court purported to distinguish § 109(h) from § 109(g) by characterizing ineligibility under the latter

11 provision as a failure that may be cured or “waived” by the court, rendering it possible that the

12 automatic stay could go into effect notwithstanding such a failure — and thus conceivable that a

13 provision specifying circumstances in which it should not would be necessary. See In re Elmendorf,

14 345 B.R. at 499-500. We agree with the Trustee that this is not a tenable distinction. The wording

15 of § 109(g) is no less mandatory that the wording of § 109(h). Moreover, even assuming that the
26

1 legislative history cited by the bankruptcy court for its description of § 109(g) is properly

2 considered, it does not support the conclusion that the requirements of the subsection are curable.

3

4 Amicus and the Trustee both correctly observe that our decision in In re Casse, 198 F.3d 327

5 (2d Cir. 1999), does not undermine the conclusion that an ineligible debtor’s petition gives rise to

6 an automatic stay. Under separate but analogous circumstances, Casse affirmed the bankruptcy

7 court’s dismissal of a case “nunc pro tunc” to the date of filing and approved of annulling a stay per

8 § 362(d), id. at 332, 342, rulings that indicate Casse recognized the stay as having initially gone into

9 effect. See Ross, 338 B.R. at 137 n.4; In re Flores, 291 B.R. at 57-58; Robert Lefkowitz, Note, The

10 Filing of a Bankruptcy Petition in Violation of 11 U.S.C. § 109(g): Does It Invoke the Automatic

11 Stay?, 26 CARDOZO L. REV. 297, 309 (2004). 

12 Finally, we note that having the automatic stay commence even when a debtor fails to satisfy

13 the credit-counseling requirements both fits into the overall purpose and framework of the stay and

14 ensures that eligible debtors receive protection from the bankruptcy system. The automatic stay

15 serves a number of purposes: “providing debtors with a fresh start, protecting the assets of the estate,

16 and allowing the bankruptcy court to centralize disputes concerning the estate.” MBNA Am. Bank,

17 N.A. v. Hill, 436 F.3d 104, 109 (2d Cir. 2006). Much of the value of the stay is in the clarity of its

18 implementation; once a debtor files for bankruptcy and the stay is in effect, creditors must cease

19 their individual attempts to gain repayment and operate only through the bankruptcy court. This

20 centralization ensures a fair distribution of assets if the debtor proceeds through bankruptcy. If it

21 were unclear whether the stay was in place immediately following a debtor’s filing for bankruptcy,
27

1 creditors would likely continue their collection efforts “in hopes that the bankruptcy court would

2 find no merit in the debtor’s petition. Thus, rather than providing the debtor with automatic

3 breathing space, the Code would pressure the debtor to file correctly in the first instance or risk

4 losing the protections of Title 11 due to the actions of several unscrupulous creditors.” Shaw v.

5 Ehrlich, 294 B.R. 260, 268 (Bankr. W.D. Va. 2003). Even a debtor who filed correctly might face

6 challenges outside the bankruptcy court from particularly aggressive creditors hoping that a filing

7 correct on its face had an underlying flaw that would redound to their advantage. Construing a

8 debtor’s ineligibility pursuant to § 109(h) as creating an exception to the automatic stay provision,

9 therefore, is a tenuous proposition given the statutory framework provided by Congress. Our

10 interpretation, in contrast, we believe supports and furthers that framework. 

11

12 V. Whether the Bankruptcy Court Must Dismiss the Cases

13 Having concluded that no case had commenced and no automatic stay had been triggered

14 in the cases of the three debtors here, the bankruptcy court chose as the appropriate method of

15 disposing of the matters to exercise its equitable powers under 11 U.S.C. § 105(a) and strike the

16 debtors’ petitions. See In re Elmendorf, 345 B.R. at 503-05. The Trustee urges us to determine that

17 the only proper method of disposing of the matter of a debtor ineligible under § 109(h) is dismissal.

18 At this time, we need not, and do not, determine what actions the bankruptcy court may have taken

19 on the petitions. Rather, we remand to the bankruptcy court for it to consider in the first instance

20 the ramifications of our determination in the circumstances presented here that cases have

21 commenced. The bankruptcy court’s determination that its equitable powers included striking the
28

1 petitions was premised on the belief that there were no cases to dismiss. While we note that we are

2 unaware of any case similar to this one in which a court has determined that a case has commenced

3 and yet taken an action other than dismissal, the bankruptcy court did not address whether other

4 actions, including striking a petition, might be appropriate in these circumstances. We thus conclude

5 that this is a question for the bankruptcy court to address initially. See In re Morgan, 182 F.3d 775,

6 780 (11th Cir. 1999) (“Since the applicability and use of § 105(a) is a decision that is typically left

7 to the bankruptcy court, we leave the decision to the bankruptcy court in this case.”). 

8

9 CONCLUSION

10 For all of the foregoing reasons, the judgment of the district court is VACATED and the case

11 is REMANDED to the district court with instructions to remand to the bankruptcy court for further

12 proceedings consistent with this opinion. We thank amicus counsel, Sanford I. Weisburst and

13 William B. Adams of Quinn Emanuel Urquhart & Sullivan, LLP, for their helpful brief and oral

14 argument.