eight days. FED. R. BANKR. P. 9006. However, if the last diy of the prescribed period falls on a
Saturday, Sunday, or legal holiday, it is not included within thy: time period. Jd.

In this case, the Debtor’s time to designate the contents of the record began when he filed
a notice of appeal on December 21, 2001. Because Rule 8006 prescribes a period greater than
eight days, intermediate Saturdays, Sundays, and legal holidays count within the computation of
the filing period. Thus, the latest day upon which the Debtor could have timely designated the
issues on appeal was Monday, December 30, 2001. Instead, the Debtor filed his designation of
the issues on appeal on January 10, 2002, in violation of Rule 8006.

The time period provided for in Rule 8006 is not jurisdictional, but failure to comply may
serve as grounds for dismissal of an appeal. Jn re Thompson, 1-40 B.R. 979, 982 (N.D. Ill. 1992),
aff'd, 4 F.3d 997 (7th Cir. 1993). While recognizing that no consensus exists as to what conduct
on the part of a noncompliant filer warrants a dismissal pursuant to 8006, the Seventh Circuit has
identified three major approaches district courts have used in addressing late or missing
designations. J re Bulic, 997 F.2d 299, 301 (7th Cir. 1993).

First, in the largest group of cases, district courts did not apply any clear standard but
simply dismissed or refused to dismiss the appeal. Bulic, 997 F.2d at 301. In explaining their
decision, such courts occasionally referenced any bad faith on the part of the late filer or
prejudice to other parties caused by the delay. /d. Under a second approach, district courts cited
Bankruptcy Rule 8001(a), which grants them broad discretion to take any appropriate steps,
including dismissal, for any non-jurisdictional procedural errors. Bulic, 997 F.2d at 301-02.
When they did examine specific factors, district courts acting under Rule 8001(a) discussed

egregiousness, prejudice, or bad faith. Jd. at 302. Third, some district courts applied Bankruptcy


The Debtor was aware of the pending Motion to Dismiss when he argued unsuccessfully
for a second extension of time to file a reorganization plan anc disclosure statement. And yet, in
over a month’s time, he failed either to provide a written response to Appellee’s Motion or file a
reorganization plan and disclosure statement. Nor did he ofter, once Appellee had met her
burden of proof on the issue of cause, any new justification for extending the filing period for the
reorganization plan. The issues regarding the amount of time necessary to file the plan had been
addressed repeatedly by the bankruptcy court in the Debtor’s tv’o Motions to Increase Time for
Filing a Plan. Therefore, a full evidentiary hearing was unnecessary.

Debtors seeking relief in a bankruptcy court must travel a two-way street. Kang, 18 B.R.
at 680. In exchange for the automatic stay from creditors proviiled by bankruptcy proceedings,
the debtor must fulfill the obligations imposed upon him by tie bankruptcy code and court. /d.
When a debtor fails to perform these duties, dismissal of his petition is proper. /d. at 681. For
all of these reasons, the Debtor’s failure to file a plan within the deadlines established by the
bankruptcy court was sufficient cause for dismissal or conversion under section 1112(b), and the

court did not abuse its discretion in so finding.

B. Dismissal in the Best Interests of the Creditors and the Estate

The Debtor next contends that the bankruptcy court erred in failing to consider the best
interests of the creditors and the estate in deciding to dismiss, in violation of explicit
requirements contained within section 1112(b). Once a bankruptcy court determines that cause
exists, it must then examine the best interests of the creditors and estate in ruling which option,
dismissal from bankruptcy proceedings or conversion to Chapter 7, will result from the showing
of cause. See 11 U.S.C. § 1112(b). Contrary to what the Debtor may be contending in his

Appellant’s Brief, this second portion of a court’s analysis under section 1112(b) does not


not counted within the period. This procedural lapse is a direct result of Debtor’s counsel’s
failure to acquaint himself with rules governing the computation of the filing period. It was
entirely within Debtor’s counsel’s reasonable control to prevent this error. The Debtor offers no
excuse for this error in his reply brief; instead, he asserts that Appellee was free to supplement
the record on appeal and should have raised her argument regarding the timeliness of the
designation earlier. These arguments are unsupported by either the plain language of rule or
with existing case law discussed above setting the standard for what constitutes excusable
neglect. See FED. R. BANKR. P. 8006.

The U.S. Supreme Court has recognized that excusable neglect under these
circumstances usually does not encompass ignorance of the rules or errors in their construction.
Pioneer, 507 U.S. at 392. Furthermore, the Seventh Circuit lias held that the excusable neglect
standard in the bankruptcy rules ““can never be met by a showing of inability or refusal to read
and comprehend the plain language of the federal rules.”” Prizevoits v, Ind. Bell Tel. Co., 76
F.3d 132, 133 (7th Cir. 1996) (quoting Jn re Cosmopolitan Aviation Corp., 763 F.2d 507, 515
(2d Cir. 1985).

Thus, because dismissal is appropriate under the excusable neglect standard utilized in
Bulic, the Court dismisses the Debtor’s appeal for his untimely designation of the content of
record. Nevertheless, even if the Court were to reach the oppcsite conclusion as to dismissal on
that ground and reach the merits of the Debtor’s appeal, for the reasons discussed below, the
Court would affirm the bankruptcy court’s decisions to dismiss the Debtor’s Chapter 11 petition

and deny his motion to vacate the dismissal and for leave to file a plan instanter.


Rule 9000(b), which allows them to extend time limits after their expiration upon a showing of
excusable neglect. /d.

Under this third standard, neglect includes omissions through carelessness and mistake.
dd. In considering what constitutes excusable neglect, courts siiould analyze all relevant
circumstances, including danger of prejudice to the debtor, the length of the delay and its
potential impact on proceedings, the reason for the delay, including whether it was within the
reasonable control of the movant, and whether the movant acted in good faith. Pioneer Inv.
Servs. Co. v. Brunswick Assocs. Ltd. Partnership, 507 U.S. 38€, 395 (1993).

Ultimately, the Seventh Circuit in Bulic applied the third excusable neglect standard in
determining whether to dismiss the debtor’s petition. 997 F.2d at 302. However, in recognizing
the lack of consensus among the district courts in dismissing bankruptcy appeals under Rule
8006, the Seventh Circuit noted that endorsing a particular apprach was unnecessary given the
particular facts before the court because the district court’s dismissal was warranted under any of
the three standards on the facis of that case. Id.

In the instant case, there is an insufficient showing of bac faith or egregious conduct to
warrant dismissal under the first two approaches enumerated in ulic. In requesting that the
Court dismiss this appeal, Appellee does not contend that the Debtor acted in bad faith. His
untimely designation does not constitute egregious behavior under the facts and circumstances of
the case, and Appellee does not argue that the delay in any way prejudiced her.

However, dismissal is warranted under the third standard utilized in Bulic, the excusable
neglect standard. It appears that the Debtor miscalculated the tiling period under Rule 8006, as
January 10, 2002, the day upon which he did designate the conterits of the record, is ten days

from his filing a notice of appeal when intermediate Saturdays. Siindays, and legal holidays are


the bankruptcy court is sufficient cause for dismissal or conversion. See 11 U.S.C. § 1112(b)(4).
While the bankruptcy court did not cite explicitly to a particular provision of the bankruptcy
code during the hearing on Appellee’s Motion to Dismiss, Justice Doyle’s remarks regarding the
Debtor’s failure to file a plan, as well as the framing of Appelle’s Motion to Dismiss as one for
failure to file a plan, clearly establish this basis for the bankruptcy court’s dismissal.

The movant under section 1112(b) bears the burden of roving by a preponderance of the
evidence that cause exists to dismiss or convert a bankruptcy petition. Woodbrook, 19 F.3d at
317. While the movant bears this burden of proof, dismissal for cause under section 1112(b)
does not necessarily require a full evidentiary hearing if all relevant issues have otherwise been
addressed in the course of the case. In re Tiana Queen Motei, lnc., 749 F.2d 146, 150 (2nd Cir.
1984); In re Sunflower Racing, Inc., 226 B.R. 665, 668 (D. Kan. 1998).

The Debtor erroneously asserts that Appellee failed to meet the burden placed upon
movants under section 1112(b) when she did not establish thet the continued pendency of the
action would be prejudicial to her or other creditors. A finding of cause under section
1112(b)(3), which justifies dismissal or conversion based on « dzbtor’s unreasonable delay of
proceedings, does typically require a finding of prejudice to the party moving for dismissal or
conversion. See 11 U.S.C. § 1112(b)(3); Jn re Macon Prestressed Concrete Co., 61 B.R. 432,
437 (Bankr. M.D. Ga. 1986). However, such a conclusion is unnecessary for a finding of cause
under section 1112(b)(4). See 11 U.S.C. § 1112(b)(4); Jn re Kang, 18 B.R. 680, 681 (Bankr.
N.D. Ill. 1982) (noting that where debtor fails to obey court orders or fulfill duties imposed upon
him by bankruptcy code or rules, dismissal is proper). Accordingly, the Appellee met her
burden of proof when she established that Debtor did not file a reorganization plan and

disclosure statement by the court-imposed deadline of October 20), 2001.


Minute Order Form (06197)

. SS {a United States District Court, Northern District of Illinois

Name of Assigned Judge
or Magistrate Judge

Ronald A. Guzman

Sitting Judge if Other
than Assigned Judge

CASE NUMBER 02 € 213 DATE 9/11/2002
CASE JAE EUN HAN, M.D. vs. HEATHER LINSTROM
TITLE
[In the following box (a) indicate the party filing the motion, ¢.g., plain iff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.}

DOCKET ENTRY:

(1) oO Filed motion of [ use listing in “Motion” box above.]

(2) 0 Brief in support of motion duc _

@) oO Answer brief to motion due___. Reply to answer brief due

(4) im Ruling/Hearingon ss setfor_— att.

(5) ia} Status hearing{held/contimed to] [set for/re-set for]on set for__ at

(6) o Pretrial conference[held/continued to] [set for/re-set forlon ss setfor_at_
(7) a] Trial[set for/re-set for]on __at

(8) Oo (Bench/Jury trial] [Hearing] held/continuedto_—at_

9) Q This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OFRCP4(m) OLocal Rule 41.1 OO FRCP41(a)(1) OO FRCP41(a)(2).
qo) [Other docket entry} ENTER MEMORANDUM OPIN ICN AND ORDER: The Court dismisses
the appeal for the Debtor’s failure to file a designation of record in the time provided by Fed.R.Bankr.P.
8006, 9006 and, in the alternative, affirms the decisions of the bankruptcy court.
al!) @f [For further detail see order attached to the original minute ordcr.]

No notices required, advised in open court. Document.

umber

No notices required. umber of wotices

SEP 1 2 700

dare docketed

Notices mailed by judge’s staff.

Notified counsel by telephone.

wv } Dacketing to mail notices.

ao | Mail AO 450 form.

IEMA bo ye
Copy tc judge/magistrate judge.
courtroom
TBK deputy's
initials 7
Date/time received in .
central Clerk's Oflice malin deputy fits



of law or fact, or to consider the impact of new evidence unavailable in prior proceedings. Jn re
Stoecker, 143 B.R. 118, 147 (Bankr. N.D. Ill.), aff'd, 143 B.R. 379 (N.D. IIL. 1992), aff d in part,
vacated in part on other grounds, 5 F.3d 1022 (7th Cir. 1993). Such motions should not provide
forums to relitigate old issues that could have been raised in prior proceedings. Stoecker, 143
B.R. at 147.

The Debtor presented no new evidence in his Motion to Reconsider; rather, he simply
filed a reorganization plan, lacking a disclosure statement, within a time frame expressly rejected
by the court in prior proceedings on Appellee’s Motion to Dismiss. The fact that he was able to
file a plan did not constitute new evidence, as the bankruptcy court had already explicitly
considered and denied extending the time for filing a plan during oral argument on Appellee’s
Motion to Dismiss. The Debtor also did not assert any manifest legal error on the part of the
bankruptcy court in his Motion to Vacate Order for Dismissal. Rather, he argued solely that the
court should vacate its previous dismissal order because he had cured the defect that had caused
it by filing a reorganization plan. Because the Debtor asserted no factual or legal basis for
vacating the dismissal, the bankruptcy court’s denial of his motion was not an abuse of

discretion.



concern whether dismissal is in the best interests of the parties as opposed to continued pendency
of the Chapter 11 proceedings. See 11 U.S.C. § 1112(b). Judge Doyle, when presented with the
options of dismissal and conversion, concluded within her discretion that dismissal was the
appropriate option. (Tr. Oral Arg. Appellee’s Mot. Dismiss or Convert, Bates 040.)

A bankruptcy court is not obligated to consider alternatives other than conversion when
deciding a motion brought under section 1112(b). Woodbrook, 19 F. 3d at 317. The Debtor
never explicitly argued for conversion to Chapter 7 liquidation proceedings instead of dismissal
during the oral argument on Appellee’s Motion to Dismiss, or in his Brief and Reply Brief filed
with this Court. While the Debtor did repeatedly assert that the creditors would be better served
by proceedings in bankruptcy court rather than collection actioris in state court, these arguments
were brought in the context of his attempts to remain within Chapter 11 proceedings by filing a
reorganization plan in a revised time frame. All creditors had notice of Appellee’s Motion to
Dismiss, yet none contested it or advocated for conversion to Chapter 7, similar to the facts of
Woodbrook. 19 F.3d at 317. The court’s failure to consider lesser sanctions was not an abuse of
discretion, since it was only obligated to consider conversion as an alternative to dismissal and,

given the record on appeal, an argument for conversion was never raised. Id.

HL. The Bankruptcy Court’s Denial of Debtor’s Motion to Vacate and Reconsider

Under Fed. R. Bankr. P. 9023, motions to vacate or reconsider final bankruptcy court
decisions are determined under the same standard prescribed by Fed. R, Civ. P. 59. See FED. R.
BANKR. P. 9023. We review the denial of a Fed. R. Civ. P. 59 motion under an abuse of
discretion standard. Figgie Int'l, Inc. v. Miller, 966 F.2d 1178, 1179 (7th Cir. 1982). Motions to

alter or amend the judgment made pursuant to Fed. R. Civ. P. 59 serve to correct manifest errors


I]. The Bankruptcy Court’s Dismissal Pursuant to Section 1112(b)

The Debtor raises several issues on appeal. He claims that the bankruptcy court abused
its discretion both in dismissing his case and in denying his motion to vacate the order of
dismissal and for leave to file a plan instanter.

Section 1112(b) of the Bankruptcy Code provides thit, on the request of a party in
interest or the United States Trustee, a bankruptcy court, after rotice and a hearing, may dismiss
or convert a case for cause, whichever is in the best interests of the creditor and the estate. See
11 U.S.C. § 1112(b). A bankruptcy court’s decision under section 1112(b) necessarily involves
a two-step analysis: (A) whether cause exists to dismiss or convert the case; and, if cause does
exist, (B) whether dismissal or conversion is in the best interests of the creditor and the estate.
In re Woodbrook Assocs., 19 F.3d 312, 316 (7th Cir. 1994) (stating that the court is not obligated

to consider alternatives to dismissal besides conversion).

A. Determination of Cause

A bankruptcy court has broad discretion to dismiss or convert a Chapter 11 case for
cause, and its decision is reviewed for an abuse of discretion. Jd While section 1112(b)
provides a list of factors that are sufficient cause for dismissal or conversion, that list is not
exhaustive. Jn re Hampton Hoiel Investors, L.P., 270 B.R. 345, 358 (Bankr. S.D.N.Y. 2001).
As such, the bankruptcy court is free to consider other factors as hey arise and use its equitable
powers to reach an appropriate result in individual cases. /d.

In this case, the basis for Appellee’s Motion to Dismiss was the Debtor’s failure to file a
plan within the time frame ordered by the court, and the bankruptcy court granted Appellee’s

Motion on that basis. Failure to file a reorganization plan within the time frame established by


hearing arguments on December 12, 2001, Judge Doyle denied the Debtor’s Motion for reasons
contained within the record.

The Debtor timely filed a Notice of Appeal from the Bankruptcy Court’s decisions on
December 21, 2001. However, he did not file a Designation of the Content of the Record on
Appeal and a Statement of the Issues to be presented on Appeal until January 10, 2002, more

than ten days after they were due.

DISCUSSION
This court has jurisdiction over this appeal pursuant to :28 U.S.C. § 158(a). The district
court reviews the bankruptcy court’s factual findings under z clearly erroneous standard, while
legal conclusions are reviewed de novo. FED. R. BANKR. P. 013; In re Newman, 903 F.2d 1150,

1152 (7th Cir. 1990).

I. Failure to Designate the Contents of the Record on Appeal

Appellee first urges this Court to dismiss the Debtor’s appeal for failure to designate the
content of the record on appeal in a timely fashion. Federal Rul of Bankruptcy Procedure
(“Rule”) 8006 requires that appellants file with the clerk and serve on the appellee a designation
of the items to be included in the record on appeal and a statement of the issues to be presented
within 10 days from the date of the following, whichever is latest: (1) filing a notice of appeal;
(2) entry of an order granting leave to appeal; or, (3) entry of an order disposing of the last
timely motion of a type specified in Rule 8002(b), which includes a motion to reconsider. FED.
R. BANKR. P. 8006. According to Rule 9006, intermediate Saturitays, Sundays, and legal

holidays are included within this period unless the time prescribed under the rules is less than


The Debtor voluntarily filed a petition for bankruptcy as an individual under Title 11,
United States Code (“the Bankruptcy Code”) on February 2(), :2001. On approximately April 27,
2001, the Honorable Carol A. Doyle ordered the Debtor to file a reorganization plan and
disclosure statement by June 20, 2001. The Debtor subsequently moved to increase this time
and Appellant opposed this motion. After hearing arguments cn the issue, Judge Doyle extended
the time for the Debtor to file a reorganization plan and disclosure statement to October 20,
2001.

On October 23, 2001, having failed to file a plan within the period specified by Judge
Dayle, the Debtor filed a second Motion to Increase Time. After hearing arguments on October
25, 2001, Judge Doyle denied this Motion for reasons stated on the record.

Appellee filed a Motion to Dismiss or Convert for Debtor’s Failure to File a Plan on
October 25, 2001, and the Debtor had notice of this pending Mction when the bankruptcy court
heard oral arguments on his second and unsuccessful Motion to Increase Time. Judge Doyle
heard arguments on Appellee’s Motion to Dismiss on November 28, 2001. Arguing in support
of dismissal, the U.S. Trustee reported that in addition to failing to file a plan, the Debtor had not
timely filed Operating Reports as required by her office. The Debtor admitted that he had not
yet filed a plan, but claimed that he could file one by December 3, 2001. Rejecting this
proposal, Judge Doyle ruled, for reasons stated in the record, tha! the Debtor’s case be dismissed.

On December 7, 2001, the Debtor filed a Motion to Vacate Order for Dismissal and for
Leave to File Plan Jnstanter. Attaching a copy of a completed reorganization plan but not a
disclosure statement, the Debtor requested that the Bankruptcy Court vacate the November 28,

2001 Dismissal Order, reinstate the case, and grant him leave to file the plan instanter. After


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION DOCKETED

JAE EUN HAN, M.D., ) SEP 12 2002
Appellant, ) 02 CV 213
v. } Judge Ronald A. Guzman
HEATHER LINSTROM, }
Appellee.

MEMORANDUM OPINION AND ORDER

Before the Court is Debtor-Appellant Jae Eun Ran, M.L.’s appeal from decisions
tendered by the United States Bankruptcy Court for the Northern District of Illinois, dismissing
his case on November 28, 2001 and subsequently denying his. motion to vacate and reconsider on
December 12, 2001. For reasons stated herein, the Court disinisses the appeal for failure to file a

timely designation of record and, in the alternative, affirms the bankruptcy court’s decisions.

FACTS
On March 20, 2000, Appellee Heather Linstrom (“Appellee”) obtained a $4.5 million
judgment against the Debtor-Appellant, Dr. Han (“the Debtor”), in a state court negligence
action. The Debtor’s liability insurance carrier, Illinois State Medical Insurance Services, Inc.
(“ISMIE”), paid Appellee the policy limit of $1 million in partial satisfaction of the judgment.
While an appeal of the state court judgment was pending, Appellee commenced collection of the

remainder from the Debtor’s individual assets.


CONCLUSION

For the foregoing reasons, the Court dismisses the appeal for the Debtor’s failure to file a
designation of record in the time provided by Fed. R. Bankr. P. 8006, 9006 and, in the

alternative, affirms the decisions of the bankruptcy court.

SOORDERED G-//-02- ENTER:

H{ON. RONALD A. GUZM.
United States Judge