Opinion ID: 771499
Heading Depth: 1
Heading Rank: 3

Heading: analysis

Text: 8 When an individual debtor petitions for bankruptcy he is entitled to claim certain property as exempt from the estate. See 11 U.S.C. S 522(b) (allowing debtor to elect to take exemptions provided by state or federal law); id. S 522(l) (requiring debtor to file list of property claimed as exempt); see also Fed. R. Bankr. P. 4003(a). Any creditor and the bankruptcy trustee may file objections to the debtor's list of properties claimed as exempt. See Fed. R. Bankr. P. 4003(b). However, absent special circumstances, these objections must be filed within 30 days after the conclusion of the meeting of creditors held pursuant to Rule 2003(a). Id. If no objections are made, then the property claimed as exempt . . . is exempt. 11 U.S.C. S 522(l). 9 The commencement of a voluntary case under Chapter 11 constitutes an order for relief. See 11 U.S.C. S 301. The Bankruptcy Code provides that [w]ithin a reasonable time after the order for relief in a case under this title, the United States trustee shall convene and preside at a meeting of creditors. 11 U.S.C. S 341(a). Rule 2003 includes provisions governing the time during which the meeting must be convened and the manner of its continuance. See Rules 2003(a), (e). Although it does not provide a rule expressly stating the manner in which a meeting is to be concluded, Rule 2003(e) provides that [t]he meeting may be adjourned from time to time by announcement at the meeting of the adjourned date and time without further written notice. 10 Smith voluntarily filed for Chapter 11 bankruptcy on August 7, 1995. The original creditors meeting, on September 8, 1995, was timely, and the first two adjournments, to September 22 and October 27, 1995 are not at issue. However, Smith argues that the October 27, 1995, meeting of creditors was not adjourned but concluded, because the trustee failed to specify a new meeting date, and that the Creditors' objections, almost eight months later, were untimely. The Creditors claim that Smith's exemptions were meritless. However, we may not reach the merits of the claimed exemptions absent a finding that the Creditors objections were timely made. In Taylor v. Freeland & Kronz, 503 U.S. 638 (1992), the debtor claimed a meritless exemption. Had the trustee or creditors objected to the claim within 30 days after the initial creditors meeting, as required under Rule 4003(b), the property could have been retained in the bankruptcy estate. 503 U.S. at 642. However, their failure to do so within that period, the Supreme Court ruled, prevented them from challenging the validity of the exemption later -whether or not [the debtor] had a colorable statutory basis for claiming it. Id. at 644. Thus, before we may reach the merits of Smith's purported exemption, we must determine whether the Creditors' objections were timely.
11 The Creditors argue that Rule 2003(e) permits a trustee to continue indefinitely a meeting of creditors, and, alternatively, that under Bankruptcy Code section 341, conversion of the proceedings from a Chapter 11 reorganization into a Chapter 7 liquidation begins a new thirty-day period for objections to property already exempted. Rule 2003(e) permits adjournment from time to time (italics added), and requires the trustee to announce the adjourned date and time if he chooses to exercise this option. The plain language of the statute requires that for a Rule 2003(e) adjournment to be effective, it must be accompanied by an announcement of the adjourned date and time. See In re Hurdle , 240 B.R. 617, 621-22 (Bankr. C.D. Cal. 1999); In re Levitt, 137 B.R. 881, 883 (Bankr. D. Mass. 1992). No other procedure for adjournment is provided by rule or statute, and no other method of adjournment is permitted under Rule 2003(e). 2 12 As the Supreme Court observed in Taylor, [d]eadlines may lead to unwelcome results, but they prompt parties to act and they produce finality. 503 U.S. at 644. To authorize trustees to adjourn meetings indefinitely, even when it is unlikely that any subsequent meeting will in fact be called, would nullify the thirty-day requirement of Rule 4003(b), rendering the holding in Taylor hollow, and undermining the concerns expressed by the Supreme Court about promptness and finality. Thus, the exemption was not properly challenged in the Chapter 11 proceeding. 13 The dissent approves adjournment until further notice: it believes that the adjourned date and time need not be announced at the meeting, but may be announced at some later time. An announcement made after a meeting adjourns may be sufficient, if it is made within a reasonable time. See In Re Bernard, 40 F.3d 1028, 1031 n.4 (9th Cir. 1994) (The objection period . . . remains open until 30 days after one of the following events: (a) the trustee concludes a 341(a) meeting without expressly continuing it to a later date, Bankr. R. 2003(e); (b) the trustee sends written notification to all those on the service list that the 341(a) examination period is closed; or (c) the bankruptcy court orders the examination period closed.). As the court in In re Levitt held, Rule 2003(e), by providing for adjournment to a specific time, exhibits a concern to keep the process moving. A trustee who continues a meeting generally and does not within a reasonable time announce the adjourned date and time and reconvene the meeting thereby defeats the policy implicit in these rules. 137 B.R. at 883. Under any reasonable construction of the rule, a delayed announcement would have to be made at least within thirty days of the last meeting held; otherwise, the whole purpose of the thirty-day requirement of Rule 4003(b) would be frustrated. 3 Here, no adjourned date and time was ever announced, and the creditors' meeting never resumed. The trustee failed to keep the process moving  in any manner. 4 Even worse, the meeting was in fact not adjourned. Whatever business the trustee had in mind, it was concluded as of October 27.
14 Having determined the requirements of Rule 2003(e), we turn to consider the conversion issue: whether the conversion of Smith's bankruptcy from a Chapter 11 reorganization to a Chapter 7 liquidation began a new thirty-day period for objections under Rule 4003(b). Rule 4003(b) allows as timely filed only those objections made within 30 days after the conclusion of the meeting of creditors held pursuant to Rule 2003(a). See In re Halbert, 146 B.R. 185, 189 (Bankr. W.D. Tex. 1992). Accordingly, for the Creditors' objections to be timely, conversion of the bankruptcy process from Chapter 11 to Chapter 7 would have to restart the time period in which objections may be filed. 15 Section 341 of the Bankruptcy Code requires the trustee to convene a meeting of creditors [w]ithin a reasonable time after the order for relief in a case under this title. Certainly, the conversion of a case initially brought under Chapter 11 to a case under Chapter 7 constitutes an order for relief under the chapter to which the case is converted. However, conversion does not reset the date of the order for relief. 11 U.S.C. S 348(a). The purpose of section 348 is to preserve actions already taken in the case before conversion. . . . To effect this purpose, section 348(a) establishes the general rule that, in a converted case, the dates of the filing, the commencement of the case and the order for relief remain unchanged by the conversion. In re Bell, 225 F.3d 203, 213 (2nd Cir. 2000) (citations omitted). Except for certain specifically enumerated filing deadlines, see 11 U.S.C. S 348(b) and (c), S 348 does not effect a change in the date of . . . the order for relief. 11 U.S.C. S 348(a). 16 Furthermore, Rule 1019(2), which implements S 348's provisions on conversion from Chapter 11 to Chapter 7, In re Bell, 225 F.3d at 209, specifies new time periods for a number of events, see Fed. R. Bankr. P. 1019(2) (resetting Rule 3002, 4004, and 4007 deadlines), but none for objections to exemptions pursuant to Rule 4003(b). See In re Bell, 225 F.3d at 209. Reading Rule 1019(2) in conjunction with S 348 compels the conclusion that S 348 generally requires the order for relief to remain unaltered by conversion from Chapter 11 to Chapter 7. To the extent that Rule 1019(2) resets any deadlines, it does so only for those exceptions expressly enumerated in section SS 348(b) and (c). NeitherS 341 nor S 702(b)(providing for the election of the Chapter 7 trustee[a]t the meeting of creditors held under section 341) is among these enumerated exceptions. See In re Bell, 225 F.3d at 214.
17 The Bankruptcy Code distinguishes between property of the estate in bankruptcy and property of the debtor. The commencement of a case under the Bankruptcy Code creates an estate, see 11 U.S.C. S 541(a), and, though the estate may acquire property after the commencement of the case, see 11 U.S.C. S 541(a)(6) and (7), estate property remains distinct from the debtor's property. See In re Bell, 225 F.3d at 215 (citing Casey v. Hochman, 963 F.2d 1347, 1351 (10th Cir. 1992) (stating general rule that post-petition acquisitions are property of the debtor); In re Winom Tool & Die, Inc., 173 B.R. 613, 624 (Bankr. E.D. Mich. 1994); 5 Collier on Bankruptcy P 541.03, at 541-9 to 10 (In general, property . . . subsequently acquired by the debtor does not become property of the estate, but, rather, becomes the debtor's personal property, clear of all claims that are discharged in the bankruptcy case.)). 18 It is widely accepted that property deemed exempt from a debtor's bankruptcy estate revests in the debtor. See 11 U.S.C. S 522(l); see also In re Brown, 178 B.R. 722, 726-27 (Bankr. E.D. Tenn. 1995) (citing cases to that effect), Owen v. Owen, 500 U.S. 305, 308 (1991) (when property becomes exempt, it is withdrawn from the estate (and hence from the creditors) for the benefit of the debtor); In re Bell, 225 F.3d at 215-216 (collecting cases). Conversion from Chapter 11 to Chapter 7 does not create a new estate. See 11 U.S.C. S 348(a); see also 11 U.S.C. S 1019(a) (stating that when a case is converted from Chapter 11 to Chapter 7,schedules . . . theretofore filed shall be deemed to be filed in the chapter 7 case); In re Bell, 225 F.3d at 216 (The subsequent conversion of the bankruptcy case from Chapter 11 to Chapter 7 does nothing to disturb the debtor's rights in that property). Here, Smith's Chapter 11 petition created an estate. Smith claimed the retirement plan as exempt under section 522(l). Due to the Creditors' failure timely to object, the plan vested in Smith. Smith's creditors have not pointed to any mechanism in the Code for bringing the plan back into the estate. The plan therefore remained exempt even after conversion of the bankruptcy proceedings from Chapter 11 to Chapter 7, and is no longer subject to the Creditors' right to object. See In re Brown, 178 B.R. at 726-727(exemptions not objected to within thirty days of conclusion of S 341 meeting in Chapter 11 cases are exempt for purposes of Chapter 7, and not sub-ject to Chapter 7 Trustee's objection) (citing In re Halbert, 146 B.R. 186 (Bankr. W.D. Tex. 1992)); In re Winom Tool & Die, Inc., 173 B.R. at 619; Carter v. Peoples Bank & Trust Co. (In re BNW, Inc.), 201 B.R. 838, 848-50 (Bankr. S.D.Ala. 1996).