Court Opinion

ID: 37804
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:58:35+00
Date Added: 2024-06-11T17:15:48.014458
License: Public Domain

United States Court of Appeals
                                                                Fifth Circuit
                                                             F I L E D
               IN THE UNITED STATES COURT OF APPEALS
                       FOR THE FIFTH CIRCUIT                February 22, 2005
                       _____________________
                                                         Charles R. Fulbruge III
                              No. 04-30489                       Clerk
                            Summary Calendar
                         _____________________

                          BALBIR SINGH TULI,

                              Appellant,

                                versus

                      UNITED STATES TRUSTEE,

                               Appellee.

_________________________________________________________________

           Appeal from the United States District Court
        for the Middle District of Louisiana, Baton Rouge
               District Court Cause No. 03-CV-533-A
_________________________________________________________________

Before JONES, BARKSDALE and PRADO, Circuit Judges.

PRADO, Circuit Judge.*

     Appellant Balbir Singh Tuli challenges the bankruptcy

court’s dismissal of his chapter 11 bankruptcy petition against

Consort Constructions, Ltd. (Consort).     Tuli, the owner and sole

shareholder of Consort, as well as a putative creditor, initiated

an involuntary chapter 11 proceeding against Consort on September

20, 2002.   On March 3, 2003, the United States Trustee filed a

motion asking the bankruptcy court to convert the involuntary

     *
      Pursuant to 5TH CIRCUIT RULE 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIRCUIT
RULE 47.5.4.

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proceeding into a voluntary proceeding on the ground that Consort

had failed to retain counsel.   In response, the bankruptcy court

issued an order requiring Tuli to show cause why the case should

not be dismissed for lack of sufficient creditors1 and why Tuli

should not be sanctioned for appearing both as a petitioning

creditor and as a representative of the debtor.    Consort

responded by asking the bankruptcy court to appoint attorney

Barry Miller to represent it.

     The bankruptcy court held two hearings on the Trustee’s and

Consort’s motions.   After the hearings, the bankruptcy court

denied Consort’s motion to employ Miller as counsel based on a

conflict of interest and dismissed the case because Consort

lacked sufficient assets to reorganize.    Tuli appealed the

dismissal order to the district court.    The district court

affirmed the bankruptcy court’s order.    Tuli now appeals to this

court.

     Tuli argues that the bankruptcy court abused its discretion

in dismissing his petition.   This court reviews the district

court’s decision sitting as an appellate court by applying the

same standards of review the district court applied to the

bankruptcy court.2   The district court reviews a bankruptcy

court’s decision to dismiss a chapter 11 bankruptcy case for

     1
      The petition listed only Tuli as a petitioning creditor.
     2
      See In re Jack/Wade Drilling, Inc., 258 F.3d 385, 387 (5th
Cir. 2001).

                                 2
abuse of discretion.3   Thus, this court reviews the dismissal of

Tuli’s petition for an abuse of discretion.

     Section 1112 of the bankruptcy code permits the bankruptcy

court to dismiss a bankruptcy case for cause.4   Section 1112 sets

forth a nonexhaustive list of factors to assist the bankruptcy

court in determining when cause exists.5   Those factors include

the “diminution of the estate and absence of a reasonable

likelihood of rehabilitation” and an inability to effectuate a

reorganization plan.6

     Here, the dismissal order does not specify the reasons for

dismissal.   Instead, the order refers to the “oral reasons given

at the hearing held on April 11, 2003.”    During that hearing and

a previous hearing, the bankruptcy court expressed its concerns

that Consort lacked sufficient assets to reorganize and that the

creditors’ claims were prescribed.   The court observed that

Consort’s comparative balance sheet listed only two assets: a

claim of interest against an entity named “Alstom” and a

construction plant in Baghdad, Iraq.    Notably, the schedule

listed no bank accounts, cash, real estate or any other property.

     3
      See In re Humble Place Joint Venture, 936 F.2d 814, 816
(5th Cir. 1991).
     4
      See 11 U.S.C. § 1112(b) (2004).
     5
      See id. (using the term “including” before listing various
reasons for dismissing a case).
     6
      11 U.S.C. § 1112(b)(1)-(2).

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The court also noted that the creditors’ claims against Consort

arose during the mid-1980s and predicted that those claims were

probably prescribed.    The court questioned whether Consort had

any assets to pay its creditors.

     Addressing these concerns, Tuli explained that Consort

sought construction contracts to provide assets for

reorganization and that Consort hoped to participate in the

rebuilding of Iraq at some future time.    Tuli also stated,

however, that Consort’s claim against Alstom was assigned to him

and that the construction plant was held by customs in Iraq.

Tuli admitted that Consort had no other assets and no

construction projects at that time.

     After hearing Tuli’s explanation, the bankruptcy court

determined that Consort lacked assets that could serve as a basis

for reorganization.    The court determined that even if the claim

against Alstom was not prescribed, the claim now belonged to

Tuli, not Consort.    The court also expressed concern that any

right Consort had to the construction plant in Iraq was highly

uncertain.   The bankruptcy court recognized that no reasonable

likelihood existed that Consort could be reorganized.    Based on

the evidence in the record, this determination was proper.

Although Tuli complains that the bankruptcy court erred because

it did not permit him to present his plan for reorganization,

presenting this plan would have been futile because Consort had

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no assets.   The bankruptcy court did not abuse its discretion.7

     Having determined that the bankruptcy court did not err in

dismissing the petition, this court need not consider any

complaint Tuli has regarding the appointment of Barry Miller as

counsel for Consort.   The court affirms the judgment of the

district court.

AFFIRMED.

     7
      See 11 U.S.C. § 1112(b)(1)-(2) (indicating that the absence
of a reasonable likelihood of rehabilitation and the inability to
effectuate a reorganization plan are proper reasons for
dismissing a bankruptcy case).

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