Judge Isgur Provides Benchmark Analysis of a Serial Filer's Rights under BAPCPA to Obtain an Extension of the Automatic Stay Beyond 30 Days
Houston's Bankruptcy Judge Marvin Isgur, who's rapidly establishing himself as the "go to" judge on BAPCPA's hot issues, delivered another strong opinion (see references here and here for his other BAPCPA-related decisions), this time on the right of a serial filer to obtain an extension of the automatic stay beyond the 30 day statutory limitation imposed on serial filers under BAPCPA's new section 362(c)(3)(A). In re Charles, 2005 WL 3288182 (Bankr. S.D. Tex., 11/30/05).
As reported here, Judge Isgur in early November 2005 granted this serial filer's motion to extend the automatic stay's protections to the primary secured lender, but he was unwilling to even consider extending the stay to "all creditors" without a good explanation in the debtor's motion of why it should be. The debtor subsequently filed an amended emergency motion for continuation of the stay as to all creditors and the Court held a hearing on the matter 16 days later.
In ruling on this amended motion, Judge Isgur said that "the Court has the discretion to extend the stay if Ms. Charles proves that the filing of this case is in good faith as to the creditors to be stayed." However, the Court added,
[b]efore the Court analyzes the applicable factors for determining whether the case was filed in good faith as to the creditors to be stayed, the Court must determine the nature of the burden of proof on the debtor.
The Court then provided a tidy three column, four row chart analyzing who has the burden of proof on each of the following four issues:
1. Whether a rebuttable presumption arises under § 362(c)(3)(C) that the case was not filed in good faith as to the creditor to be stayed.
2. If a rebuttable presumption arises, whether the case was filed in good faith as to the creditors to be stayed.
3. If a rebuttable presumption does not arise, whether the case was filed in good faith as to the creditors to be stayed.
4. Whether the Court should exercise its discretion to extend the automatic stay.
As to whether the new case was filed in good faith as to a specific creditor, the Court further noted that "there are no published opinions analyzing the good faith requirement in § 362(c)(3)" and that it "therefore adopts the test set forth in [this] chart to determine whether the new case was filed in good faith as to a creditor.
The Court painstakingly applied each of the chart's articulated factors to the case at hand, then considered "equitable factors" weighing in the debtor's favor, and finally concluded that the debtor "filed this case in good faith as to all creditors in this case and the equities favor an extension of the automatic stay."
It's always nice to see the right result reached in a principled way, and Judge Isgur surely should be applauded for his pathbreaking BAPCPA-related decisions. It's clear opinions like these that make our lives as lawyers a lot easier.