11 U.S.C. § 349 — Effect of dismissal

Page 71 TITLE 11—BANKRUPTCY § 349 (i) the claim of any creditor holding secu- rity as of the date of the filing of the peti- tion shall continue to be secured by that se- curity unless the full amount of such claim determined under applicable nonbankruptcy law has been paid in full as of the date of conversion, notwithstanding any valuation or determination of the amount of an al- lowed secured claim made for the purposes of the case under chapter 13; and (ii) unless a prebankruptcy default has been fully cured under the plan at the time of conversion, in any proceeding under this title or otherwise, the default shall have the effect given under applicable nonbankruptcy law. (2) If the debtor converts a case under chapter 13 of this title to a case under another chapter under this title in bad faith, the property of the estate in the converted case shall consist of the property of the estate as of the date of conver- sion. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2568; Pub. L. 99–554, title II, § 257(i), Oct. 27, 1986, 100 Stat. 3115; Pub. L. 103–394, title III, § 311, title V, § 501(d)(5), Oct. 22, 1994, 108 Stat. 4138, 4144; Pub. L. 109–8, title III, § 309(a), title XII, § 1207, Apr. 20, 2005, 119 Stat. 82, 194; Pub. L. 111–327, § 2(a)(11), Dec. 22, 2010, 124 Stat. 3558.) HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS The House amendment adopts section 348(b) of the Senate amendment with slight modifications, as more accurately reflecting sections to which this particular effect of conversion should apply. Section 348(e) of the House amendment is a stylistic revision of similar provisions contained in H.R. 8200 as passed by the House and in the Senate amendment. Termination of services is expanded to cover any exam- iner serving in the case before conversion, as done in H.R. 8200 as passed by the House. SENATE REPORT NO. 95–989 This section governs the effect of the conversion of a case from one chapter of the bankruptcy code to an- other chapter. Subsection (a) specifies that the date of the filing of the petition, the commencement of the case, or the order for relief are unaffected by conver- sion, with some exceptions specified in subsections (b) and (c). Subsection (b) lists certain sections in the operative chapters of the bankruptcy code in which there is a ref- erence to ‘‘the order for relief under this chapter.’’ In those sections, the reference is to be read as a reference to the conversion order if the case has been converted into the particular chapter. Subsection (c) specifies that notice is to be given of the conversion order the same as notice was given of the order for relief, and that the time the trustee (or debtor in possession) has for assuming or rejecting executory contracts recom- mences, thus giving an opportunity for a newly ap- pointed trustee to familiarize himself with the case. Subsection (d) provides for special treatment of claims that arise during chapter 11 or 13 cases before the case is converted to a liquidation case. With the ex- ception of claims specified in proposed 11 U.S.C. 503(b) (administrative expenses), preconversion claims are treated the same as prepetition claims. Subsection (e) provides that conversion of a case ter- minates the service of any trustee serving in the case prior to conversion. Editorial Notes AMENDMENTS 2010—Subsec. (b). Pub. L. 111–327, § 2(a)(11)(A), struck out ‘‘728(a), 728(b),’’ after ‘‘727(b),’’ and ‘‘1146(a), 1146(b),’’ after ‘‘1141(d)(4),’’. Subsec. (f)(1)(C)(i). Pub. L. 111–327, § 2(a)(11)(B), which directed insertion of ‘‘of the filing’’ after ‘‘date’’, was executed by making the insertion after ‘‘date’’ the first time appearing to reflect the probable intent of Con- gress. 2005—Subsec. (f)(1)(B). Pub. L. 109–8, § 309(a)(2)(A), substituted ‘‘only in a case converted to a case under chapter 11 or 12, but not in a case converted to a case under chapter 7, with allowed secured claims in cases under chapters 11 and 12’’ for ‘‘in the converted case, with allowed secured claims’’. Subsec. (f)(1)(C). Pub. L. 109–8, § 309(a)(1), (2)(B), (3), added subpar. (C). Subsec. (f)(2). Pub. L. 109–8, § 1207, inserted ‘‘of the es- tate’’ after ‘‘bad faith, the property’’. 1994—Subsec. (b). Pub. L. 103–394, § 501(d)(5), sub- stituted ‘‘1201(a), 1221, 1228(a), 1301(a), and 1305(a)’’ for ‘‘1301(a), 1305(a), 1201(a), 1221, and 1228(a)’’ and ‘‘1208, or 1307’’ for ‘‘1307, or 1208’’. Subsecs. (c) to (e). Pub. L. 103–394, § 501(d)(5)(B), sub- stituted ‘‘1208, or 1307’’ for ‘‘1307, or 1208’’. Subsec. (f). Pub. L. 103–394, § 311, added subsec. (f). 1986—Subsec. (b). Pub. L. 99–554, § 257(i)(1), substituted references to sections 1201(a), 1221, and 1228(a) of this title for reference to section 1328(a) of this title, and in- serted reference to section 1208 of this title. Subsecs. (c) to (e). Pub. L. 99–554, § 257(i)(2), (3), in- serted reference to section 1208 of this title. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109–8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109–8, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1994 AMENDMENT Amendment by Pub. L. 103–394 effective Oct. 22, 1994, and not applicable with respect to cases commenced under this title before Oct. 22, 1994, see section 702 of Pub. L. 103–394, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1986 AMENDMENT Amendment by Pub. L. 99–554 effective 30 days after Oct. 27, 1986, but not applicable to cases commenced under this title before that date, see section 302(a), (c)(1) of Pub. L. 99–554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure. § 349. Effect of dismissal (a) Unless the court, for cause, orders other- wise, the dismissal of a case under this title does not bar the discharge, in a later case under this title, of debts that were dischargeable in the case dismissed; nor does the dismissal of a case under this title prejudice the debtor with regard to the filing of a subsequent petition under this title, except as provided in section 109(g) of this title. (b) Unless the court, for cause, orders other- wise, a dismissal of a case other than under sec- tion 742 of this title— (1) reinstates— (A) any proceeding or custodianship super- seded under section 543 of this title; (B) any transfer avoided under section 522, 544, 545, 547, 548, 549, or 724(a) of this title, or Page 72 TITLE 11—BANKRUPTCY § 350 preserved under section 510(c)(2), 522(i)(2), or 551 of this title; and (C) any lien voided under section 506(d) of this title; (2) vacates any order, judgment, or transfer ordered, under section 522(i)(1), 542, 550, or 553 of this title; and (3) revests the property of the estate in the entity in which such property was vested im- mediately before the commencement of the case under this title. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2569; Pub. L. 98–353, title III, § 303, July 10, 1984, 98 Stat. 352; Pub. L. 103–394, title V, § 501(d)(6), Oct. 22, 1994, 108 Stat. 4144.) HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 349(b)(2) of the House amendment adds a cross reference to section 553 to reflect the new right of recovery of setoffs created under that section. Cor- responding changes are made throughout the House amendment. SENATE REPORT NO. 95–989 Subsection (a) specifies that unless the court for cause orders otherwise, the dismissal of a case is with- out prejudice. The debtor is not barred from receiving a discharge in a later case of debts that were discharge- able in the case dismissed. Of course, this subsection refers only to pre-discharge dismissals. If the debtor has already received a discharge and it is not revoked, then the debtor would be barred under section 727(a) from receiving a discharge in a subsequent liquidation case for six years. Dismissal of an involuntary on the merits will generally not give rise to adequate cause so as to bar the debtor from further relief. Subsection (b) specifies that the dismissal reinstates proceedings or custodianships that were superseded by the bankruptcy case, reinstates avoided transfers, rein- states voided liens, vacates any order, judgment, or transfer ordered as a result of the avoidance of a trans- fer, and revests the property of the estate in the entity in which the property was vested at the commencement of the case. The court is permitted to order a different result for cause. The basic purpose of the subsection is to undo the bankruptcy case, as far as practicable, and to restore all property rights to the position in which they were found at the commencement of the case. This does not necessarily encompass undoing sales of prop- erty from the estate to a good faith purchaser. Where there is a question over the scope of the subsection, the court will make the appropriate orders to protect rights acquired in reliance on the bankruptcy case. Editorial Notes AMENDMENTS 1994—Subsec. (a). Pub. L. 103–394 substituted ‘‘109(g)’’ for ‘‘109(f)’’. 1984—Subsec. (a). Pub. L. 98–353 inserted ‘‘; nor does the dismissal of a case under this title prejudice the debtor with regard to the filing of a subsequent peti- tion under this title, except as provided in section 109(f) of this title’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1994 AMENDMENT Amendment by Pub. L. 103–394 effective Oct. 22, 1994, and not applicable with respect to cases commenced under this title before Oct. 22, 1994, see section 702 of Pub. L. 103–394, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98–353, set out as a note under section 101 of this title. § 350. Closing and reopening cases (a) After an estate is fully administered and the court has discharged the trustee, the court shall close the case. (b) A case may be reopened in the court in which such case was closed to administer assets, to accord relief to the debtor, or for other cause. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2569; Pub. L. 98–353, title III, § 439, July 10, 1984, 98 Stat. 370.) HISTORICAL AND REVISION NOTES SENATE REPORT NO. 95–989 Subsection (a) requires the court to close a bank- ruptcy case after the estate is fully administered and the trustee discharged. The Rules of Bankruptcy Proce- dure will provide the procedure for case closing. Sub- section (b) permits reopening of the case to administer assets, to accord relief to the debtor, or for other cause. Though the court may permit reopening of a case so that the trustee may exercise an avoiding power, laches may constitute a bar to an action that has been de- layed too long. The case may be reopened in the court in which it was closed. The rules will prescribe the pro- cedure by which a case is reopened and how it will be conducted after reopening. Editorial Notes AMENDMENTS 1984—Subsec. (b). Pub. L. 98–353 substituted ‘‘A’’ for ‘‘a’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98–353, set out as a note under section 101 of this title. § 351. Disposal of patient records If a health care business commences a case under chapter 7, 9, or 11, and the trustee does not have a sufficient amount of funds to pay for the storage of patient records in the manner re- quired under applicable Federal or State law, the following requirements shall apply: (1) The trustee shall— (A) promptly publish notice, in 1 or more appropriate newspapers, that if patient records are not claimed by the patient or an insurance provider (if applicable law permits the insurance provider to make that claim) by the date that is 365 days after the date of that notification, the trustee will destroy the patient records; and (B) during the first 180 days of the 365-day period described in subparagraph (A), promptly attempt to notify directly each pa- tient that is the subject of the patient records and appropriate insurance carrier concerning the patient records by mailing to the most recent known address of that pa- tient, or a family member or contact person for that patient, and to the appropriate in- surance carrier an appropriate notice re-