31 Oct Extending The Deadline To File A Subchapter V Plan
Bankruptcy Code section 1189(b) permits bankruptcy courts to extend the deadline to file a Subchapter V plan “if the need for the extension is attributable to circumstances for which the debtor should not justly be held accountable.” Courts agree this is a higher standard than “for cause,” but to what extent? In the United States Bankruptcy Court District of New Mexico, Chief Judge Robert H. Jacobvitz has rendered an opinion addressing that issue. See In re Trinity Legacy Consortium, LLC, Case 22-10973-j11, Doc. No. 288. Chief Judge Jacobvitz, in applying relevant case law concluding “excusable neglect” is a question of equitable determination, similarly suggests courts should use an “equitable inquiry” to determine “whether a debtor should not justly be held accountable.” The decision to extend the deadline, Chief Judge Jacobvitz argues, should be reached by considering the totality of the circumstances. Specifically, Chief Judge Jacobvitz states courts should consider the risk of prejudice to the debtor, the reason and length of the requested extension, whether the movant acted in good faith, and whether the delay is within the movant’s reasonable control. In so doing, Chief Judge Jacobvitz suggests bankruptcy courts can strike a fair balance among the affected parties’ interests while comporting with the overall goal of expeditiously and economically reorganizing debtors through a consensual plan.