BAP Affirmed Denial of Request for Appointment of New Counsel, Objections to Proofs of Claims, and Motion for Writ of Mandamus

By David Tanabe posted 01-18-2023 09:25 AM


In In re Reichel, 645 B.R. 620 (B.A.P. 8th Cir. 2022), the Eighth Circuit BAP affirmed the denial of the debtor’s requests for appointment of counsel, writ of mandamus, summary judgment, and recusal.

The debtor filed a petition for Chapter 7 relief and signed a stipulation that waived his bankruptcy discharge. In 2016, a jury in a criminal case determined that the debtor engaged in wire fraud and bankruptcy fraud by illegally transferring funds from investors and employees to himself, and the court sentenced the debtor to prison. In 2017, the Chapter 7 trustee was discharged from service when the bankruptcy case was closed. Thereafter, the debtor filed a host of motions to reopen the bankruptcy case that were denied by the bankruptcy court and affirmed on appeal. For the present appeal, the debtor objected to a bankruptcy court order disposing of matters.

For the appeal, the debtor argued that his twenty-seven motions were inappropriately blanket denied by the bankruptcy court. The BAP disagreed and found that the bankruptcy court sufficiently addressed the motions, including the rejection of the debtor’s argument that his legal counsel had a conflict of interest as both his legal representative and staff attorney for the Chapter 13 trustee.  

The debtor also argued the trustee failed to properly examine proofs of claims in the bankruptcy case. In rejecting the argument, the BAP found the debtor missed opportunities to object to several proofs of claim during the pendency of the case. Further, the BAP indicated proofs of claim that do not substantially comply with the documentation requirements for Federal Rule of Bankruptcy Procedure 3001 are allowed, unless the debtor establishes an exception to the allowance of the claim under 11 U.S.C. § 502(b). In the record, certain attorneys for creditors that filed proofs of claim alleged in pleadings and at the objection hearing that debtor’s counsel was given supporting documentation. Thus, the BAP concluded the bankruptcy court did not abuse discretion in denying the motions objecting to proofs of claims.

The debtor further argued he paid taxes as a “penalty fee” forced on him by the trustee. The BAP found the assertion disingenuous at best because the payment was part of a settlement of the debtor’s tax refunds, and the debtor raised the issue nearly ten years after the settlement and without supporting evidence. Likewise, the BAP rejected another mischaracterization by the debtor that the trustee “forced” a payment in exchange for personal property seized in a court-approved inspection. 

The BAP concluded that the bankruptcy court did not abuse its discretion, and the debtor failed to demonstrate cause to reopen the bankruptcy case.