IN Re: John E. Allen et al

Filing 10

Judge Michael A. Ponsor: MEMORANDUM AND ORDER REGARDING APPEAL FROM BANKRUPTCY COURT RULING entered. As follows: the decision of the bankruptcy judge toappoint a Chapter 11 trustee in this case sua sponte is hereby AFFIRMED. This case may now be closed. See the attached memo and order for complete details. (Lindsay, Maurice)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
In Re
)
JOHN E. ALLEN, ET AL
)
Debtors
)
---------------------------)
)
)
v.
)
)
RICHARD KING, ET AL.,
)
Appellees
)
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Ch. 11

No. 11-31287-HJB

JOHN E. ALLEN, ET AL.,
Appellants

C.A. No. 12-cv-30012-MAP

MEMORANDUM AND ORDER REGARDING
APPEAL FROM BANKRUPTCY COURT RULING
(Dkt. No. 8)
March 22, 2012
PONSOR, U.S.D.J.
The issue presented by this bankruptcy appeal is
straightforward: Did the bankruptcy judge err when he
appointed the trustee in this Chapter 11 bankruptcy
proceeding sua sponte?1

The answer to this question may be

found in the bankruptcy statute at 11 U.S.C. § 105(a), which
provides that:
The court may issue any order, process, or
1

In an earlier stage of the proceeding, the decision to
appoint the trustee sua sponte was remanded by another judge
of this District, based upon the inadequacy of notice. It is
undisputed that, on remand, the parties were given adequate
notice and opportunity to be heard on the question of the sua
sponte appointment.

judgment that is necessary or appropriate to carry
out the provisions of this title. No provision of
this title providing for the raising of an issue
by a party in interest shall be construed to
preclude the court from, sua sponte, taking any
action or making any determination necessary or
appropriate to enforce or implement court orders
or rules, or to prevent an abuse of process.
At least two Courts of Appeal have issued decisions
confirming a bankruptcy judge’s power, sua sponte, to
appoint a trustee in a Chapter 11 proceeding.

See In re US

Mineral Products, 105 Fed. Appx. 428 (3d Cir. 2004); In re
Bibo, Inc., 76 F.3d 256 (9th Cir. 1996).

See also In re

McKenna, No. CA 10-472, 2011 WL 2214763 at *3 (D.R.I. May
31, 2011)(Lisi, J.).
A bankruptcy judge inevitably has a much better feel
for the cases before him and is in a much better position
than a reviewing court to determine the appropriateness of
exercising sua sponte authority under Section 105.

The

bankruptcy judge here set forth his reasons in detail
supporting his decision to appoint the trustee.

This court

can perceive no reason to reverse this exercise of
discretion.
Appellant argues that the exercise of discretion
contemplated by Section 105, particularly in a Chapter 11
case, requires a finding of some extreme and egregious
impropriety that is lacking in this case.

Appellant offers

no decisional authority supporting any such requirement.
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To

repeat, a bankruptcy judge is better situated than a
reviewing court to determine when an appointment of a
trustee is necessary to ensure a smooth and fair Chapter 11
proceeding.
Appellant argues, in addition, that the sua sponte
appointment of a trustee in a Chapter 11 case would inject
the bankruptcy judge into the administrative functioning of
the bankruptcy process, which would be contrary to the
general intent of the bankruptcy code.

The bankruptcy

judge, Appellant argues, should remain in the judicial role.
The decision to appoint a trustee, however, ensures that the
trustee, not the bankruptcy judge, will handle the practical
details of the bankruptcy proceeding and leave the judge
free to concentrate on his judicial responsibilities.

Thus,

even accepting Appellant’s argument, the bankruptcy judge’s
decision to appoint a trustee here was well supported.
In conclusion, the decision of the bankruptcy judge to
appoint a Chapter 11 trustee in this case sua sponte is
hereby AFFIRMED.

This case may now be closed.

It is So Ordered.
/s/ Michael A. Ponsor
MICHAEL A. PONSOR
U. S. District Judge

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