Reversing bankruptcy courts, the Tenth Circuit Bankruptcy Appellate Panel held that a debtor can reopen a closed case to schedule assets and claim exemptions without showing excusable neglect.

Two cases on appeal presented the same fact pattern. The chapter 7 debtors sustained personal injuries before bankruptcy. They did not schedule the personal injury claims. The debtors received their discharges, and their cases were closed.

On motions by the debtors, the bankruptcy judges reopened the cases and allowed the debtors to schedule the claims. However, the bankruptcy courts denied the exemptions because the debtors did not show excusable neglect in failing to amend the schedules before the cases were originally closed.

The debtors appealed and won, in an opinion for the BAP on February 5 by Bankruptcy Judge Michael E. Romero, Colorado’s chief bankruptcy judge.

Judge Romero began by laying out the rules. Bankruptcy Rule 1009(a), governing amendments to petitions and schedules, allows a debtor to amend a schedule “at any time before the case is closed.” Bankruptcy Rule 9006(b)(1), dealing with enlargements of time, only requires a showing of “cause” to extend a deadline if the application for an extension is made before the “specified period” expires.

Beyond the “specified period,” Rule 9006(b)(1) requires a showing of “excusable neglect.”

Judge Romero said the BAP “cannot conclude that Rule 9006(b)(1) applies to Rule 1009(b).”

Judge Romero focused on the language in the two rules. He said that “at any time before a case is closed” in Rule 1009(a) is not a “specified time” in Rule 9006(b)(1). Using a “plain meaning” analysis, he said that Rule 1009(a) does not specify a time for amending because it is impossible to know the deadline until the case is actually closed.

Reopening a case is “purely administrative,” Judge Romero said. He declined to “read Rule 1009(a)’s language to impose a substantive deadline on the debtor’s ability to amend” schedules. He noted that Rule 1009(a) makes no distinction between original and reopened cases.

The BAP remanded the cases for the bankruptcy courts to rule on the merits of the claimed exemptions.