Toibb v. Radloff

by Harry Blackmun

United States Supreme Court

501 U.S. 157

Toibb  v.  Radloff

No. 90-368  Argued: April 22, 1991. --- Decided: June 13, 1991

Syllabus

Petitioner Toibb filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code, disclosing, inter alia, assets that included stock in an electric power company. When he discovered that the stock had substantial value, he decided to avoid its liquidation by moving to convert his Chapter 7 case to one under Chapter 11's reorganization provisions. After the Bankruptcy Court granted his motion, and he filed his reorganization plan, that court dismissed his petition, finding that he did not qualify for relief under Chapter 11 because he was not engaged in an ongoing business. The District Court and the Court of Appeals affirmed.

Held: The Bankruptcy Code's plain language permits individual debtors not engaged in business to file for relief under Chapter 11. Toibb is a debtor within the meaning of § 109(d), which provides that "a person who may be a debtor under chapter 7 . . . except a stockbroker or a commodity broker, and a railroad may be a debtor under chapter 11." He is a person who may be a Chapter 7 debtor, since only railroads and various financial and insurance institutions are excluded from Chapter 7's coverage, and § 109(d) makes Chapter 11 available to all entities eligible for Chapter 7 protection, other than stockbrokers and commodities brokers. Although Chapter 11's structure and legislative history indicate that it was intended primarily for the use of business debtors, the Code contains no ongoing business requirement for Chapter 11 reorganization; and there is no basis, including underlying policy considerations, for imposing one. Pp. 160-166.

902 F.2d 14 (CA 8 1990), reversed.

BLACKMUN, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and WHITE, MARSHALL, O'CONNOR, SCALIA, KENNEDY, and SOUTER, JJ., joined. STEVENS, J., filed a dissenting opinion.

Peter M. Lieb for petitioner.

Stephen J. Marzen, for the respondent United States supporting petitioner.

James Hamilton by invitation of the Court as amicus curiae in support of the judgment below.

Justice BLACKMUN delivered the opinion of the Court.

Notes