Taking a Stand Where Few Have Trodden

A “structured dismissal” of a Chapter 11 case following a sale of substantially all of the debtor's assets has become increasingly common as a way to minimize cost and maximize creditor recoveries. However, only a handful of rulings have been issued on the subject, perhaps because bankruptcy courts are unclear as to whether the Bankruptcy Code authorizes the remedy. A Texas bankruptcy court recently added to this slim body of jurisprudence. In In re Buffet Partners, L.P., 2014 BL 207602 (Bankr. N.D. Tex. July 28, 2014), the court ruled that sections 105(a) and 1112(b) of the Bankruptcy Code provide authority for such a structured dismissal, noting that the remedy “is clearly within the sphere of authority Congress intended to grant to bankruptcy courts in the context of dismissing Chapter 11 cases.”