In re: Ryan John Welch and Jolyn M. Welch ( 2015 )


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  •                                                          FILED
    1                         NOT FOR PUBLICATION            JAN 05 2015
    2                                                    SUSAN M. SPRAUL, CLERK
    U.S. BKCY. APP. PANEL
    OF THE NINTH CIRCUIT
    3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
    4                            OF THE NINTH CIRCUIT
    5   In re:                        )      BAP No. NV-14-1079-HlPaJu
    )
    6   RYAN JOHN WELCH and           )      Bankr. No. 11-18277-LBR
    JOLYN M. WELCH,               )
    7                                 )
    Debtors.      )
    8   ______________________________)
    )
    9   DYMON INVESTMENTS, INC.;      )
    BK LAND INVESTORS, INC.;      )
    10   CHAD DYMON; JOHN “BUCK” LEE, )
    )
    11                   Appellants,   )
    )
    12   v.                            )      M E M O R A N D U M1
    )
    13   RYAN JOHN WELCH; JOLYN M.     )
    WELCH; BRIAN D. SHAPIRO,      )
    14   Chapter 7 Trustee,            )
    )
    15                   Appellees.    )
    ______________________________)
    16
    Argued and Submitted on September 18, 2014
    17                            at Las Vegas, Nevada
    18                          Filed - January 5, 2015
    19               Appeal from the United States Bankruptcy Court
    for the District of Nevada
    20
    Honorable Linda B. Riegle, Bankruptcy Judge, Presiding
    21                          _________________________
    22   Appearances:     Stephanie M. Zinna of Olson, Cannon, Gormley,
    Angulo & Stoberski argued for appellants Dymon
    23                    Investments, Inc., BK Land Investors, Inc., Chad
    Dymon, and John “Buck” Lee; Matthew Philip
    24                    Pawlowski of Walsh & Friedman, Ltd., argued for
    appellees Ryan John Welch and Jolyn M. Welch.
    25
    26       1
    This disposition is not appropriate for publication.
    27 Although it may be cited for whatever persuasive value it may
    have (see Fed. R. App. P. 32.1), it has no precedential value.
    28 See 9th Cir. BAP Rule 8013-1.
    1   Before:      HOULE,2 PAPPAS, and JURY, Bankruptcy Judges.
    2
    3            Creditors Dymon Investments, Inc., BK Land Investors, Inc.,
    4   Chad Dymon, and John “Buck” Lee (collectively “Creditors” or
    5   “Appellants”) appeal the bankruptcy court’s order denying their
    6   motion to reopen the closed chapter 73 case of debtors Ryan John
    7   Welch (“Welch”) and Jolyn M. Welch (collectively, “Debtors”), by
    8   which Creditors sought to conduct an examination of Debtors
    9   under Rule 2004 of the Federal Rules of Bankruptcy Procedure.
    10   Finding no abuse of discretion, we AFFIRM.
    11                                    FACTS
    12            Pre-petition, Appellants and Welch were all members of
    13   several limited liability companies registered in Nevada
    14   (“Companies”) that were engaged in the business of acquiring
    15   real properties, entitling these properties, and selling them
    16   for profit.      In 2004, certain members of the Companies initiated
    17   a complaint for judicial dissolution (the “dissolution action”)
    18   against other members of the Companies, including Welch.      On
    19   August 5, 2005, an Offer of Judgment was filed in the
    20   dissolution action, whereby plaintiffs offered to allow a
    21   judgment be taken against them in favor of defendants Welch and
    22   RJ Welch, Ltd. (a Nevada corporation in which Welch presumably
    23   held some interest) in the amount of $3,500,000.      While
    24
    25        2
    The Honorable Mark D. Houle, U.S. Bankruptcy Judge for the
    Central District of California, sitting by designation.
    26
    3
    27        Unless otherwise indicated, all chapter, section and rule
    references are to the Bankruptcy Code, 11 U.S.C. §§ 101–1532, and
    28 to the Federal Rules of Bankruptcy Procedure, Rules 1001–9037.
    -2-
    1   Appellants assert Welch and RJ Welch, Ltd., were paid $3,500,000
    2   on account of this offer of judgment (which funds are also
    3   characterized by Appellants as an “asset”), no evidence exists
    4   in the record showing that Welch or RJ Welch, Ltd. were paid any
    5   portion of the $3,500,000 or even accepted the $3,500,000 offer
    6   of judgment.
    7        The resolution of the dissolution action is not clear from
    8   the record.    Subsequently, however, the plaintiffs in the
    9   dissolution action and other parties filed a complaint in state
    10   court against Welch and others on July 7, 2006, asserting
    11   various causes of action including fraud and breach of fiduciary
    12   duty based on defendants’ alleged failure to contribute as
    13   promised to the Companies, and for otherwise interfering with
    14   plaintiffs’ efforts to refinance and sell certain real property
    15   owned by the Companies.    Appellants assert that Debtors filed
    16   their bankruptcy petition on the eve of trial in the 2006
    17   action.
    18        Debtors filed for chapter 7 relief on May 27, 2011, and
    19   Lenard E. Schwartzer was appointed chapter 7 trustee (“Trustee
    20   Schwartzer”).    On June 2, 2011, Creditors were sent notice of
    21   the § 341(a) meeting (set for June 27, 2011), notice that the
    22   case was a no-asset case, and instructions not to file a proof
    23   of claim unless creditors receive a notice to do so.    The
    24   § 341(a) meeting was continued to July 15, 2011, and then again
    25   to August 22, 2011.    Appellants appeared at the August 22, 2011
    26   § 341(a) meeting, where they contend they were advised that
    27   Welch’s attorney stole money Welch allegedly received in the
    28   dissolution action, and that Welch was required to produce
    -3-
    1   documents to Trustee Schwartzer related to Welch’s claim against
    2   his attorney.   Welch allegedly failed to produce any such
    3   documents.   On August 24, 2011, Trustee Schwartzer withdrew his
    4   initial no asset report on the grounds that he had submitted his
    5   resignation in the case due to a conflict of interest.
    6        Debtors received a discharge on August 29, 2011.    While
    7   Appellants contend that the discharge was entered in error,
    8   there is no evidence in the record that the discharge was
    9   revoked or vacated subsequent to its entry, nor is there any
    10   indication of error in entry of the discharge since no
    11   section 727 adversary had been filed to deny the discharge.
    12        On October 26, 2011, successor trustee Brian Shapiro
    13   (“Trustee Shapiro”) was appointed.   The § 341(a) meeting was
    14   continued to October 31, 2011, and again continued to
    15   November 14, 2011, although Creditors argue they did not have
    16   notice of this continued § 341(a) meeting.   On November 16,
    17   2011, Trustee Shapiro filed a notice of assets.   Several months
    18   later on January 18, 2002, however, Trustee Shapiro filed a
    19   report of no distribution, and the clerk of the bankruptcy court
    20   entered a final decree that same day discharging Trustee Shapiro
    21   and closing the case.
    22        Two months after the case was closed, on March 23, 2012,
    23   Creditors filed a Motion in the bankruptcy case for an order
    24   requiring Debtors to appear for examination under Rule 2004.
    25   Creditors later filed a Motion to Reopen Chapter 7 Case
    26   (“Motion”) on August 28, 2012, seven months after the case was
    27   closed.   The record provides no explanation for the delay.    By
    28   the Motion, Creditors requested that the bankruptcy court reopen
    -4-
    1   the case to allow Creditors to examine Debtors under oath as to
    2   allegedly concealed assets that would be subject to liquidation
    3   and distribution to Debtors’ creditors.
    4           While the Creditors’ appellate briefs reference a
    5   $3,500,000 “asset” allegedly paid to Welch to resolve the
    6   dissolution action, and at the hearing on the Motion Creditors’
    7   counsel made vague reference to a $5,000,000 sum allegedly paid
    8   to Welch pre-petition, neither the Motion nor Creditors’ reply
    9   (“Reply”) references any specific asset in existence or to be
    10   discovered.     Instead, Creditors alleged in the Motion and Reply
    11   that they were led to believe there was some potential for a
    12   distribution of assets when the case was converted from a
    13   no-asset to an asset case by Trustee Shapiro, and further that
    14   Creditors had “specific knowledge about the tactics commonly
    15   employed by Debtors to secret assets away from the reach of
    16   their creditors.”
    17           The Motion was first heard on April 24, 2013, before the
    18   Honorable Linda B. Riegle.     From our review of the case docket,4
    19   it appears the delay between the filing of the Motion and the
    20   April 24, 2013 hearing was entirely due to Creditors’ delay in
    21   scheduling the hearing; Appellants do not assert otherwise.     At
    22   the hearing, Judge Riegle expressed that she was unlikely to
    23   grant the Motion because discharge had been entered over a year
    24   earlier, in August of 2011, and she ultimately continued the
    25       4
    We obtained this information by reviewing the items on the
    bankruptcy court’s automated bankruptcy case docket in the
    26
    Debtors’ bankruptcy case. We may take judicial notice of the
    27 contents and filing of these items. See O’Rourke v. Seaboard
    Sur. Co. (In re E.R. Fegert, Inc.), 
    887 F.2d 955
    , 957-58 (9th
    28 Cir. 1989).
    -5-
    1   hearing because Creditors had failed to provide Debtors with
    2   notice of the hearing.
    3        The excerpt of the transcript from the April 24, 2013,
    4   hearing does not reflect that Judge Riegle continued the hearing
    5   to a particular date, but on November 1, 2013, Creditors filed a
    6   Notice of Hearing for the Motion for November 27, 2013.   It is
    7   unclear from the record why there was a seven-month delay
    8   between the first hearing on the Motion and the second hearing.
    9   The docket and record seems to indicate, however, that the delay
    10   was due to Creditors’ delay in re-noticing the hearing;
    11   Appellants do not assert otherwise.
    12        On November 14, 2013, Debtors filed an Opposition to the
    13   Motion.   Debtors argued that the Motion was untimely and that
    14   Creditors failed to present evidence to support the proposition
    15   that Debtors concealed assets.    On November 22, 2013, Creditors
    16   filed a Reply to Debtors’ Opposition.
    17        At the hearing on November 27, 2013, the Honorable Bruce T.
    18   Beesley presiding, the bankruptcy court denied the Motion.    The
    19   excerpt of transcript reflects that Creditors’ counsel stated at
    20   the November 27, 2013, hearing that Welch was supposed to submit
    21   additional documentation regarding “where the money went,” but
    22   that these documents were never submitted.   Creditors’ counsel
    23   further expressed to the court that they were never given notice
    24   of the appointment of the new trustee, discharge, or closing of
    25   the case.   Finally, Creditors’ counsel asked the court to reopen
    26   the case to conduct a Rule 2004 examination to find the
    27   information Welch was supposed to have provided to the trustee,
    28   conceding that Creditors delayed in seeking to reopen but
    -6-
    1   arguing that where there is a potential for recovery for
    2   creditors there is “no time line under the bankruptcy code that
    3   precludes reopening the bankruptcy case.”    The court, in
    4   response, finding that Creditors had delayed in filing the
    5   Motion and did not exercise their other remedies, found lack of
    6   good grounds to reopen and denied the Motion.
    7        An order was entered denying the Motion on February 6,
    8   2014.   On February 20, 2014, Creditors timely filed a notice of
    9   appeal.
    10                              JURISDICTION
    11        The bankruptcy court had jurisdiction under 28 U.S.C.
    12   §§ 1334, 157(b)(2)(A) and (O).    We have jurisdiction under
    13   28 U.S.C. § 158.
    14                                 ISSUE
    15        Whether the bankruptcy court abused its discretion when it
    16   denied Creditors’ Motion because Creditors delayed in filing the
    17   Motion and did not exercise their other remedies, such as timely
    18   requesting a 2004 examination.
    19                           STANDARD OF REVIEW
    20        Denial of a motion to reopen a bankruptcy case is reviewed
    21   for abuse of discretion.   See Weiner v. Perry, Settles & Lawson,
    22   Inc. (In re Weiner), 
    161 F.3d 1216
    , 1217 (9th Cir. 1998); Lopez
    23   v. Specialty Restaurants, Inc. (In re Lopez), 
    283 B.R. 22
    , 26
    24   (9th Cir. BAP 2002).   Similarly, a bankruptcy court's exercise
    25   of its equitable powers is reviewed for an abuse of discretion.
    26   Baker v. Delta Air Lines, Inc., 
    6 F.3d 632
    , 639 (9th Cir. 1993).
    27        The Panel applies a two-part test to determine whether the
    28   bankruptcy court abused its discretion.    See United States v.
    -7-
    1   Hinkson, 
    585 F.3d 1247
    , 1261–63 (9th Cir. 2009)(en banc).       A
    2   bankruptcy court abuses its discretion if it applies an
    3   incorrect legal standard, or misapplies the correct legal
    4   standard, or if its factual findings are illogical, implausible,
    5   or without support from evidence in the record.      Hinkson,
    
    6 585 F.3d at 1262
    .
    7        We may affirm on any ground supported by the record, even
    8   if the ground was not relied upon by the bankruptcy court.
    9   Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency,
    10   
    322 F.3d 1064
    , 1076-77 (9th Cir. 2003).
    11                                DISCUSSION
    12        Appellants raise two main issues on appeal: (1) whether the
    13   bankruptcy court abused its discretion when it denied the Motion
    14   and (2) whether cause existed to grant the Motion.
    15        “Application to have the estate reopened may be made by an
    16   ‘interested party’ who would be benefitted by the reopening.”
    17   In re Mullendore, 
    741 F.2d 306
    , 308 (10th Cir. 1984)(citations
    18   omitted).    Pursuant to section 350(b), the court may reopen a
    19   closed bankruptcy case to administer assets, to accord relief to
    20   the debtor or “for other cause.”      § 350(b).   Rule 5010 provides:
    21      A case may be reopened on motion of the debtor or other
    party in interest pursuant to § 350(b) of the Code. In
    22      a chapter 7, 12, or 13 case a trustee shall not be
    appointed by the United States trustee unless the court
    23      determines that a trustee is necessary to protect the
    interests of creditors and the debtor or to insure
    24      efficient administration of the case.
    25   Rule 5010.
    26        “While the Code does not define ‘other cause’ for purposes
    27   of reopening a case under section 350(b), the decision to reopen
    28   or not is discretionary with the court, which may consider
    -8-
    1   numerous factors including equitable concerns, and ought to
    2   emphasize substance over technical considerations.”    Emmerling
    3   v. Batson (In re Emmerling), 
    223 B.R. 860
    , 864 (2d Cir. BAP
    4   1997)(citations omitted); see also Matter of Bianucci, 
    4 F.3d 5
      526, 528 (7th Cir. 1993); Ashe v. Ashe (In re Ashe), 
    228 B.R. 6
      457, 461 (C.D. Cal. 1998).
    7         As explained by this Panel in Menk v. Lapaglia
    8   (In re Menk), 
    241 B.R. 896
    , 916-17 (9th Cir. BAP 1999):
    9        In short, the motion to reopen legitimately presents
    only a narrow range of issues: whether further
    10        administration appears to be warranted; whether a
    trustee should be appointed; and whether the
    11        circumstances of reopening necessitate payment of
    another filing fee. Extraneous issues should be
    12        excluded.
    13        Further, a bankruptcy court may consider a number of
    14   nonexclusive factors in determining whether to reopen, including
    15   (1) the length of time that the case has been closed;
    16   (2) whether the debtor would be entitled to relief if the case
    17   were reopened; and (3) the availability of nonbankruptcy courts,
    18   such as state courts, to entertain the claims.   In re Antonious,
    19   
    373 B.R. 400
    , 405-06 (Bankr. E.D. Pa. 2007).   Bankruptcy Courts
    20   can also consider whether any parties would be prejudiced were
    21   the case reopened or not.    In re Otto, 
    311 B.R. 43
    , 47 (Bankr.
    22   E.D. Pa. 2004).
    23   A.   Lack of Diligence in Seeking Relief
    24        While there is no express time period under § 350 within
    25   which a motion to reopen must be filed, the request to reopen
    26   must be made within a “reasonable” time, and what constitutes
    27   reasonableness is determined on a totality basis.   See, e.g.,
    28   Matter of Pagan, 
    59 B.R. 394
    (D.P.R. 1986)(denying motion to
    -9-
    1   reopen under a laches analysis where movant had knowledge of the
    2   bankruptcy, but waited four years to file the motion);
    3   Stackhouse v. Plumee (In re Plumee), 
    236 B.R. 606
    , 610-11 (E.D.
    
    4 Va. 1999
    )(“in deciding whether to reopen an estate, the length
    5   of time between the estate’s closing and the motion to reopen it
    6   should be ‘of crucial significance’ to the bankruptcy court.
    7   ‘[A]s the time between closing of the estate and its reopening
    8   increases, so must also the cause for reopening increase in
    9   weight.’”) (citation omitted).   As stated on this point by the
    10   Seventh Circuit in Redmond v. Fifth Third Bank, 
    624 F.3d 793
    ,
    11   799 (7th Cir. 2010 ):
    12       The passage of time weighs heavily against reopening.
    The longer a party waits to file a motion to reopen a
    13       closed bankruptcy case, the more compelling the reason
    to reopen must be. In assessing whether a motion is
    14       timely, courts may consider the lack of diligence of
    the party seeking to reopen and the prejudice to the
    15       nonmoving party caused by the delay.
    16   
    Redmond, 624 F.3d at 799
    (citations omitted).
    17      Here, the bankruptcy court determined that Creditors’ delay
    18   in filing the Motion was significant.   Creditors were well aware
    19   of Debtors’ bankruptcy, as they had notice of the May 27, 2011,
    20   petition date, and actively participated in, at least, Debtors’
    21   § 341(a) meeting on August 22, 2011.    Nonetheless, Creditors did
    22   not seek permission to conduct a Rule 2004 examination until
    23   more than two months after the Debtors’ case closed on
    24   January 18, 2012, or more than ten months after the case was
    25   filed.   More importantly, Creditors thereafter did not file the
    26   Motion until August 28, 2012, five months after seeking the
    27   Rule 2004 examination and more than eight months after the case
    28   closed, and then inexplicably did not set the Motion for hearing
    -10-
    1   until eight months later on April 24, 2013.   Because Creditors
    2   initially failed to serve Debtors with notice of the Motion, the
    3   April 24, 2013 hearing then had to be continued, and Creditors
    4   delayed again in waiting until November 1, 2013, to give notice
    5   of the continued hearing date on November 27, 2013.   Ultimately,
    6   due entirely to Creditors’ lack of diligence, the Motion was not
    7   heard until more than a year after the Motion was filed, and
    8   almost two years after the case had been closed.
    9      Creditors concede without explanation that they were solely
    10   responsible for this delay.   As Creditors’ counsel opaquely
    11   acknowledged at the hearing on the Motion: “there were problems
    12   on my clients’ side and there was a delay on my clients’ side in
    13   asking to reopen.”   Given the record before the bankruptcy
    14   court, where (i) Creditors had substantial pre-petition
    15   experience with Welch as former business partners and litigation
    16   adversaries, (ii) Creditors had notice of and actively
    17   participated in the bankruptcy case, and (iii) because of
    18   Creditors’ numerous failures the hearing on the Motion did not
    19   take place until almost two years after the case was closed, it
    20   was not an abuse of discretion for the bankruptcy court to find
    21   that the delay in seeking to reopen the case was unreasonable
    22   under the circumstances.
    23      On this point we echo the comments of the district court in
    24   In the Matter of Pagan, which stated, in denying a motion to
    25   reopen a bankruptcy case, that:
    26       We note that equity assists the vigilant and diligent,
    not those who sleep on their rights. Appellants’
    27       actions after receiving notice of the bankruptcy
    constitute dilatory behavior under the circumstances.
    28
    -11-
    1   Pagan, 
    59 B.R. 394
    at 397.   To that end, we find unpersuasive
    2   Appellants’ arguments that Creditors’ failure to promptly seek a
    3   Rule 2004 examination was caused by the lack of notice of
    4   several § 341(a) meetings.   Creditors clearly were familiar with
    5   Debtors at the time the bankruptcy case was filed, had apparent
    6   reason to believe Debtors were hiding assets, and actively
    7   participated in the bankruptcy case.    Nonetheless, at every turn
    8   in the course of defending their interests in Debtors’ case,
    9   Creditors’ behavior was inexplicably dilatory.
    10      In this light, and while creditors are certainly entitled to
    11   notice of § 341(a) meetings as a general rule, the alleged
    12   partial failure of such notice, along with some level of
    13   confusion caused by the substitution of trustees, is
    14   insufficient in the totality of circumstances to excuse
    15   Creditors’ delay in protecting their rights.    It is common
    16   practice for a chapter 7 trustee to orally announce the
    17   continued § 341(a) meeting date at the conclusion of the
    18   meeting, which would negate the obligation to give notice of the
    19   continued meeting, and here Creditors appeared at at least one
    20   § 341(a) meeting.   Moreover, Creditors were aware of the filing
    21   of the case but failed to seek a Rule 2004 examination during
    22   the almost eight months the case was open, nor did they take
    23   minimal steps to monitor the case such as filing a request for
    24   special notice or periodically viewing the docket
    25   electronically.
    26      Finally, Creditors’ counsel was sent BNC notice of the
    27   discharge on August 29, 2011.    Creditors were thereby, at a
    28   minimum, on constructive notice that the closing of Debtors’
    -12-
    1   case was imminent.    However, the record does not reflect any
    2   inquiry by Appellants as to the status of the case or any effort
    3   to set a Rule 2004 exam until after the case was closed.     This
    4   is particularly compelling given the close and litigious pre-
    5   petition relationship between the parties, and supports the
    6   conclusion that the bankruptcy court’s ruling was not an abuse
    7   of discretion.
    8        As such, the bankruptcy court did not err when it considered
    9   the delay in seeking to reopen as cause to deny the Motion.
    10   B.   No prima facie proof that case was not fully administered
    11        With respect to the potential for recovery for the estate,
    12   the bankruptcy court has the duty to reopen an estate whenever
    13   prima facie proof is made that it has not been fully
    14   administered.    Lopez v. Specialty Restaurants Corp.
    15   (In re Lopez), 
    283 B.R. 22
    , 27 (9th Cir. BAP 2002)(citing Kozman
    16   v. Herzig (In re Herzig), 
    96 B.R. 264
    , 266 (9th Cir. BAP 1989)).
    17   “In particular, it is an abuse of discretion to deny a motion to
    18   reopen where assets of such probability, administrability, and
    19   substance appear to exist as to make it unreasonable under all
    20   the circumstances for the court not to deal with them.”     
    Id. 21 (internal
    quotation marks omitted).    “A motion to reopen can be
    22   denied, however, where the chance of any substantial recovery
    23   for creditors appears too remote to make the effort worth the
    24   risk.”   
    Lopez, 283 B.R. at 27
    (internal quotation marks
    25   omitted).
    26        As to Creditors’ contention that the case had not been fully
    27   administered, Creditors merely state in the Motion that:
    28        Creditors have suspected that Debtors are concealing
    -13-
    1       substantial assets that would be subject to liquidation
    and distribution to their creditors. . . . these
    2       Creditors have specific knowledge about the tactics
    commonly employed by Debtors to secret assets away from
    3       the reach of their creditors.
    4   Motion, page 3, lines 27-28, page 4, lines 4-5.
    5   Similarly, Creditors contend in their Reply that:
    6       Creditors are not making this request with a light
    heart and mere speculation. Creditors were business
    7       associates of the Debtors and know them well, and
    although Debtors have argued that there are no specific
    8       allegations about Creditors’ knowledge of Debtors’
    activities, facts regarding Debtors’ true finances may
    9       come to light during a debtor examination.
    10   Reply, page 2, lines 10-13 (emphasis added).
    11      Noting the business relationship and subsequent prolonged
    12   litigation between the parties (which would presumably result in
    13   a more detailed understanding of the existence of Debtors’
    14   alleged substantial assets and/or the tactics used to hide
    15   them), and at the same time the lack of detail regarding the
    16   “tactics” allegedly employed by Debtors along with only
    17   unsubstantiated and vague assertions insinuating the possible
    18   existence of some undefined asset (be it the $3,500,000 “asset”
    19   referred to in Appellants’ appeal briefs that was allegedly paid
    20   to Debtors at some point pre-petition, the $5,000,000 “payment”
    21   referred to by Creditors’ counsel during the hearing on the
    22   Motion, or otherwise), there is nothing in the record to
    23   establish prima facie proof the case was not fully administered.
    24      Moreover, while Appellants assert that Debtors never
    25   produced certain documents requested by Trustee Schwartzer,
    26   including settlement documents regarding the $3,500,000 offer of
    27   judgment, Creditors conceded at oral argument on appeal that
    28   they never followed up with Trustee Schwartzer or Debtors to
    -14-
    1   confirm whether such documents were in fact ever produced.       The
    2   lack of diligence by Creditors in this regard further serves to
    3   undermine the existence and substance of any hidden assets.
    4   Even though Creditors’ focus in seeking a Rule 2004 examination
    5   reflects that Creditors needed to conduct an investigation to
    6   identify and locate allegedly hidden assets, these facts warrant
    7   denial since there was no showing to support a finding that
    8   there was a chance of substantial recovery for creditors.      See
    9   
    Lopez, 283 B.R. at 27
    .
    10         Based on the foregoing, the bankruptcy court did not abuse
    11   its discretion in denying the Motion given the lack of any
    12   specific asset and the mere speculative prospect (much less a
    13   substantial one) of any ultimate recovery for creditors.      See
    14   
    id. 15 C.
       Prejudice to Debtors upon Reopening
    16         “In the absence of some meaningful prejudice, a court of
    17   equity would abuse its discretion by barring the reopening of a
    18   case.”    In re 
    Emmerling, 223 B.R. at 865
    .   This Panel has found
    19   that a bankruptcy court abused its discretion where it denied a
    20   debtor’s motion to reopen the case to schedule an omitted cause
    21   of action based on debtor’s bad faith.      
    Lopez, 283 B.R. at 22
    .
    22         Where, as here, there is no evidence of any asset (or
    23   likelihood of discovering any asset) to be recovered for
    24   creditors, notwithstanding the extensive pre-petition
    25   relationship between the parties and where Creditors had ample
    26   opportunity during the pendency of the case to investigate
    27   potential assets, and given that the chapter 7 trustee
    28   implicitly determined there were no assets worth pursuing,
    -15-
    1   reopening the case would cause meaningful prejudice to Debtors.
    2   Among other things, reopening the case to allow Creditors to
    3   conduct a Rule 2004 examination would subject Debtors to
    4   examination and additional litigation fees more than two years
    5   after they had received their discharge.   Given these
    6   circumstances the bankruptcy court did not abuse its discretion
    7   in denying the Motion.
    8                               CONCLUSION
    9      Based on our review of the record, we conclude that the
    10   court below did not abuse its discretion when it denied the
    11   Motion.   We therefore AFFIRM the bankruptcy court’s order.
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    -16-