In re Jartran, Inc.

In re Jartran, Inc.

Opinion

 [*860]  CUDAHY, Circuit Judge

In this case we are asked to determine the novel question of the propriety of serial Chapter 11 bankruptcy filings. The debtor originally filed a petition for reorganization under Chapter 11, which was confirmed and substantially consummated. Less than one and a half years later, the debtor filed  [*861]  a second Chapter 11 petition, which had as its goal the liquidation of the reorganized entity. If the second Chapter 11 filing is proper, the original plan for reorganization approved as a result of the first Chapter 11 petition will presumably be superseded by a new plan. One of the creditors under the original plan objects to this potential alteration [**2]  of its rights and claims. The bankruptcy court, however, ruled that the serial filing was permissible and that the creditor was not automatically entitled to an administrative priority in the second case by virtue of guarantees in the original reorganization plan. In re Jartran, Inc., 71 Bankr. 938 (Bankr. N.D Ill. 1987). The district court affirmed, In re Jartran, Inc., 87 Bankr. 525 (Bankr. N.D.Ill. 1988), and we do likewise.

In 1981 Jartran, Inc. ("Jartran"), a company that rented and leased trucks on a nationwide basis, filed a petition in bankruptcy under Chapter 11 (Jartran I). Jartran's Fifth Amended Plan of Reorganization was confirmed in its third modified form ("Plan") on September 29, 1984, and was subsequently substantially consummated. On March 4, 1986, the reorganized Jartran filed a second Chapter 11 petition, this time with the aim of liquidating rather than reorganizing the company (Jartran II). ¹ Fruehauf Corporation ("Fruehauf"), a creditor under the original Chapter 11 Plan, argues that this second Chapter 11 filing was improper and should be dismissed. Alternatively, Fruehauf argues that it is entitled to an administrative [**3]  priority in the current proceedings. We will address these contentions after consideration of the jurisdictional situation of the case.

At oral argument, the panel expressed doubt whether the district court's order in this case was a "final order" suitable for mandatory appeal under 28 U.S.C. section 158(d); the parties have submitted supplemental [**4]  briefs on this issue. Subsequent to oral argument, the district court certified its original order in this case for discretionary review under 28 U.S.C. section 1292(b), and this court granted Fruehauf's Petition for Permission to Appeal from an Interlocutory Order of the District Court. No. 88-2166 (7th Cir. Feb. 2, 1989). We conclude that the order was not final and that the original notice of appeal therefore did not transfer jurisdiction to this court; the district court retained jurisdiction and certified the order for interlocutory appeal after we had held oral argument in this court. We now have jurisdiction on an interlocutory basis.

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