Section 554(a) of the Bankruptcy Code permits the trustee to abandon estate property upon a showing that it is either burdensome or of inconsequential value and benefit to the bankruptcy estate. Abandonment can also occur under Section 554(c) if property of the estate is properly “scheduled” by a debtor but not administered by the trustee by the time the case is closed. Courts have interpreted “scheduled” in two ways. Several have held that to be scheduled, property needs to be included on the “schedule of assets and liabilities.” Others have held that to be scheduled, property just needs to be included on any one of the statutory filings from, whether that filing is called a schedule or something else.
In re Stevens, 15 F.4th 1214 (9th Cir. 2021), followed the strict approach. In doing so, it rejected “the Debtors’ ‘any filing’ reading.” Instead, it held “that, absent Trustee or court action, to be abandoned under §554(c), property must be scheduled on a schedule, not just listed on the SOFA.” Id. at 1217. In doing so, the court noted that the Bankruptcy Code does not define “scheduled.” Therefore, when terms used in a statute are undefined, the court must give them their ordinary meaning.” Id. In this regard, the court noted that Webster’s defined “scheduled” as “to place or include in a schedule” or “to make a schedule of.” The Oxford Compact defined the verb “schedule” to mean “[t]o enter in a schedule or list.” Id. at 1218. The court concluded that:
These dictionary definitions show that the ordinary meaning of “scheduled” was to include something on a literal schedule. That ordinary meaning, taken with §554(c)’s explicit cross-reference to §521(a)(1), which itself also uses the noun “schedule,” compels us to construe “scheduled” narrowly.
Id. at 1218. The court went on to explain that “schedule” is used in Section 521(a)(1) of the Bankruptcy Code as a noun. However, whether “scheduled” is used as a verb (such as in Section 554(c)), or as a noun (as used in Section 521(a)(1)), it shares the same root. “And the Supreme Court has noted that different grammatical forms of the same word “typically reflect the meaning of” one another.” Id. (quoting FFC v. AT&T Inc., 562 U.S. 397 (2011). Where Congress uses similar statutory language in two adjoining provisions, it normally intends similar interpretations. Id.
We hold that abandonment under §554(c) requires listing on a schedule, as we have defined it here, and that anything else (e.g., actual knowledge of the trustee, ad hoc oral disclosures, discussion at the § 341 meeting of creditors) is not enough. “The law is abundantly clear that the burden is on the debtors to list the asset and/or amend their schedules, and that in order for property to be abandoned the debtor must formally schedule” it.
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We conclude that property listed only on the SOFA, §521(a)(1)(B)(iii), is not “scheduled,” and thus without Trustee or court action, cannot be abandoned under §554(c).
Id. at 1219. Other courts determining that the word “scheduled” in Section 554(c) has been given a specific meaning in Section 521(a)(1), and refers only to assets listed in the debtor’s Schedules of Assets and Liabilities include, In re Medley, 29 B.R. 84, 86 (Bankr. M.D.Tenn. 1983); In re Harris, 32 B.R. 125, 127 (Bankr. S.D.Fla. 1983) (reference to partnership in SOFA was insufficient to schedule debtor’s interest in mortgages held by partnership); In re Schmid, 54 B.R. 78, 80 (Bankr. D.Or. 1985) (no abandonment where debtor made ambiguous disclosures in SOFA and schedules and concealed information about the lawsuit from trustee at the first meeting of creditors); Swindle v. Fossey (In re Fossey), 119 B.R. 268, 272 (D.Utah 1990) (cause of action listed in debtor’s SOFA but not in schedules was not “scheduled” under Section 521(a)(1) and thus was not abandoned under Section 554(c)); In re McCoy, 139 B.R. 430, 431 (Bankr. S.D. Ohio 1991) (no abandonment despite trustee’s knowledge of the asset since debtor did not list it in her schedules); In re Winburn, 167 B.R. 673, 676 (Bankr. N.D.Fla. 1993) (cause of action listed only in debtor’s amended SOFA filed one year into bankruptcy case and never disclosed in schedules was not abandoned under Section 554(c), regardless of trustee’s or any creditor’s knowledge of the asset before the case closed).
In re Tadayon, 2019 WL 1923044 (9th Cir.BAP) followed the latter line of cases. However, its facts were unique, as noted in the following explanation:
Regardless of whether [debtor] had to list the State Court Action in his Schedule B for it to be deemed abandoned under §554(c) when his case closed, or whether listing it in the SOFA was enough for that purpose, the trustee here filed a notice of intent to abandon, stating that the asset was burdensome and of inconsequential value to the estate. Trustee Rosenberg questioned [debtor] about the State Court Action at the §341(a) meeting of creditors. Although Dr. Nasseri asserts that [debtor] was not truthful about what claims were being litigated or the value of the asset, nothing in the record supports this. What we do know is that Trustee Rosenberg conducted an investigation into the State Court Action before making the deliberate decision to abandon it from the estate. Despite the lack of an order, Trustee Rosenberg’s intent to abandon the State Court Action was clear and unequivocal. The entire question of “scheduled” property becomes academic where, as here, the Abandonment Notice specifically abandoned the State Court Action. Trustee Rosenberg’s final report, stating that all scheduled and known assets had been or would be abandoned, is further evidence of his intent to abandon it.
Therefore, under these facts, we conclude that the requirements for abandonment under §554(c) were met and that the State Court Action was abandoned to [debtor] in 2012.
Id. at *6-7. The following courts have not followed a strict interpretation of “scheduled” in Section 554(c), holding that assets are scheduled if listed in the SOFA: In re Hill, 195 B.R. 147, 150-51 (Bankr. D.N.M. 1996) (holding that prepetition lawsuit listed on SOFA but not on schedules was abandoned upon closure of the case, given that trustee was aware of the lawsuit, had inquired about it at the Section 341(a) meeting of creditors, and had demonstrated an intent to abandon it in his Report of No Distribution and Notice of Abandonment of Assets) and U.S. ex. rel. Fortenberry v. The Holloway Grp., Inc., 515 B.R. 827, 829 (W.D.Okla. 2014) (holding that the word “scheduled” in Section 554(c) refers to both the SOFA and Schedules of Assets and Liabilities; debtor’s disclosure of lawsuit only in his SOFA satisfied Section 554(c) and was abandoned when case closed).
Matthew T. Gensburg
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