Toibb v. Radloff

William H. Rehnquist:

The opinion of the Court in No. 90-368 Toibb against Radloff will be announced by Justice Blackmun.

Harry A. Blackmun:

This is a bankruptcy case that comes to us from the Court of Appeals for the Eighth Circuit.

We took it because of the conflict in the lower courts.

It concerns the interplay of chapters 7, 11, and in a way, 13 of the Bankruptcy Code.

Specifically, it has to do with a conversion by an individual of his chapter seven case to one under chapter eleven's reorganization provisions.

The Bankruptcy Court of Saint Louis allowed the conversion, but when the petitioner's reorganization plan was filed, that court dismissed the petition finding at that time that he did not qualify for relief under chapter 11 because he was not engaged in an ongoing business.

The District Court for the Eastern District of Missouri affirmed and so did the Court of Appeals.

We hold that the code's language permits individual debtors not engaged in business to file for relief under chapter 11.

We acknowledge that, that chapter was intended primarily for the use of business debtors.

But the code contains no ongoing business requirement for a chapter-11-reorganization.

And the judgment of the Court of Appeals is, therefore, is reversed.

Justice Stevens has filed a dissenting opinion.