|Title||In re Cleary Packaging LLC, Case No. 21-10765 Cantwell-Cleary Co., Inc. v. Cleary Packaging, LLC, Adversary No. 21-00056|
Michelle M. Harner
The plaintiff filed an adversary proceeding to have its debt against the defendant/debtor deemed nondischargeable under section 523(a) of the Bankruptcy Code. The defendant argued that section 523 is not applicable to an entity debtor under subchapter V of the Bankruptcy Code and that, as a result, the plaintiff’s complaint should be dismissed under Civil Rule 12(b)(6). The Court reviewed the statutory language of sections 523 and 1192 of the Bankruptcy Code, as well as the scope of the bankruptcy discharge for corporate debtors both under chapter 11 generally and in the specific context of consensual and nonconsensual plans under subchapter V. Based on that review, the Court concluded that the section 523(a) exceptions to discharge do not apply to the discharge of a subchapter V entity debtor. The Court, in turn, dismissed the plaintiff’s complaint as being legally insufficient to state a claim for excepting the plaintiff’s debt from discharge under the Bankruptcy Code.