In re Salon Proz, LLC

630 B.R. 765 (Mem)

IN RE, SALON PROZ, LLC, Debtor.

Case No. 21-00820-DD

United States Bankruptcy Court, D. South Carolina.

Signed August 20, 2021

Jane H. Downey, Moore Bradley Myers Law Firm, P.A., West Columbia, SC, for Debtor.

ORDER DISMISSING CASE WITHOUT PREJUDICE

David R. Duncan, US Bankruptcy Judge

This matter comes before the Court on the motion of South Carolina Community Bank d/b/a Optus Bank ("Optus") filed May 4, 2021, for an order dismissing Debtor's case with prejudice (the "Motion"). Debtor filed an objection to the Motion on May 24, 2021, and the Court held hearings on June 2 and August 19, 2021. Present at the hearings were counsel for Debtor and Optus, along with a principal of Debtor. Based on the following, the Motion is granted in part, and the case is dismissed without prejudice.

At the August 19, 2021, hearing, counsel for Debtor consented to dismissal of the bankruptcy case. The issue before the Court and the argument was limited to whether to dismiss the case with prejudice. Ordinarily, dismissal of a bankruptcy case is without prejudice to the filing of a subsequent case. In re Edgefield Inn, LLC , 521 B.R. 116, 123 (Bankr. D.S.C. 2014), 11 U.S.C. § 349(a). However, the Fourth Circuit allows for dismissal of bankruptcy cases with prejudice to re-filing when there is evidence of bad faith. Id. (citing Colonial Auto Ctr. v. Tomlin (In re Tomlin) , 105 F.3d 933, 937 (4th Cir.1997) ). A party arguing that a chapter 11 filing was in bad faith must show that it was filed with objective futility and subjective bad faith. In re Premier Automotive Services, Inc ., 492 F.3d 274, 280 (4th Cir. 2007). Further, "[w]hen considering whether to dismiss a case with prejudice, the court must find the bad faith amounts to some ‘egregious behavior’ that prejudices creditors." Edgefield Inn , at 123 (citing Tomlin at 937 ).

In this case, Optus was unable to establish the predicates for dismissal with prejudice. It is true that the...