Daniel William Cook and Yolanda T. Cook

1This Report states:
Trustee's Report of No Distribution: I report that I
have neither received any property nor paid any money
on account of this estate except exempt property, and
that I have made a diligent inquiry into the financial
affairs of the debtor(s) and the location of the
property belonging to the estate, and that there is no
property available for distribution from the estate
over and above that exempted by law. 	Pursuant to Fed.
R. Bankr. P. 5009, I certify that this estate has been
fully administered. 	I request that this report be
approved and that I be discharged from any further
duties as trustee. 	Filed by Trustee Philip J. Montoya.
2Bankruptcy Rule 7001 requires an adversary proceeding for a
declaratory judgment for proceedings that determine an interest
in property. 	The parties have not raised this issue, but the
Court finds that the parties have had all the procedural
safeguards of an adversary.
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
DANIEL WILLIAM COOK
and YOLANDA T. COOK,
Debtors. 	No. 7 - 04-17704 - SA
MEMORANDUM OPINION ON ABANDONMENT
On June 2, 2008, Trustee Philip Montoya (“Trustee”) filed a
Trustee’s Report of No Distribution 1 (“NDR”). 	See Docket entry
immediately after 755. 	On July 30, 2008, Trustee filed a
Withdrawal of Document, withdrawing the NDR. 	Doc 767. 	On July
31, 2008, Hydroscope Group, Inc., Hydroscope Inc., USA,
Hydroscope Canada Inc. and CBM Group, Inc. (the “Entities”) filed
an objection to the withdrawal of the NDR and seeking a
declaration 2 that the Trustee had in fact abandoned all estate
property. 	Doc 770. 	The Court conducted a hearing on August 25,
2008 and requested briefing on the issues raised by the
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3“[A]fter notice and a hearing”, or a similar phrase--
(A) means after such notice as is appropriate in the
particular circumstances, and such opportunity for a
hearing as is appropriate in the particular
circumstances; but
(B) authorizes an act without an actual hearing if such
notice is given properly and if--
(i) such a hearing is not requested timely by a party
in interest; or
(ii) there is insufficient time for a hearing to be
commenced before such act must be done, and the court
authorizes such act.
11 U.S.C. § 102(1).
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pleadings. 	The Court has reviewed the pleadings and briefs and
applicable authorities and now issues this Memorandum Opinion.
This is a core proceeding. 	28 U.S.C. § 157(b)(2)(A). 	For the
reasons set forth below, the Court finds that the Trustee could
withdraw the NDR and has not in fact abandoned all estate
property. 	This Memorandum Opinion constitutes the Court’s
findings of fact and conclusions of law as may be required by
Bankruptcy Rule 7052.
DISCUSSION
Abandonment of estate property is governed by 11 U.S.C. §
554, which provides:
Abandonment of property of the estate
(a) After notice and a hearing 3, the trustee may
abandon any property of the estate that is burdensome
to the estate or that is of inconsequential value and
benefit to the estate.
(b) On request of a party in interest and after notice
and a hearing, the court may order the trustee to
abandon any property of the estate that is burdensome
to the estate or that is of inconsequential value and
benefit to the estate.
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Page -3-
(c) Unless the court orders otherwise, any property
scheduled under section 521(1) of this title not
otherwise administered at the time of the closing of a
case is abandoned to the debtor and administered for
purposes of section 350 of this title.
(d) Unless the court orders otherwise, property of the
estate that is not abandoned under this section and
that is not administered in the case remains property
of the estate.
Section 544 is implemented through Bankruptcy Rule 6007, which
provides:
(a) Notice of proposed abandonment or disposition;
objections; hearing.
Unless otherwise directed by the court, the trustee or
debtor in possession shall give notice of a proposed
abandonment or disposition of property to the United
States trustee, all creditors, indenture trustees, and
committees elected pursuant to § 705 or appointed
pursuant to § 1102 of the Code. 	A party in interest
may file and serve an objection within 15 days of the
mailing of the notice, or within the time fixed by the
court. 	If a timely objection is made, the court shall
set a hearing on notice to the United States trustee
and to other entities as the court may direct.
(b) Motion by party in interest
A party in interest may file and serve a motion
requiring the trustee or debtor in possession to
abandon property of the estate.
The Notice of Chapter 7 Bankruptcy Case, Meeting of
Creditors, & Deadlines (the “341 notice”), doc 728, contains the
following paragraph:
Unless a request for notice is filed and served upon
the trustee by a party in interest within 15 days after
the date of mailing of this notice, the trustee may
abandon any property deemed burdensome or of
inconsequential value to the estate without further
notice.
The 341 notice was mailed on March 20, 2008, and no parties
requested notice of abandonment within 15 days of that date.
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However, there were numerous previous requests for notice. 	See
docs 398, 376, 329, 230, 144, 64, 37, 27, 20, 19, 10, 8, 4, and
3. 	There was also a later request for notice. 	Doc 829.
Under 11 U.S.C. § 554, there are three methods by which the
property in a debtor's estate can be abandoned. 	See, e.g.,
Miller v. Pacific Shore Funding, 287 B.R. 47, 51 (D. Md. 2002).
First, after notice and hearing, the estate may abandon any
property that is “burdensome” to the estate or is of little
value. 	Id. § 554(a). 	Second, on motion by a party, the court
may order the abandonment of certain properties. 	Id. § 554(b).
Third, once a bankruptcy case is closed, any assets that have
been properly scheduled, but not otherwise administered, are
abandoned by operation of law. 	Id. § 554(c).
In this case there was no abandonment under § 554(a). 	The
Trustee did not send out a notice of proposed abandonment to
those parties requesting notice. 	Without effective notice under
§ 554(a) there can be no abandonment. 	Morlan v. Universal
Guaranty Life Insurance Co., 298 F.3d 609, 618 (7th Cir. 2002)
(Attempted abandonment by trustee failed when trustee did not
comply with the statute. 	“The requirements are exacting.”);
Sierra Switchboard Co. v. Westinghouse Electric Corp., 789 F.2d
705, 709 (9 th Cir. 1986) (Even if Trustee intends to abandon, it
is ineffective without notice to creditors.); Jones v. Cendant
Mortgage Corp. (In re Jones), 396 B.R. 638, 647 (Bankr. W.D. Pa.
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Page -5-
2008)(“De facto abandonment cannot occur in bankruptcy.”)
(Citation omitted.); Cemco, Inc. v. Howard Nat’l Corp. (In re
Howard Nat’l Corp.), 70 B.R. 278, 282 (N.D. Ill. 1987)(Bankruptcy
Rule 6007 requires reasonable notice to be given to all
creditors.); First Carolina Financial Corp. v. Trustee of Estate
of Caron (In re Caron), 50 B.R. 27, 29 (Bankr. N.D. Ga. 1984)
(Consent of debtor, creditor and trustee does not obviate need
for notice.)
In this case there was also no abandonment under § 554(b).
The Court has not made findings that any property was burdensome
to the estate or of inconsequential value and benefit to the
estate, and has entered no orders abandoning property. 	See Vu v.
Kendall (In re Vu), 245 B.R. 644, 647 (9 th Cir. BAP 2000). 	The
case has not been closed, so § 554(c) is inapplicable.
The Entities argue that the Trustee abandoned property when
he filed the NDR. 	While the filing an NDR may show an intention
to abandon property, the NDR in and of itself does not result in
abandonment unless the court closes the case. 	Schwaber v. Reed
(In re Reed), 940 F.2d 1317, 1331 (9 th Cir. 1991); In re Beaton,
211 B.R. 755, 758 (Bankr. N.D. Ala. 1997)(“The statute does not
mention a trustee’s final report or otherwise authorize a trustee
to abandon property solely by filing any document with the
bankruptcy court which is not accompanied by notice and a
hearing.”) 	Furthermore, the NDR was not noticed out to all
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4 	The concept of abandonment began as judge-made law
formulated decades prior to enactment of the Bankruptcy
Code. There was no provision of the Bankruptcy Act
which defined or governed abandonment. 	Under the Act,
abandonment was born from the equitable concept of
estoppel and the determination of whether property had
been abandoned centered around the conduct, words or
inaction of the trustee. 	2 James M. Henderson,
Remington on Bankruptcy §§ 1142-1148 (1956). 	The
preferred practice of abandonment, under the case law
as it ultimately developed, was for the trustee to
notify creditors and obtain an order endorsing the
proposed abandonment from the bankruptcy referee. 	“To
obviate subsequent criticism, it is advisable to notify
the creditors before definitely abandoning any asset
which might possibly have substantial value. 	There is
no rule or statutory requirement to this effect, but
certain practical aspects will be recognized by anyone
(continued...)
Page -6-
creditors or even to those creditors that requested notice in the
case.
The Entities also argue that the Trustee stated his
intentions to abandon all assets and acted consistently with this
intention. 	The former Bankruptcy Act was silent about a
trustee’s right to abandon and cases held that a clear
manifestation of intent would suffice to abandon property. 	5
Lawrence P. King, Collier on Bankruptcy, ¶554.LH[1] at 554-16
(15 th ed. Rev.); In re Newkirk Mining Co., 238 F. Supp. 1, 4 (D.
Pa. 1964)(decided under former law.) 	In contrast, Bankruptcy
Code section 554 contains strict statutory requirements that
replace the “difficult or nebulous factual determinations”
regarding a Trustee’s intention that were relevant under the
Bankruptcy Act 4. 	Under § 554, the Trustee’s intent is not
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4(...continued)
familiar with this field of enterprise.” Id. at § 1144
p. 625. 	In 1973, however, the preferred practice was
formally recognized by adoption of former Bankruptcy
Rule 608 which governed procedure under the Act and
provided:
The court may, on application or its own
initiative and after hearing on such
notice as it may direct, approve the
abandonment of any property and, without
reopening the case, may direct the
abandonment of any property of
inconsequential value discovered after a
case is closed. 	If a case is closed
without administration of property of
the estate that has been scheduled, the
property shall be deemed to have been
abandoned with the approval of the
court, and on request the court may,
without reopening the case, enter an
order approving the abandonment.
Rules Bankr.Proc. Rule 608, 11 U.S.C. (1982 ed.)
Congress, in enacting the present section
554, further refined the law of abandonment, and
eliminated needless litigation by making notice to
creditors or closing of the case mandatory for
effective abandonment of scheduled property.
Strict statutory requirements were substituted for
the old “common law” standard which hinged on
often difficult or nebulous factual determinations
regarding the intent of the trustee.
In re Beaton, 211 B.R. at 758 n. 5.
Page -7-
relevant to the issue of whether there was adequate notice of a
proposed abandonment. 	See Sierra Switchboard, 789 F.2d at 709
and n. 4.
The Entities also argue that having abandoned the property,
the Trustee cannot now un-abandon it. 	This is the law generally.
See, e.g., Huntington Nat’l Bank v. Hunter (In re Hunter), 76
B.R. 117, 118 (Bankr. S.D. Ohio 1987). 	This assumes, however,
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that there was an abandonment in the first place. 	Above, the
Court found that there was no abandonment. 	Therefore, the
withdrawal of the NDR is not an attempted un-abandonment.
The Court will enter an Order approving the withdrawal of
the NDR. 	The Entities request for a declaration that all assets
of the estate have been abandoned will be denied.
Honorable James S. Starzynski
United States Bankruptcy Judge
Date filed on docket: April 15, 2009
Copies to:
Daniel J Behles
Attorney for Debtors
Cuddy & McCarthy, LLP
7770 Jefferson NE, Suite 305
Albuquerque, NM 87109
William J. Waggoner
Attorney for Entities
529 W San Francisco
Santa Fe, NM 87501
Philip J. Montoya
Trustee
PO Box 159
Albuquerque, NM 87103
United States Trustee
PO Box 608
Albuquerque, NM 87103-0608
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