Christopher A. Johnson

UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
In re: 	) 	Case No. 25-13360
)
CHRISTOPHER A. JOHNSON, 	) 	Chapter 13
)
Debtor. 	)
)
Judge Suzana Krstevski Koch
)
)
MEMORANDUM OF OPINION AND ORDER
This cause is before the Court on the Motion of the Chapter 13 Trustee (the “Trustee”) for
an Order Regarding Funds on Hand in Dismissed Case (the “Motion”). ECF No. 139. Debtor
Christopher A. Johnson (the “Debtor”) filed a Response (the “Debtor’s Response”) and argued
that the Trustee should continue to hold the funds. ECF No. 141. Creditor Akron Auto Auction,
Inc. (the “Creditor”) also filed a Response (the “Creditor’s Response”) and argued that the Court
should direct the Trustee to remit the funds to the state court in which Creditor has a judgment so
Creditor may enforce its state court judgment. ECF No. 147.
The Court held a hearing on the Motion on August 4, 2026 and, in an oral ruling, granted
the Trustee’s Motion, directing the Trustee to return any funds in her possession to the Debtor,
less administrative expenses, and overruling the Debtor’s Response and the Creditor’s Response.
IT IS SO ORDERED.
Dated: 6 August, 2026 04:06 PM
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This Memorandum of Opinion and Order supplements the Court’s oral ruling, and to the extent
there are any inconsistencies between this Court’s oral ruling and this Order, this Order controls.
JURISDICTION
The Court has jurisdiction over Debtor’s Chapter 13 case pursuant to 28 U.S.C. §§ 1334,
157(a), and Local General Order 2012-7 of the United States District Court for the Northern
District of Ohio. The contested matter arising from the Motion is a core proceeding that this
Court may hear and determine. 28 U.S.C. §§ 157(b)(1) and (b)(2)(A) and (O).
Although the Court dismissed Debtor’s case on February 12, 2026 (ECF No. 111), a
bankruptcy court’s authority over the bankruptcy trustee provides an independent basis of
jurisdiction to determine the disposition of funds she is holding. Robinson v. Michigan Consol.
Gas Co. Inc., 918 F.2d 579, 586 (6th Cir. 1990) (28 U.S.C. § 959 provides basis for jurisdiction
over bankruptcy trustee “independent” of 28 U.S.C. § 1334); In re Hufford, 460 B.R. 172, 175
n.2 (Bankr. N.D. Ohio 2011) (bankruptcy court has jurisdiction to determine rights to funds
remaining with chapter 13 trustee despite dismissal); In re Gonzales, 578 B.R. 627, 628–29
(Bankr. W.D. Mich. 2017) (although bankruptcy estate ceased to exist upon dismissal of the case,
bankruptcy court authority over the bankruptcy trustee provides an independent basis of
jurisdiction to determine the disposition of funds she is holding).
BACKGROUND
Debtor filed a petition for relief under Chapter 13 of Title 11 of the United States Code on
August 6, 2025. ECF No. 1. As of February 12, 2026, the Debtor had no plan confirmed
pursuant to 11 U.S.C. § 1325. On February 12, 2026, the Court dismissed Debtor’s case, finding
Debtor was not eligible to be a Chapter 13 debtor under 11 U.S.C. §109(e). ECF No. 111.
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On February 25, 2026, Debtor filed a Notice of Appeal. ECF No. 113. On that same day,
Debtor also filed a request for a stay pending appeal pursuant to Bankruptcy Rule 8007 and a
request to expedite the stay. ECF Nos. 114 and 116. The Court granted the Debtor’s request to
determine the stay pending appeal on an expedited basis. ECF No. 121. The Court entered an
Order on March 5, 2026, denying the Debtor’s request for a stay pending appeal. ECF No. 125.
Since the case was dismissed, the Debtor has continued to make payments to the Trustee.
The Trustee is holding over $31,000 in undistributed funds (the “Funds”).
SUMMARY OF ARGUMENTS
Trustee’s Motion requests an order directing her to disburse the Funds, but the Trustee
takes no position as to whom the Funds should be disbursed. At the hearing on August 4, 2026,
the Trustee requested an order directing her to disburse the Funds or to continue to hold the
Funds. The Trustee argued she has duties pursuant to 11 U.S.C. § 1302(b)(1), and she should be
permitted to carry out her statutory duties including disbursing the Funds, filing a final report,
and proceeding towards closure of the case.
Debtor argues that cause exists under 11 U.S.C. § 349(b) such that the Court should order
the Trustee to continue to hold the Funds so as to maintain the status quo pending resolution of
the Debtor’s appeal. Debtor argues that by ordering the Trustee to continue to hold the Funds,
rights of creditors will not be altered because the Funds will be preserved until the appellate
process concludes. Debtor believes this will prevent unnecessary prejudice. Debtor provides no
case law with cases in a similar procedural posture where a court determined that maintaining the
status quo pending appeal, after a stay pending appeal was denied, was sufficient cause under 11
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U.S.C. § 349(b).1
Creditor also argues that cause exists under 11 U.S.C. § 349(b), but that the Court should
order the Trustee to remit the Funds to the state court in which Creditor obtained a judgment.
Creditor had a wage garnishment in place when Debtor filed his petition and argued that the
wage garnishment should be restored. Creditor takes the position that the pendency of an appeal
is not a basis to hold the Funds as the Debtor’s request for a stay pending appeal was denied.
LAW AND ANALYSIS
The Debtor’s case was dismissed pre-confirmation, and all the parties agree that 11
U.S.C. §§ 349(b) and 1326(a)(2) are the applicable Bankruptcy Code provisions. Section 349(b)
governs the dismissal of a Chapter 13 case and states that:
(b) Unless the court, for cause, orders otherwise, a dismissal of a case other than under
section 742 of this title – ... (3) revests the property of the estate in the entity in which
such property was vested immediately before the commencement of the case under this
title.
11 U.S.C. § 349.
Section 1326(a)(2) provides that:
A payment made under paragraph (1)(A) shall be retained by the trustee until
confirmation or denial of confirmation. If a plan is confirmed, the trustee shall distribute
any such payment in accordance with the plan as soon as is practicable. If a plan is not
confirmed, the trustee shall return any such payments not previously paid and not yet due
and owing to creditors pursuant to paragraph (3) to the debtor, after deducting any unpaid
claim allowed under section 503(b).
11 U.S.C. § 1326. The third sentence of § 1326(a)(2) specifically deals with the distribution of
plan payments if a plan is not confirmed.
1 Also, at the hearing on August 4, 2026, Debtor argued that the Trustee’s position as an appellee in the appeal makes
the Trustee biased in the instant contested matter, and that this is an additional reason to order the Trustee to
continue to hold the Funds. The Court finds this argument to be unpersuasive, without merit, and wholly without
support.
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There are two cases in this district that have addressed how 11 U.S.C. §§ 349(b) and
1326(a)(2) apply to funds a Chapter 13 Trustee is holding in a case that was dismissed before
confirmation: In re Kirk, 537 B.R. 856 (Bankr. N.D. Ohio 2015)(Woods, J.) and In re Tesca,
2000 WL 35485099, Case No. 05–66893 (Bankr. N.D. Ohio Nov. 28, 2006)(Kendig, J.).
In Tesca, Judge Kendig explained that the revesting directive in 11 U.S.C. § 349 appears
to be in conflict with 11 U.S.C. § 1326(a)(2), which provides in applicable part, that “[i]f a plan
is not confirmed, the trustee shall return any such payment to the debtor, after deducting any
unpaid claim allowed under section 503(b) of this title.” 2000 WL 35485099 at *2. He then
explained that Ҥ 349(b)(3) is the Code provision that governs the disposition of all estate
property upon dismissal of a chapter 13 case and that the policies expressed by Congress in
§ 1326(a)(2) are best implemented through the exercise of the court’s discretion under
§ 349(b)(3).” Id. (citing In re Lewis, 346 B.R. 89, 111 (Bankr. E.D. Pa.2006)).
Judge Woods, on the other hand, found that the specific directives in § 1326(a)(2) control
over the general directive in § 349(b)(3). In re Kirk, 537 B.R. 856, 860 (Bankr. N.D. Ohio 2015)
(citing In re Inyamah, 378 B.R. 183 (Bankr. S.D. Ohio 2007). Judge Woods explained that 11
U.S.C. § 349 “generally requires that property of the estate be returned to the debtor upon
dismissal . . . . However, § 1326(a)(2) expressly dictates the manner in which a chapter 13 trustee
should distribute plan payments if a chapter 13 plan is not confirmed prior to dismissal. Id.
In each of Tesca and Kirk, however, both judges determined that the undisbursed funds,
less the amount of administrative expenses for attorney’s fees, be returned to the debtor. Judge
Woods reaches that conclusion based on 11 U.S.C. § 1326(a)(2), and Judge Kendig reaches that
conclusion based on an administrative order governing fees in Chapter 13 cases. There is no
dispute in the instant contested matter that administrative expenses, in the form of attorney’s
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fees, should be paid from the Funds. No party has argued otherwise, and at the hearing on
August 4, 2026, no party objected to the payment of administrative expenses. The sole issue in
this contested matter, though, is what constitutes “cause” pursuant to 11 U.S.C. § 349, and
neither Tesca nor Kirk address “cause” pursuant to 11 U.S.C. § 349.
The Bankruptcy Code does not define what constitutes “cause” under § 349(b) to order
undisbursed funds paid to someone other than the debtors. In re Elms, 603 B.R. 11, 18 (Bankr.
S.D. Ohio 2019). The legislative history accompanying § 349(b) provides:
Subsection (b) specifies that the dismissal reinstates proceedings or custodianships that
were superseded by the bankruptcy case, reinstates avoided transfers, reinstates voided
liens, vacates any order, judgment, or transfer ordered as a result of the avoidance of a
transfer, and revests the property of the estate in the entity in which the property was
vested at the commencement of the case. The court is permitted to order a different
result for cause. The basic purpose of the subsection is to undo the bankruptcy case, as
far as practicable, and to restore all property rights to the position in which they were
found at the commencement of the case. This does not necessarily encompass undoing
sales of property from the estate to a good faith purchaser. Where there is a question over
the scope of the subsection, the court will make the appropriate orders to protect rights
acquired in reliance on the bankruptcy case.
H.R. Rep. No. 95-595, 95th Cong. 1st Sess. 338 (1977); S .Rep. No. 95-989, 95th Cong. 2d Sess.
48-49 (1978), U.S. Code Cong. & Admin. News 1978, p. 5787 (emphasis added).
In this district, there is a case that found cause existed such that undisbursed funds be
paid to creditors. In re Hufford, 460 B.R. 172 (Bankr. N.D. Ohio 2011) (J. Speer). In Hufford,
however, the case was dismissed after confirmation, and Judge Speer found that the terms of the
order confirming the Chapter 13 plan explicitly provided that “all funds remaining in the hands
of the Trustee at the time of dismissal or conversion shall be paid to the Chapter 13 creditors
pursuant to the terms of this confirmed plan[.]” Id. at 176. The instant case was dismissed
before a plan was confirmed, so Hufford is not analogous.
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Courts have found “cause” to preclude revesting of funds in the debtor based on equitable
considerations. For example, a court may conclude that funds should be disbursed to creditors if
the source of funds is postpetition wrongful conduct of a party. In re Genovese, 91 B.R. 831
(Bankr. E.D. Tenn. 1988). There is no wrongful conduct in the instant contested matter.
Courts have also found cause in circumstances where it would be inequitable to permit
dismissal without distribution of funds accumulated during the case when the debtor has enjoyed
the benefit of the automatic stay for a lengthy period. In re Torres, No. 99-02609, 2000 WL
1515170 (Bankr. D. Idaho 2000). In Torres, the confirmation order was entered eight months
after the confirmation hearing due to the debtors’ delay, and a voluntary dismissal was filed
immediately after the confirmation order was entered. 2000 WL 1515170 at *2. There is no
similar procedural history in the instant contested matter to raise these kinds of equitable
concerns here.
Debtor cites to In re Gonzales, 578 B.R. 627, 631 (Bankr. W.D. Mich. 2017) for the
proposition that 11 U.S.C. § 349 does not definitively resolve the treatment of post-confirmation
funds in the possession of a Chapter 13 Trustee upon dismissal. ECF No. 141 at 3. The instant
case, however, was dismissed before confirmation. When a case is dismissed before a Chapter
13 plan is confirmed, as Gonzalez instructs in its introductory paragraph, “the Bankruptcy Code
clearly directs the trustee to return the funds to the debtor after deducting allowed administrative
claims.” Id. at 628. Debtor also cites to In re Hamilton, 493 B.R. 31 (Bankr. M.D. Tenn. 2013),
arguing that Hamilton finds a bankruptcy court has broad discretion to alter the effects of
dismissal pursuant to 11 U.S.C. § 349. The Court disagrees and reads Hamilton to mean that the
scope of 11 U.S.C. § 349 itself is broad. Id. at 38 (“The scope of § 349(b) is broad, and serves to
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undo the bankruptcy case to the extent possible – to put all parties in the positions they were in
before the case was filed.) This comports with the legislative history of 11 U.S.C. §349(b).
Debtor generally argues that the Trustee should continue to hold the Funds, and Debtor
should continue to make payments to the Trustee so that if the Debtor’s appeal is successful, the
current status quo will be preserved. This is not cause. To grant this request would be to allow
Debtor to have “enjoyed use of the Trustee’s office as something akin to a court-protected
savings account during the pendency of” their appeal. In re Torres, No. 99-02609, 2000 WL
1515170, at *3 (Bankr. D. Idaho Oct. 10, 2000). This is prejudicial to Creditor, as well as all of
the Debtor’s creditors, because with no automatic stay in place, creditors would not have the
benefit of enforcing their state court rights. Debtor’s arguments do not support a finding of cause
such that the Chapter 13 Trustee should continue to hold undisbursed funds pending the outcome
of an appeal.
Creditor, in its Response and at the August 4, 2026 hearing, requests that the Funds be
sent to the state court in which it has obtained a judgment so that it may enforce its judgment,
citing In re Shields, 431 B.R. 446, 449 (Bankr. S.D. Ind. 2010) and In re Johnson, No. 19-43854,
2020 WL 1943205 (Bankr. E.D. Mich. Apr. 22, 2020). As Creditor admits, Johnson was in a
procedurally different posture than the instant contested matter. The Court finds Johnson does
not squarely address what constitutes “cause” under 11 U.S.C. § 349(b). The court in Shields did
order undisbursed funds to be sent to a state court, but the Chapter 13 Trustee was ordered to
issue the check made payable to the debtors. This kind of intervention is not appropriate in this
case because it would put Creditor in a better position than it was prepetition. “A dismissal
typically ‘revests the property of the estate in the entity in which such property was vested
immediately before the commencement of the case’ – in other words, it aims to return to the
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prepetition financial status quo.” Czyzewski v. Jevic Holding Corp., 580 U.S. 451, 456 (2017).
For this Court to order the Funds to be remitted to a state court would not return all the parties to
the prepetition financial status quo; it would put Creditor in a better position than it held
prepetition because Creditor asserts only a prepetition wage garnishment. While Creditor does
have a state court judgment, and asserts it had a prepetition wage garnishment, when this case
was dismissed, the automatic stay ceased to exist. Creditor may return to state court to continue
enforcement of its state law rights, just as every other typical creditor is free to do. Cf. In re
Marve, No. 19-13434, 2020 WL 11622509, at *3 (E.D. Mich. Sept. 28, 2020) (explaining the
rationale for why cause exists under 11 U.S.C. § 349(b) when addressing administrative expense
claimants as creditors, not “typical creditors”).
Each of 11 U.S.C. §§ 349(b) and 1326(a)(2) require the return of funds held by a Chapter
13 Trustee to a debtor who does not have a confirmed plan upon dismissal, except for
administrative expenses and unless a court finds cause exists to order otherwise. No party in this
proceeding has presented the Court with sufficient cause. The purpose of 11 U.S.C. § 349(b) is
to restore all property rights to the position in which they were found at the commencement of
the case. H.R. Rep. No. 95-595. To order the Chapter 13 Trustee to hold the Funds or to remit
them to a state court for the benefit of one creditor would not return the parties to a prepetition
status quo.
CONCLUSION
For the foregoing reasons, the Trustee’s Motion is granted, the Responses are overruled,
and the Trustee is ordered to return the Funds, except for the amount of administrative expenses,
to the Debtor, in her ordinary course of business.
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The Debtor and/or the Debtor’s employer, as well as the future income of the Debtor, is
hereby released from the supervision and control of the Court, as well as any order of the Court
requiring payments to the Trustee in this case.
The Trustee is authorized to pay to the Bankruptcy Court an amount equal to the amount
of any unpaid filing fees. Any payment made to the Bankruptcy Court for unpaid filing fees
shall be paid from funds received either from or on behalf of the Debtor prior to the dismissal of
this case and, in order to comply with Bankruptcy Rule 1006(b)(3) and any relevant statute(s),
said distribution may be made before (and possibly to the detriment of) any other authorized but
unpaid distributions and/or refunds. The Trustee is also authorized to retain the administrative
fee on funds received.
IT IS SO ORDERED.
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