Facts and Procedural History
Toibb, the petitioner, filed for Chapter 7 bankruptcy. Among his assets, Toibb held stock in a power company. After Toibb filed a petition under Chapter 7, the board of the power company offered to purchase the stock for $25,000. Upon discovering the value, Toibb moved to convert his Chapter 7 case into a Chapter 11 case to prevent his assets from being liquidated.
The Bankruptcy Court initially granted the motion, but later ordered Toibb "to show cause why his petition should not be dismissed because petitioner was not engaged in business and, therefore, did not qualify as a chapter 11 debtor." Toibb argued that he was engaged in a business, or in the alternative, that individuals who do not own businesses are also eligible for relief under Chapter 11. The bankruptcy court rejected these arguments and, based on Wamsganz v. Boatmen's Bank of De Soto, held that the petitioner "failed to qualify for relief under Chapter 11."
Toibb appealed to the United States District Court for the Eastern District of Missouri, which affirmed the decision of the bankruptcy judge. On further appeal, the United States Court of Appeals for the Eighth Circuit adhered to the precedent that it had earlier set in Wamsganz and affirmed the decisions of the lower courts.
Toibb petitioned the United States Supreme Court for a writ of certiorari, which was granted because of a conflict of circuits: the United States Court of Appeals for the Eighth Circuit had held that only businesses and business owners can file for chapter 11, but in a different case, the United States Court of Appeals for the Eleventh Circuit had held that individuals can file for Chapter 11 even if they do not own a business.
Read more about this topic: Toibb V. Radloff
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