Petition Signed By Corporate Officer Was Improper, But Correctable
IN RE: IFC CREDIT CORP. (December 5, 2011)
Northbrook Bank & Trust had a fraud suit pending against IFC Credit Corporation when IFC declared bankruptcy on July 27, 2009. The Chapter 7 petition filed on that day was signed by IFC's non-lawyer president. IFC filed an amended petition -- signed by a lawyer -- the following day. The Bank refiled its complaint in the bankruptcy proceeding. The Bank and the trustee settled a preference dispute conditioned on a finding of jurisdiction. The bankruptcy court had rejected the Bank's argument that the bankruptcy proceeding was void because the original petition was not signed by a lawyer. Judge Manning (N.D. Ill.) agreed. The Bank appeals.
In their opinion, Seventh Circuit Judges Bauer, Posner, and Wood affirmed. The Court recognized the rule (and the practical reasons behind) that corporations are not permitted to represent themselves. But that does not make it an element of subject matter jurisdiction. The Supreme Court in recent years has limited the number of rules that actually involve subject matter jurisdiction. Subject matter jurisdiction is all about the competence of a court to decide case, not about the conduct of the parties in those cases. After considering the potential consequences, the Court concluded that the rule against pro se corporate litigants was not jurisdictional. Of course, the bankruptcy court could have dismissed the petition had it discovered the error before it had been corrected. Here, IFC amended the petition pursuant to Bankruptcy Rule 1009(a). Although that rule does not address relations back, the Court concluded that a bankruptcy court could allow the petition to relate back to the original filing.
Michael Rigney practices in the law offices of GVC Ltd. in Chicago. In this blog, he reports on select