Creditor of a corporate Subchapter V debtor filed a complaint seeking a determination of nondischargeability under 11 U.S.C. §§ 1192 and 523(a)(2), (3), and (6). The debtor moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), asserting three bases for dismissal: (1) the discharge provisions of § 1192—and, by extension, the discharge exceptions in § 523(a)—apply only to a debtor who confirms a plan under 11 U.S.C. § 1191(b), and do not apply to the debtor, whose plan was confirmed under § 1191(a); (2) even assuming the debtor’s plan was confirmed under § 1191(b), § 1192 does not change the scope of the discharge exceptions identified in § 523(a), which apply only to individual debtors, not to corporate debtors; and (3) the debtor is not eligible for a discharge because under § 1141(d)(3), a corporate debtor who confirms a liquidating plan and stops operating a business receives no discharge.
The Court concluded dismissal was warranted because the discharge provisions of § 1192 (and thus the discharge exceptions on which the creditor relied) do not apply to a debtor whose plan was confirmed under § 1191(a). Because the debtor’s plan was confirmed under § 1191(a), the creditor failed to state any claim under § 523(a) upon which relief could be granted. This ruling mooted the need to decide whether § 523(a) applies to a corporate debtor who confirms a plan under § 1191(b), an otherwise complex issue causing widespread disagreement in the courts. Finally, the Court concluded that while § 1141(d)(3) may prevent the debtor’s discharge, it provided no alternative grounds for dismissal at the pleading stage, due to questions of fact regarding whether the debtor’s plan had been consummated and whether the debtor’s postconfirmation activities constituted engaging in business.