Bankruptcy Rule 1011(a), like its predecessors, former Bankruptcy Rule 112 and Section 18(b) of the Bankruptcy Act, former 11 U.S.C. ยง 41(b) (repealed), did not allow creditors and other parties in interest to contest an involuntary petition. See Carlson Plywood Co., Inc. v. Vytex Plastics Corp., 519 F.2d 556, 557-58 (7th Cir. 1975); Commercial Credit Corp. v. Skutt, 341 F.2d 177, 179-80 (8th Cir. 1965). Superseded custodians do not enjoy an absolute right to intervene in involuntary cases but where, as here, a substantial jurisdictional issue has been raised concerning the entry of the order for relief, this Court possesses the power, in its discretion, to permit intervention.
Thus, in Commercial Credit Corp. v. Skutt, 8 Cir., 1965, 341 F.2d 177, where the petition was challenged as "so fatally defective" on its face as to deprive the Bankruptcy Court of jurisdiction, the Eighth Circuit has this to say. "This contention overlooks the fact that the Congress, not the pleadings, vests the District Court with the power or right to act in bankruptcy proceedings.
Both parties rely on one other decision which clearly supports only debtors' position. Commercial Credit Corp. v. Skutt, 341 F.2d 177 (8th Cir. 1965). We will note simply that defendants' committed what we hope was a simple error when they cited as precedental the Eighth Circuit's description of the lower court decision, rather than the actual holding of the case.
Further, it can modify or vacate its order so long as no intervening right has become vested in reliance thereon. Commercial Credit Corp. v. Skutt, 341 F.2d 177, 181 (8th Cir. 1965); Castaner v. Mora, 234 F.2d 710, 714 (1st Cir. 1956) (referee in bankruptcy can reconsider, amend, or vacate an order). Thus, the bankruptcy court had equitable power to revoke its order partially confirming the Chinichians' plan once it recognized the Chinichians did not file their plan in good faith as required by section 1325(a)(3).
Opposing this general rule is the well-established rule that a bankruptcy court has wide latitude to reconsider and vacate its prior decisions, so long as the proceedings have not been terminated, and no intervening rights have become vested which would be disturbed by a modification or reconsideration of the court's decision. Pfister v. Northern Illinois Finance Co., 317 U.S. 144, 63 S.Ct. 133, 87 L.Ed. 146 (1942); Wayne United Gas Co. v. Owens-Illinois Glass Co., 300 U.S. 131, 57 S.Ct. 382, 81 L.Ed. 557 (1937); Commercial Credit Corp. v. Skutt, 341 F.2d 177 (8th Cir. 1965); In re McGoldrick, 121 F.2d 746 (9th Cir. 1941). In Wayne Gas, supra, the Supreme Court seemingly stated that a bankruptcy court can vacate its decision even after an appeal thereof has been perfected:
In re Jack Kardow Plumbing Co., 451 F.2d 123, 129 (5th Cir. 1971). Accord, In re Highley, 459 F.2d 554, 556 (9th Cir. 1972); Commercial Credit Corp. v. Skutt, 341 F.2d 177, 179 (8th Cir. 1965); In re Carden, 118 F.2d 677, 679 (2d Cir. 1941), cert. denied, 314 U.S. 647, 62 S.Ct. 91, 86 L.Ed. 519; In re Western Auto Associate Store, 295 F. Supp. 566, 570 (W.D.Va. 1968); In re Tanner, 242 F. Supp. 172, 174 (M.D.Pa. 1965); 2 Collier, Bankruptcy ยถ 18.33, 18.48 (14th ed. 1975). The reasons for this change were stated in the House Report on the Act:
This becomes even more evident upon a close consideration of the effects of a successful challenge to the jurisdiction of the Referee in the case at bar. For another case which held that a creditor has no right to challenge the pleadings in opposition to the petition in bankruptcy, see Commercial Credit Corporation v. Skutt, 341 F.2d 177 (8th Cir. 1965). If Amstan were to prevail in its assertion that the bankruptcy court was without jurisdiction to adjudicate the company bankrupt, the adjudication on the involuntary petition filed on 23 December 1966 might have to be voided and bankruptcy proceedings on a new petition would be required, according to the maxim ex nihilo nihil fit. Since under ยง 60, sub. a of the Act a transaction is vulnerable as a preference only if it occurs within four months of the filing of the petition in bankruptcy, the assignments to Amstan in August and October of 1966 could obviously not be treated as preferential transfers unless the new petition were assigned the filing date of the allegedly defective petition.
The Bank sought to intervene while this case was pending on appeal, and was granted that right subject to further orders of the Court. It seems clear that under the statute a creditor has no interest in the date of adjudication and may not attack an adjudication. Commercial Credit Corp. v. Skutt, 341 F.2d 177 (8 Cir. 1965); Citizens Nat'l Bank v. Speer, 202 F.2d 491 (5 Cir. 1953). The Bank's brief is accepted and was considered as an amicus curiae brief.
The trustee is both an officer of the court and a representative of the bankrupt's creditors and has a duty to realize the maximum from the estate of the bankrupt for distribution to the creditors. In re Luther, 465 F.2d 19 (9th Cir. 1972); Commercial Credit Corp. v. Skutt, 341 F.2d 177 (8th Cir. 1965); DePinto v. United States, 407 F. Supp. 5 (D.Ariz. 1976), aff'd on other grounds, 585 F.2d 405 (9th Cir. 1978). Commonly, the interim trustee continues to serve, and an election is never held.
Section 70(c) vests the trustee with status as a lien creditor as of the date of the petition in bankruptcy. Commercial Credit Corp. v. Skutt, 341 F.2d 177, (8th Cir. 1965). At the date Schalk filed his petition in 1976, Belle Bland Bank had already perfected its security interest in the trailer by virtue of the title application and issuance in October of 1973.