No. 21-6004 ___________________________

In re: JACOB LEVITT and PAIGE LEVITT,

Debtors.

------------------------------

JACOB LEVITT and PAIGE LEVITT,

Appellants

v.

JILL R. JACOWAY, Trustee, and DANIEL J. CASAMATTA, U.S. Trustee,

Appellees ____________

Appeal from United States Bankruptcy Court for the Western District of Arkansas – Fayetteville ____________

Submitted: September 21, 2021 Filed: November 18, 2021 ____________ Before NAIL, Chief Judge, SALADINO and RIDGWAY, Bankruptcy Judges. ____________

RIDGWAY, Bankruptcy Judge. Jacob and Paige Levitt appeal the bankruptcy court’s 1 orders (1) granting in part and denying in part the chapter 7 trustee’s application to pay her law firm as attorney for the trustee, and (2) denying the debtors’ motion to remove the trustee, among other findings not at issue here. Prior to considering the merits of the issues raised on appeal, we must first address the issue of standing. For the reasons that follow, we find that the debtors lack standing, and we therefore dismiss the appeal.

BACKGROUND

The debtors have an extensive history of filing bankruptcy cases. 2 They filed the chapter 13 case now before us in November 2018; it was subsequently converted to a chapter 11 case and then to a chapter 7 case. Ms. Jill Jacoway was appointed as the trustee and filed an application to employ her law firm to provide legal services on behalf of the estate. In an affidavit of disinterestedness that accompanied her application, the trustee stated that neither she nor her law firm had any connection with the debtors, their creditors, or any other party in interest.

The trustee proceeded to administer the estate, which included an investigation into three businesses the debtors reported as assets – each with an assigned value of $1.00 on the debtors’ schedules – and an unidentified claim against a third party. After completing her investigation, the trustee initially determined the case was a no asset case. Subsequently, however, she filed a motion to sell property of the estate after receiving an offer to purchase the debtors’ 100% membership interests in the three businesses, together with any individual claims the debtors held against certain creditors, for $45,000.

1 The Honorable Ben Barry, United States Bankruptcy Judge for the Western District of Arkansas Fayetteville Division. Judge Barry retired on April 25, 2021. 2 They filed two chapter 13 cases, both of which were dismissed for failure to make plan payments, before filing their only bankruptcy case in which they successfully received a discharge: a chapter 7 case in 2013, in which Ms. Jacoway was appointed as the trustee. The debtors filed two additional chapter 13 cases – which were dismissed for failure to file required information – before filing this case. 2 The debtors filed amended schedules in which they claimed the three business were collectively worth $340,001 and the “rights to sue” were valued at approximately $100,000. They objected to Ms. Jacoway’s motion to sell the assets for $45,000, but the bankruptcy court approved the sale of the estate property over their objection. Notably, the debtors claimed $22,713.74 of the proceeds exempt, and the trustee paid them that amount from the $45,000 sale. The debtors did not appeal the bankruptcy court’s order approving the sale.

Ms. Jacoway filed an application for compensation on behalf of her law firm for service