Conversion from Chapter 7 to Chapter 13 May or May Not Be an Absolute Right
by David G. Baker
Three Bankruptcy Appellate Panels recently have considered the question of whether the right to convert a case from chapter 7 to another chapter (usually chapter 13) pursuant to §706(a) is absolute. In early August, the 9th Circuit BAP held that the right is absolute except in the two circumstances explicitly set forth in the statute: (1) the case has been previously converted; and (2) the debtor is not qualified to be a debtor under the other chapter. The 9th Circuit BAP refused to find a “good faith” requirement implicit in the statute. In re Croston, 2004 WL 1908111 (9th Cir. BAP (Ariz.)). The 10th Circuit BAP reached the same conclusion in Miller v. United States Trustee, 303 B.R. 471 (10th Cir. BAP 2003), holding that a debtor has a one time absolute right to convert. In so holding, the court relied primarily on the legislative history and the plain meaning of the statute.
On Sept. 10, however, the 1st Circuit BAP held that the right is not absolute and may be denied in extreme circumstances, which the panel found to be present in the case before it. In re Marrama, 2004 WL 2011273 (1st Cir. BAP (Mass.)). The 1st Circuit Panel rejected the use of the bankruptcy court’s power under §105 of the Code. The debtor has submitted a motion for rehearing.
Winter Leadership Conference to Feature Joint Meeting with Professional Compensation Committee
At the ABI’s Annual Winter Leadership Conference, the Consumer Bankruptcy Committee will hold a joint meeting with the Professional Compensation Committee. Topics for discussion will include bankruptcy court control over the professional fees charged by creditors in various contexts including proofs of claim, reaffirmation agreements and student loan collections. Speakers will also discuss the question of whether unliquidated legal fees arising from domestic relations litigation are nondischargeable pursuant to 11 U.S.C. §523(a)(5) and/or (a)(15). The presentation will also include a discussion of disclosure requirements for debtor’s counsel, waivers of conflicts of interest and the implications of recent decisions in the Jore and Fleming cases. More information, including the roster of speakers, will be included in the Committee’s November newsletter, issued just before the conference.