In re Woodruff (17-70070)

The Court denied the Debtor’s motion to convert his Chapter 7 case to a Chapter 11 pursuant to 11 U.S.C. § 706(b).  The issues before the Court were whether a debtor’s right to convert to a Chapter 11 is absolute and, if not, under what circumstances a court should deny a debtor’s request for conversion.  The Court held a debtor’s right to convert is not absolute.  Rather, where the debtor’s conduct would constitute grounds for immediate reconversion or dismissal, a court may deny conversion.  The Court determined the totality of the circumstances surrounding this case clearly indicated conversion would immediately create grounds to dismiss or reconvert the case.  In making this determination, the court considered the nonexhaustive factors set forth in 11 U.S.C. § 1112(b)(4) and the debtor’s bad-faith conduct.

Friday, January 19, 2018