You are here

In re Wetter (Case No. 19-71010) 10.14.20

Chapter 7 Debtor filed a motion to convert his case to one under Chapter 11 so that he could amend his petition to elect Subchapter V status.  The Trustee and two creditors objected to the conversion.   Citing Marrama, the Court noted that a debtor should not be able to convert his case when conversion would result in immediate dismissal or reconversion.  After analyzing the recent cases of In re Trepetin and In re Seven Stars on the Hudson Corp., along with the deadlines imposed by Sections 1188(a) and 1189(b), the Court noted that it sees no reason why a delayed conversion to Subchapter V cannot occur when the Section 1189(b) plan filing deadline can be extended by the Court, when no party objects to such conversion.  However, in this case, the Debtor has been evasive and misleading about the true nature of his involvement with an LLC owned as tenants by the entirety with his spouse and gave conflicting information as to ownership and transfer dates to the Trustee, the United States Trustee and two different lenders. If converted to Chapter 11 and Subchapter V elected, this Court would decline to extend the time for the Debtor to file a plan under Section 1189(b) given the Debtor’s conduct.  Because the Debtor would immediately run afoul of Section 1112(b)(4)(J) if the motion to convert were granted and the election made, the Court denied the motion to convert.  

Wednesday, October 14, 2020
Best Interests
Chapter 11 Issues
Chapter 7 Issues
Conversion and Dismissal
Subchapter V