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Advanced Control Solutions, Inc. v. Justice
639 F.3d 838
8th Cir.
2011
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Background

  • Justice filed for bankruptcy protection under Chapter 13.
  • Advanced Control Solutions objected to Justice’s Chapter 13 plan.
  • Justice converted the case to Chapter 7 after objections.
  • The bankruptcy court found a presumption of abuse under 11 U.S.C. § 706(b)(2) and ordered reconversion to Chapter 13 or dismissal.
  • Justice consented to reconversion by moving to convert back to Chapter 13; the court granted the motion.
  • Advanced Control Solutions appealed to the district court, which affirmed; the funds disputed the reconversion authority.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether §707(b)(1) authorizes reconversion to Chapter 13 after abuse is found Advanced Control Solutions argues §707(b)(1) lacks reconversion mechanism. Justice contends §707(b)(1) permits conversion with debtor consent when abuse is shown. §707(b)(1) authorizes reconversion to Chapter 13 with consent.
Whether §706(a) controls reconversion and precludes §707(b)(1) Advanced Control Solutions asserts §706(a) governs reconversion and blocks §707(b)(1) use. Justice argues §706(a) is separate and not to override §707(b)(1). §706(a) does not co-opt §707(b)(1) authority.
Whether Justice's consent to reconversion was effective Advanced Control Solutions maintains consent was not properly obtained. Justice consented by filing the reconversion motion. Consent was effectively given; reconversion proper.

Key Cases Cited

  • Ransom v. FIA Card Servs., N.A., 131 S. Ct. 716 (U.S. 2011) (means-test abuse may permit dismissal or conversion with debtor consent)
  • Marrama v. Citizens Bank of Mass., 549 U.S. 365 (U.S. 2007) (distinguishes between conversion rights and liquidation)
  • Resendez v. Lindquist, 691 F.2d 397 (8th Cir. 1982) (applies § 707(b)(1) to conversions)
  • Paracelsus Healthcare Corp. v. Philips Med. Sys., Nederland, B.V., 384 F.3d 492 (8th Cir. 2004) (statutory language governs, plain meaning controls)
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Case Details

Case Name: Advanced Control Solutions, Inc. v. Justice
Court Name: Court of Appeals for the Eighth Circuit
Date Published: May 17, 2011
Citation: 639 F.3d 838
Docket Number: 10-3168
Court Abbreviation: 8th Cir.