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