617 B.R. 841
Bankr. D. Md.2020Background
- Debtor Gregory Trepetin, an individual small-business owner, filed a chapter 7 petition on Feb. 10, 2020; trustee filed a Report of No Distribution (no-asset case); a stay-relief motion was pending.
- On June 11, 2020 the Debtor moved under 11 U.S.C. § 706 to convert the case to chapter 11 and to elect Subchapter V, and simultaneously requested extensions of the §1188 (60‑day status conference) and §1189 (90‑day plan) deadlines.
- The court granted conversion and the Debtor elected Subchapter V, but the §1188/§1189 deadlines had already expired if measured from the original petition/order‑for‑relief date under §348(a).
- §348(b) resets certain deadlines on conversion for enumerated provisions but does not expressly mention Subchapter V deadlines; §§1188 and 1189, however, permit extensions when delay is due to circumstances for which the debtor should not justly be held accountable.
- No creditor opposed the extension request; the court adopted a standard analogous to chapter 12’s §1221 (involving chapter‑12 case law) requiring that inability to meet the deadline be due to circumstances beyond the debtor’s control.
- Holding: the court found no bad faith or dilatory conduct, concluded the Debtor should not be justly held accountable for the missed deadlines, and granted extensions resetting the relevant Subchapter V deadlines from the conversion date.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Availability of Subchapter V after conversion from chapter 7 | Trepetin: eligible and may invoke Subchapter V post‑conversion | Opposing view: conversion should not permit invoking Subchapter V if its deadlines already expired under original order‑for‑relief date | Court: Subchapter V is available; debtor may elect and proceed under Subchapter V |
| Effect of §348 on Subchapter V deadlines | Trepetin: conversion makes compliance with §1188/§1189 impracticable and extensions are appropriate | Textualist: §348(a)/(b) fix order‑for‑relief date and omission of Subchapter V from §348(b) means deadlines run from original petition date | Court: §348 omission does not preclude extensions; court may extend/reset deadlines consistent with statutory scheme |
| Standard to extend §§1188/1189 (“should not justly be held accountable”) | Trepetin: conversion and chapter‑7 procedural differences are circumstances beyond his control | Opposing: standard should be strict; debtor must clearly demonstrate inability to file due to factors outside control | Court: applies a chapter‑12/§1221‑style standard—debtor must show inability due to circumstances beyond control; this standard satisfied here |
| Application to facts (grant extension?) | Trepetin: timely sought conversion/extension, complied with chapter 7, no dilatory conduct | Potential opponents: delay could prejudice creditors or reflect manipulation of timing | Court: no bad faith or prejudice shown; grants extensions measured from conversion date |
Key Cases Cited
- Davis v. Michigan Dep’t of Treasury, 489 U.S. 803 (1989) (statutory language must be read in context)
- Ransom v. FIA Card Servs., N.A., 562 U.S. 61 (2011) (contextual reading of statutory terms supports interpretation)
- United States v. Morton, 467 U.S. 822 (1984) (courts should examine statutory provisions in context)
- In re Ventura, 615 B.R. 1 (Bankr. E.D.N.Y. 2020) (court permitted extension/reset of SBRA deadlines post‑conversion)
- In re Bello, 613 B.R. 894 (Bankr. E.D. Mich. 2020) (debtor may elect Subchapter V even if case commenced before SBRA effective date)