455 B.R. 328
Bankr. D. Mass.2011Background
- Povah filed a pre-petition Chapter 13 which was converted to Chapter 7 and later restored, with an adversary against Hansbury & Finn, Inc. regarding a deeded 7 Lincoln Avenue mortgage and alleged predatory lending.
- The Chapter 7 Trustee filed a Report of No Distribution and abandoned the Debtor’s causes of action against Hansbury, raising questions about a potential reconversion feasibility.
- The Debtor seeks to convert back to Chapter 13, arguing feasible plan and improved circumstances, including possible recovery from the adversary proceeding.
- Hansbury challenges reconversion, arguing lack of feasibility, income, and good faith, and contends the adversary lacks estate relevance absent conversion.
- The Court denied the Motion to Convert, finding lack of feasibility and good faith, and reserved ruling on the adversary dismissal, noting related-to jurisdiction would not sustain dismissal absent conversion.
- The Chapter 7 discharge and abandonment left the adversary largely unsecured as to the estate, guiding the Court’s jurisdictional analysis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Court discretion to reconvert from Chapter 7 to Chapter 13 | Povah asserts §706(a) grants discretion to reconvert in appropriate circumstances. | Hansbury argues §706(a) limits reconversion when case was previously Chapter 7; no discretion. | Court has discretion to reconvert in appropriate circumstances. |
| Good faith and feasibility of a Chapter 13 plan | Povah argues feasible plan with reverse mortgage and asset recovery to fund payments. | Hansbury argues the plan is speculative and lacks feasibility and confirmation potential. | Debtor failed to prove feasibility and good faith; reconversion denied. |
| Jurisdiction and relation to the bankruptcy estate given abandonment | Adversary matters may impact estate assets; reconversion could enable relief. | Absent conversion, no related-to jurisdiction or ancillary relief exists. | Related-to jurisdiction is insufficient to sustain the adversary absent conversion; dismissal may follow. |
| Effect of discharge and liens on reconversion feasibility | Discharge does not erase in rem claims; potential recovery could fund a plan. | Post-discharge, unsecured debts are gone; plan would be impractical; liens remain. | Conversion futile under current record; plan unlikely to confirm. |
Key Cases Cited
- In re Boston Regional Med. Ctr., Inc., 410 F.3d 100 (1st Cir. 2005) (related-to jurisdiction can extend to bankruptcy matters that affect the estate)
- Pacor, Inc. v. Higgins, 743 F.2d 984 (3d Cir. 1984) (broad related-to jurisdiction for bankruptcy courts)
- Marrama v. Citizens Bank of Mass., 549 U.S. 365 (U.S. 2007) (109(e) and 1307 considerations in reconversion feasibility)
- In re Bange, 2010 WL 3829632 (Bankr. D. Kan. 2010) ( Court recognized discre tion to reconvert under §706(a))
- In re Masterson, 141 B.R. 84 (Bankr. E.D. Pa. 1992) (feasibility standards in reconversion analyses)
- In re Fantasia (First Nat'l Bank of Boston v. Fantasia), 211 B.R. 420 (1st Cir. BAP 1997) (feasibility and reliance on projected recoveries)
- Harris, 450 B.R. 324 (Bankr. D. Mass. 2011) (abandonment and lack of estate effects on jurisdiction)