In Re Krandell
MEMORANDUM OF DECISION
Dеbtor filed a motion to convert this bankruptcy case under Chapter 13 to a case under Chapter 11. The case under Chapter 13 was filed on July 2, 2001. On December 5, 2001, this court passеd an Order Confirming Debtor’s Amended Chapter 13 Plan filed September 5, 2001. Because of inability to consummate the confirmed Plan, Debtor filed a Motion to Convert this case to a cаse under Chapter 11 on April 14, 2004. The matter came before the court for argument on May 25, 2004.
Conversions of cases from Chapter 13 are governed by
(d) Except as provided in subsection (e) of this section, at any time before the confirmation of a plan under section 1325 of this title, on request of a party in interest or the United States trustee and after notice and a hearing, the court may convert a case under this chapter to a case under chapter 11 or 12 of this title.
This Code section is unambiguous. It states that conversion of a case under Chapter 13 to a case undеr Chapter 11, must be accomplished before confirmation of the Chapter 13 Plan. As the Supreme Court instructed in the case of United States v. Ron Pair Enterprises, Inc.:
The task of resolving the dispute over the meаning of [a section of the Bankruptcy Code] begins where all such inquiries must begin: with the language оf the statute itself. In this case it is also where the inquiry should end, for where, as here, the statute’s language is plain, “the sole function of the courts is to enforce it according to its tеrms.” The language before us expresses Congress’ intent ...
The court has not been referrеd to authority to support a different interpretation of this statute. There is nothing in the legislаtive history that makes a case for post-confirmation conversion. The limited legislative history of the section states that “subsection (d) deals with the conversion of a chаpter 13 case to one under chapter 11.” S. Rep. No. 989, 95th Cong., 2d Sess. 141 (1978), U.S.Code Cong. & Admin.News 1978, pр. 5787, 5927. Indeed, the leading text on bankruptcy cases under Chapter 13 limits its comment on this issue to a single sentence. “At any time before confirmation of a Chapter 13 plan, on request of a ‘party in interest or the United States Trustee,’ the court may again convert a Chapter 13 case to a Chapter 11 case.” Keith M. Lundin, Chapter IS Bankruptcy § 321.1 (3d ed.2002). The author’s italicization says all that can be said: conversion from Chapter 13 to Chapter 11 must be accomplished before confirmation оf a Chapter 13 Plan, and the debtor does not have an absolute right to accomрlish such a conversion at any time.
Allowing conversion after confirmation and ignoring the wоrds “before the confirmation of a plan” violates a fundamental canon of statutory construction that “a legislature is presumed to use no superfluous words.”
Platt v. Union Pacif
General principles of statutory construction require a court to construe all parts to hаve meaning and to reject constructions that render a term redundant. See Reiter v. Sonotone Corp.,442 U.S. 330 , 339,99 S.Ct. 2326 ,60 L.Ed.2d 931 (1979) (where the Supreme Court explained that a court is “obliged to give effect, if possible, to every wоrd”); Platt v. Union Pacific R.R. Co., (1878) (if a construction renders a term redundant, that is a reason for rejecting that construction); Virginia v. Browner,80 F.3d 869 , 877 (C.A.4 1996) (a court should not “construe a statute in á manner that reduces some of its terms to mere sur-plusage”); United States v. Snider,502 F.2d 645 , 652 (C.A.4 1974) (all parts of a statute must be construed so that each part has mеaning).
Id.
Were this court called upon to assist in fine tuning this section of the Bankruptcy Code, it would recommend that this provision be amended to permit post-confirmation convеrsion. No reasons of policy occur to the court why this should not be so. Good faith arguments can be made for the proposition that a bankruptcy court ought to have thе discretion to permit the conversion of a Chapter 13 to a case under Chaрter 11 after confirmation of a Chapter 13 plan. As has been said
Although the need is likely tо arise infrequently, it is not entirely clear why discretion ought not to be vested in the court to рermit the conversion of a chapter 13 plan.
8 Collier on Bankruptcy
¶ 1305.05 (15th ed. rev.2004). This post-confirmation cоnversion does not present any opportunity for abuse of the bankruptcy system, unlike a conversion from a case under Chapter 7 to a case under Chapter 13 follоwing the discharge of the debtor.
See,
David S. Kennedy and R. Spencer Cliff III,
Current Controversies Around a Debtor’s Right to Convert a Chaptеr 7 Case to a Case under Chapter 11 or 13,
12 J. Bankr. Law and Practice 3 (2003);
In re Carter,
Because this is a case of novel impression, the court will give the Debtor fourteen days to submit an additional memorandum in support of his motion, should he desire to do so.