*2 CUDAHY, Before EASTERBROOK KANNE, Judges. Circuit and EASTERBROOK, Judge. family run a Patsy and Sadler Delbert Bankruptcy Code Chapter 12 of the farm. The family farmers. benefits for offers Chapter 13 petition filed a under Sadlers 1986, September two Code the 1978 effect.† Chapter took months before bankruptcy law to used the The Sadlers Bank of First National avoid a lien the crops. County on their Perry had obtained principal lend one of their The Bank was $173,000. ers, When advancing some suit and pay, the filed did not Bank Sadlers This prejudgment attachment. obtained to seize the Sad- lien, inducing the sheriff crops, led to soybean and lers’ corn judgе bankruptcy filing. The Chapter 13 prefer a voidable lien as set aside the new consideration without ence—a transfer filing. days during the 90 before 547(b)(4)(A). money The from U.S.C. § segregated pending crops of the sale bankruptcy in the proceedings further case. bankruptcy judge February payments plan of
approved the Sadlers’ later the months Chapter 13. Two better off they would be decided try to They did not Chapter 12. 24, Judges, 302(a) Bankruptcy United States September petition on Sadlers filed their † Trustees, Bankruptcy by legislation Family Act of created Farmer 1986, 99-554, signed by on October the President 100 Stat. 3088. Pub.L. days going later. Section into force 30 directly Chapter convert from to conversion from 13 to bankruptcy Only ter 12. Instead asked the was desirable. objection the Bank’s bankruptcy judge dеny to convert the 13 case led the the Sad- lers’ motion. Section and then convert the offered the *3 bankruptcy judge way give a Chapter case to 12. The Bank the Sadlers and two the of the objected. filing despite benefit earlier date Bankruptcy other creditors the denial of conversion: the Judge dismissal of a Kearns denied the Sadlers’ motion. preferences case reinstates 1307(a) avoided Although gave 11 U.S.C. the Sad- § court, cause, “[ujnless the for orders other- every right Chapter lers to convert to 7 on judge wise”. The district whim, concluded that parallel right there is no to move to the benefits of Chapter conversion to concluded, Chapter Judge 12. Kearns on coupled the with desire to avoid a windfall 302(c)(1) the basis of of the statute creat- § Bank, for specify the were “cause” to that ing Chapter that cases filed before the dismissal did not reinstate the Bank’s Chapter may 12’s effective date not be lien. Chapter converted tо 12. See In re Sin- clair, (7th Cir.1989). 1340 He difficulty The with the district however, suggested, that the Sadlers con- approach 302(c)(1) court’s is that bans the § dismissing Chapter sider proceed- their pending Chapter conversiоn of 13 cases to
ing, right a matter of under 11 U.S.C. Chapter 12. Sinclair. More: both the 1307(b), filing Chapter and a new 12 case. § bankruptcy judge and judge the district up sugges- The Sadlers took him on that any inability viewed to cоnvert as some tion, commencing Chapter proceeding thing respect to be overcome rather than We must decide the effect of ed. possibility, Sinclair addressed this this dismissal and reinstitutiоn on the use too: 547(b) to avoid the Bank’s lien. § The request. debtors made an alternative They asked the bankruptcy judge to al- A case converted chap from one low them to dismiss their ter of the 1978 Code to another all retains case and start a new one under Chapter original filing of the dates. 11 U.S.C. 12. This would avoid the ban 348(a). dismissed, When a proceeding is § 302(c)(1).... The do not § however, [debtоrs] transfers avoided under 547 are § prejudice, want to dismiss the case with 349(b)(1)(B). Any reinstated. U.S.C. § debts, pay all of their accrued and then filing new takes its own date—which here bankruptcy file a fresh action that could substantially days was more than 90 after go refiling. forward from the date of the Bank’s lien surprisingly, attached. Not want, They instead, to file a the Bank believes that it is entitled to the case that would bе administered as if it money from the sale of the corn soy and had been commenced the [when beans 1986. The Sadlers commenced an 11 case was by This is conversion filed]. adversary proceeding against the Bank in another name. Statutes control more case, the contending that the nomenclature; they than are addressed filing of the 13 case “tolled” the Proposals tо conduct. for time for avoiding preferences. The bank proposals another name are for conver- ruptcy judge favor, ruled in the Sadlers’ properly sion. This one rejectеd on explaining that relation back “effectuates authority 302(c)(1). the of § spirit and purposes Bankruptcy Although convert, Code. unable to the 870 F.2d at bankruptcy 1345. The and gave debtors’ dismissal and refiling judges exactly immediate district the Sadlers the day on the next says should still have the same relief may pro- courts not relation back as if this had been con vide.
verted, especially since the debtors utilized passage Does afford § this method at this suggestion." Court’s We think around Sinclair1 not. The
The district court bankruptcy affirmed on a different court did not find “cause” un theory. judge The district believеd that der and was never asked to. carry plan con- out the why at explained Sadlers for the Counsel They ask February 1987. do not firmed in case from the he took over argument: oral this, keep the want to that unaware lawyer and was however — another Chapter 12 and to retain benefits avoided had been lien Bank’s soybean crops too. the corn and funds from bankruptcy This also means eggs; these to unscramble It is too late itself “cause”. is not invitation judge’s years mak- gone four without have the Sadlers promising not judge The in their payments called for ing the be reinstatemеnt dismissal equitable They do not want an plan. ter 13 subject never consequence. without they would have position restoration of the events, bankruptcy all up. At came dismissal; they seek occupied but for away rights give may *4 conversion, very the of the full benefits they that debtors by promising creditors they may not have. holds thing Sinclair way. particular act in a to are entitled eq- have better would making in a Other creditors is correct the Whether Prefer- Sadlers. claims do the uitable than par of a consequences the prediction about rata- designed to are aсhieve ence actions may be that question is a action ticular among creditors. Several ble distributions v. Ernst Cf. Osterneck appeal. on pursued Bank filed claims in addition to the lenders 109 S.Ct. Whinney, 489 U.S. & сredi- proceeding. These in the 13 (1989), explaining 146 987, 993, L.Ed.2d protest the dismis- might to tors be entitled timing rules exceptions to equitable that to them access refiling that denied sal and per best, party has only if “а apply, at realized from the of cash any share the done, which, properly if an formed act if not crops. Most soybean 1986 corn and has ... him more [give time] would dealing under cases with “сause” all of the judicial assurance specific received to by creditors 349(b) efforts arose from properly has this act been that officer by the of recoveries retain the benefits “prop no there was Given done.” Trust, Realty re In Gonic E.g., estate. refiling to dismissal and way to er” use Cir.1990); United (1st 627-28 909 F.2d conversion; effect as produce the same Bank, State v. Standard States givе did not bankruptcy judge anyway, the re Suc- Cir.1990); (8th Professional that dismissal “specific assurance” International, Inc., 22 B.R. cess Seminars original the maintain would reinstitution the None of (Bkrtcy.S.D.Fla.1982). action prеference any later filing date in sought relief. creditors has other Sadlers’ Chapter 12. under the stand, to only the claimants things As 349(b) means an “Cause” Be- Bank. and the funds are end to make an Desire acceptable reason. two, the better the Bank has tween the adequate an is statute not run around a money that borrowed claim: the Sadlers specified that Congress reason. Case, In re repay. See they yet have to of date on the effective pending 13 cases The Sadlers (Bkrtcy.D.S.D.1983). B.R. 844 It may not be converted. Chapter 12 to dismissal-refiling not maneuver used the treat to еxpress this decision defeat other creditors rights of their protect file a new to debtors’ wish “cause” the as money to themselves. to divert more but relating all 12 case with dates them to allоws in the 1978 Code Nothing proceeding. original to the back succeed. Sinclair, be, in we remarked as That would Reversed. part not It is name. by another creative out office seek judiciаl concurring. CUDAHY, Judge, statutes. ways to defeat circum- particular that agree I (pending when contend Although the Sadlers of this stances eq “cause” favor, enacted) no there cannot be is their there equities cut in refusing section Congress for with accordance to achieve what claim uitable preferences. Some eq reinstate avoided might have an just The Sadlers bade. might lead opinion majority language in the to return if wanted argument uitable that there could never be one to conclude preserve
such “cause” if the result were to
an avoidance in the transition from a
ter 13 case to case. But it is policy me clear to of section
302(c)(1)of Public Law 99-554 should be unyielding
regarded as so as to render the
exception to section a dead letter I
under all circumstances. have mind
circumstances where the interests of unse- subject creditors than the other
cured implicated. the avoided transfer are
majority opinion suggests possibility
equitable considerations these circum- course,
stances. such Of considerations
exist, and we should be understood to be
acting only today respect specif- with to the 302(c)(1)
ic facts before us. Section of Pub-
lic Law 99-554 as construed
certainly precludes directly or
indirectly pending from 13 cases
before the enactment of 12 to
Chapter 12. But if such “conversion” oc- here, objection,
curs without as face prohibitiоn, the “cause” mentioned
section need always be conclu-
sively foreclosed if the interests of other respect,
creditors are involved. In this
legislative history 302(c)(1)ap- of section
parently contains no reference to section subject or the that it addresses. The
above apparently considerations become
more relevant if and when seek debtors post-enactment
dismissal of
cases, a circumstance to which section
302(c)(1)is not directed. Freedman, Bornstein,
Alan M. H. Bruce Bornstein, Ill., Chicago, Freedman & for plaintiff-appellant. Resis, Murphy, Michael Maureen Z. Bri- Joyce EVANS, Plаintiff-Appellant, Clarke, Burke, an J. Querrey, Thomas P. v. Harrow, Ill., Kennedy, Chicago, Gulanick & WEST, Defendant-Appellee.
Maxine defendant-appellee. No. 90-2083. POSNER, Before FLAUM Appeals,
United States Court of RIPPLE, Judges. Seventh Circuit. Circuit Argued April FLAUM, Judge.
Decided Maxine West owns a two-bedroom condo- Estates, minium in Hoffman Illinois. She placed newspaper an advertisement in a