*3 MARLAR, RYAN, Before PERRIS and Bankruptcy Judges.

OPINION MARLAR, Bankruptcy Judge. OVERVIEW Appellant Liquidating Corpora- Pioneer (“PLC”) tion imple- was formed 1992 to investor inter- title to all the provided that Plan in the con- the confirmed ment auto- of the estate “shall ests and assets bankruptcy case. debtors’ solidated Corpora- Liquidating matically vest granted the bankruptcy court Date.” Joint Plan the Effective tion as of motion to convert Trustee’s States United at 23. 7,1 a motion that the case to by the investor claim- part, prompted, any owner- given were not The investors their distributions in PLC. The Joint ship voting ants’ dissatisfaction interest order, among oth- voluntary conversion for the transfer to date. The Plan called interests accountings file and all investors’ required PLC to PLC of things, er of trusts as well the notes and deeds receipts and disbursements. of its thereof, exchange for a any proceeds court abused contends PLC, to be satisfied from right payment the case for by converting its discretion *4 each inves- assets based on from PLC’s cause, independent and that PLC was net loss. tor’s answerable to which was not corporation by persuaded are not the court. We board of a seven-member PLC consisted and AFFIRM. arguments, directors, were whose members autho- of with years, longer for five or

rized serve were also approval. The directors FACTS PLC corporation. the new shareholders Plan A. The Joint compensate given authority was filed January six debtors CEO, directors, On employees, and and for relief under hun- voluntary petitions expended it had appeal, time of this Mortgage Enti- on salaries ll.2 Consolidated Pioneer of thousands of dollars dreds (“Debtor”) attorneys’ fees. the umbrella name for and ties was substantive- whose cases were the debtors “Liq- Plan PLC as the The Joint defined Debtor sold Prepetition, ly consolidated. oper- ... Corporation formed uidating *5 overwhelmingly The Joint Plan was ac- had been liquidated. PLC distributed investors, cepted by the and was confirmed more than million to the investors. $21.6 19, Post-confirmation, on June 1992. addition, In had been investors able to six debtors under were dissolved Califor- claim deductible losses of more than $100 nia law. million in 1992. PLC had also made the required general distribution unse- Activity B. Post-Confirmation creditors, cured final distribution The disclosure statement Joint Plan approved to that class was the bank- guarantee specific did not a amount of 30,1994. ruptcy court on September parties distribution to the investors. The Still, anticipated PLC a future income in interest that “the understood whole ba- largest from its potential pending, asset —a sis ... opinion of this is an an esti- estimated million dollar lawsuit $125 mate done of what could be this liqui- brought by Diego against PLC San Trust 5, dating entity.” Transcript May of Savings & Bank its successors in in- hearing on Disclosure Statement at 60. terest by merger, First Interstate Bank of payment method of to the investors (“the California Fargo and Wells Bank was by pro to be a rata distribution of the bank litigation”). pre- These claims arose proceeds liquidation from the of Debtors’ confirmation.3 assets that were not otherwise utilized or addition, expended implement the Joint In anticipated a PLC benefit to such as for operating reported those needed ex- the investors from losses in con- penses. distribution, assets, Following an initial disposition nection with the of its investors for who voted the Joint operating a federal net loss (“NOL”) were to payments receive as soon of carryover approximately as the $31.3 amount of eq- unrestricted available cash million its tax on federal income return for $1,000,000. ualed 30, year exceeded was fiscal June ending PLC 1996. PLC 1999, January pending post-confirmation of the Ninth Circuit PLC Court also had a Appeals summary judgment of reversed a malpractice against action its former attor- claims, enabling dismissal of certain of PLC's neys litigation stayed the bank that was PLC to prosecute conspiracy- continue to its during litigation the time bank was on negligence against to-defraud and claims appeal. bank. impacted to be if there’s perform going result in a tax that the NOL could alleged feeling goodwill.” more million. there’s lack of savings of than of—if $12.1 with court then denied the motion payments the nature of the made Due to 15, prejudice. Transcript September of assets, the years of over liquidation hearing at 81-82. existence, Plan’s the investors the Joint of cer- States Trustee made United 1997, On PLC a “Motion May filed provide financial requests tain the Tenure of the board of di- Extend Considering itself to be an information. rectors and the CEO” until the bank liti- express report- with no independent gation vigor- resolved. investors was unresponsive ing requirements, PLC ously the motion due to their opposed requests. such PLC maintained continued frustration the failure any disclosure of financial information accounting PLC to financial jeopardize position its the bank regarding information "status of monthly oper- PLC did not file litigation. liquidation. Transcript See of June it ating reports, pay quarterly nor did fees hearing. granted The court disbursements, it although pay did on board of extension. directors six-month States Trustee minimum the United requested On November President and per quarter. PLC’s $250 an additional extension of the tenure payments made the minimum based CEO board of directors and CEO. current it behalf reports financial filed on Simultaneously, “Ap- an investor filed an reorganized “former debtor.” Ex- plication Appointment of an for grounds aminer.” The asserted Discontent Festers C. appointment the examiner were the year after confirmation of the Within di- failure of PLC board of continued Plan, some of the investors had be- cooperate rectors with investors *6 skeptical. They had not seen a 35 come provide accounting, financial case status An return on their investments. percent information, the and information about the April 1993 PLC newsletter stated that anticipated on investor distribution the adjusted to return should downward claims. dollar, cents the with most about 15-20 on granted the extension of the in later being paid the distributions the of year, board of and CEO for one directors the years of Joint Plan. request appoint- also the granted but 13, 1993, a motion filed August On However, ment of the court an examiner. disgruntled of over on behalf 800 investors to stayed appointment of the examiner the requiring provide an order PLC to seeking give opportunity present plead- an to which report” financial “variance would financial ings regarding its disclosure of in the compare the actual results achieved The court noted and other information. effort liquidation projec- to that, there have been though even “should on hearing At a on motion tions. spent” report- more time detail or on 15, 1993, September of ing accounting aspects and at the time expressed its reluctance to interfere with confirmation, “techniques there were board of di- the “discretion” still devices” could be fashioned which and further stated that “Court rectors infor- accomplish of such the dissemination directing” the board of has no role 18, of 1997 Transcript mation. December provide requested infor- directors hearing at 112. expressed hope The court its that mation. “try response, to be its conditioned the board directors information forthright” requested information disclosure of providing more (a) investors, to entertain “recognize agreement the court’s seeking finan- ability to further motions additional reorganized debtor’s role and (b) information, 11, cial to vacate the or- At a hearing February continued the examiner. the court appointing der On Febru- found that PLC was creat- 13, 1998, ed ary purpose Joint Plan for the stay the court vacated the trust,” order, “acting as a and that holding the examiner that “the a fiduciary “PLC has relationship with the heavily offer of certain conditioned docu- investors” and a duty pro- “fundamental by [PLC] ments submitted was not suffi- vide adequate accounting of financial activ- fiduciary obligations cient to meet its ity.” Transcript February constituency Chapter investor of this hearing at 37. The court further found showing case and that no was made that PLC, longer had endured than any particular documents should not be trusts, most liquidating demonstrated un- disclosed.”4 delay reasonable in accomplishing the 8, 1998, On December PLC’s board of goals, Joint Plan in failing recognize again directors and CEO moved for duty adequate accountings. tenure, extension of their which the court at Id. 38-39. The court observed that a 15, 1999, granted January until and the trustee could review bring court sought parties’ input. PLC closure to the case. made another conditional offer to disclose information, financial which was unsatis- D. The Conversion Order

factory to the United Trustee States Therefore, the court ordered the case to the investors. be converted to chapter 7 based on its authority under 1142 and 23, 1998, On December the United well as Article 12 of the Joint Plan. The States Trustee filed a “Motion to Convert court extended the tenure of the board of or, Chapter Proceeding, Case to directors and CEO until Alternative, to Appointment Authorize trustee determined whether it should con- PosNConfirmation Creditors’ Committee ruling tinue. Its left to Proceeding Determine Course of questions trustee the of whether to contin- Chapter 11 opposed Case.” PLC the mo- ue prosecution litigation bank tion, and, newsletter, encouraged over and the way most efficient to administer sign opposition 600 investors to a form the NOLs. representation based on PLC’s *7 appointment chapter of a 7 trustee could The conversion order was entered on result a leak of confidential information 1, March required 1999. The order “The and a litigation. dismissal of the bank Entities, Consolidated Mortgage Pioneer including Pioneer Liquidating Corporation At a hearing respective continued on the (PLC)” to turn over all and rec- 15, 1999, motions January on the court re- trustee, chapter ords to the 7 to file vari- jurisdiction examined and reasserted its ous regarding post-confirma- schedules its fashion a remedy based on its construction obligations, tion debts and and to file an of the Joint Plan provisions. The court accounting post-confirmation of its receipts that, stated although corporate form was and timely disbursements. PLC appealed used, PLC was “akin to a the order. trust,” “it contemplated was never that the new entirely exists [inde- ISSUES pendent] fiduciary from the relationship it owes the investors and other creditors.” 1. bankruptcy Whether the court erred 15, Transcript January hearing 1999 at by finding that PLC owed a fiducia- ry duty to the investors such that its 66. taken, appeal 4. An was subsequently but was dismissed as moot when the case was con- being interlocutory, chapter and the matter became verted to 7.

375 364, Co., Gypsum 333 U.S. financial account- United States provide failure to (1948). 525, 542, 395, “cause” convert 92 L.Ed. 746 was 68 S.Ct. ings 11 case. chapter matter subject The existence of erred bankruptcy court 2. Whether jurisdiction, statutory interpre well as by finding “cause” for conversion tation, re legal questions which are are delay by based unreasonable Storage Drive viewed de novo. Greenfield in- prejudicial to the that was 916; Int’l, Park, v. B.R. at Reebok Ltd. 207 vestors/creditors. Inc., Enterprises, 970 F.2d Mamatech erred bankruptcy court 3. Whether Cir.1992). (9th 554 determining conversion creditors in the best interests of the DISCUSSION and the estate. had bankruptcy

4. Whether Existed for Conversion A. Cause authority to re- bankruptcy court converted PLC, order, quire conversion it that PLC dem this case because found turn over under its control assets delay in accom unreasonable onstrated account chapter 7 and to trustee failed to plishing goals, post-confirmation receipts its duty ac adequate recognize and disbursements. chapter may A court convert countings. “cause,” to one under 7 for case STANDARD OF REVIEW “(3) delay by the unreasonable given A wide court is creditors”; prejudicial is debtor that to convert a 11 case to discretion (7) inability to substantial ..'. effectuate 7 for “cause.” In re Greenfield ... plan; of a confirmed consummation (9th Park, Storage 207 B.R. Drive (8) material default the debtor [or] 1997). The is Cir. BAP decision to convert plan. a confirmed U.S.C. respect abuse of In re reviewed for an discretion. n 1112(b). causes are enumerated Broadcasting, Klein/Ray 100 B.R. exhaustive, and be able “the court will (9th 1987). BAP A Cir. arise, they other factors as to consider ruling if its discretion it bases its abuses powers to reach an equitable use its the law or erroneous view of result cases.” individual appropriate the evi clearly erroneous assessment of 95-595, Cong., 95th 1st Sess. H.R. No. Beatty, re B.R. dence. (1977), reprinted 405-06 (9th 1994). BAP Cir. court must also U.S.C.C.A.N. interpre The bankruptcy court’s the best interests consider what Plan is re tation of the confirmed Joint estate. creditors novo, appli as a contract under viewed de 1112(b). California), (here, law cable state *8 record, the court considered the where Fiduciary Duty to the a i. PLC Owed evidence, its or other testimony extrinsic Investors clear error. interpretation is reviewed for court determined Motors, Auto. Hillis Inc. v. Hawaii See acting in akin to a capacity was a (9th that PLC Ass’n, 581, 997 588 Cir. Dealers’ F.2d and, trust, therefore, a it had Co., liquidating 1993); v. Ins. 758 Miller Title Safeco to the The Unit (9th fiduciary duty investors. Cir.1985). 364, is finding “A F.2d 367 maintained agreed Trustee ed States there is ‘clearly although erroneous’ when reorga to the it, successor that PLC support reviewing court evidence to debtor, liqui being in addition with the nized on the entire is left evidence however, that entity. argued, PLC dating and firm conviction that a mistake definite cor- independent v. Plan created an committed.” States the Joint has been United 376 fiduciary

poration specific no duties to ous as nature fiduciary to the of PLC’s estate, or the any report- the investors nor duties to the investors.

ing requirements. Plan a “liqui- Joint defines PLC as

In reorganization, dating corporation,” a typical the record reveals confirmed, once a is a plan reorganized corporation was formed as longer fiduciary debtor owes a duty no to primarily for tax advantages, including the the estate because the estate ceases to ability of the board of to carry directors Industries, Inc., re exist. T.S.P. 117 Nevertheless, over operating net losses. (Bankr.N.D.Ill.1990). 375, If, B.R. 377 on duties, responsibilities, and raison hand, plan the other creates a trust or solely d’etre were the implementation and a vehicle for the exclusive benefit of the completion liquidation plan, includ- creditors, then has a fiduciary the trust ing prosecution against of claims third duty to those for whose benefit it was parties. Smith, Holywell Corp. v. created. See 503 confirming The order Joint Plan ex- 53-54, 1021, 1025, U.S. 112 117 S.Ct. pressly provided PLC would exercise (1992) (trustee 196, 204 appointed L.Ed.2d investors, its powers on behalf of the pursuant 11 plan liquidate hold monies trust non-electing property, distribute debtor’s which (non-Class 4) investors. The Joint Plan trust, had been transferred to was a implicitly provided a similar trust arrange- under fiduciary and was required IRC ment for belonging electing monies returns).5 to file tax As an created investors who voted to their have claims benefit, for the investors’ PLC’s fiduciary treated 4 under Class of the Joint Plan. included, responsibilities implicitly, the ac Their money would be proceeds, held from countability origins. associated with its then distributed when the unrestricted Bank, See v. Cal. Werschkull United 85 available cash level reached or exceeded 981, 1001, Cal.App.3d Cal.Rptr. $1,000,000. (under (1978) law, California the bank fiduciary was a to the beneficiaries of a precisely These are the sort duties pension which it administered as trusts, undertaken liquidating trustee). are described follows: established, If a liquidating trust is argued that there is no ex normally the trust is funded with prop- press language trust in the Joint Plan. A erty which will be reduced to cash by corners, contract to be taken its four the liquidating trustee after so as confirma- give construed effect to every tion of a part, reorganization. interpreted internally to be consistent. liquidating given trustee will berg Brind erson-New the au- Joint Ven Erectors, Inc., thority to ture v. sell assets within F.2d reason- Pacific (9th time, Cir.1992), denied, able preserve cert. the assets U.S. interim, 1267, 122 (1993) L.Ed.2d and to the proceeds S.Ct. distribute law). (applying California Although debtor’s former creditors who are Joint Plan did not expressly require beneficiaries of the trust. provide reports financial The plan reorganization typically the inves will tors, alleged deficiency this provi that as the effective date of sions did not make the ambigu- plan, right, all title and interest of trust, express opinion grantor We no how PLC association taxable as cor- *9 be characterized under Internal Revenue poration, entity.” other or some taxable John Code, except depending to note that on the Howard, D. Liquidating The Taxation of facts, organization an can be treated aas trust Trusts, Escrows and Settlement Funds in regulations, under the tax and ‘‘[i]n different Cases, Chapter Bankruptcy 64 Am.Bankr. n situations, the IRS liquidating has ruled a 403, (1990). L.J. 413-14 trust, trust should be treated as a taxable debtor, impermissi reorganized in a to the vests in certain the debtor exist responsibility vacuum of pow- The trustee’s ble trustee. that would be unac restricted, include the Plan often under the Joint but ers are provi in- to property; under ceptable to sell certain power avoiding transfers inter fund the investors’ protected crease the sions which Perez, that are voidable 30 F.3d the debtor’s In re ests. See Code; operate to Bankruptcy (9th Cir.1994) may only (bankruptcy under court sued; to and be to sue property; with the complies approve claims made disputed contest and settle Code). acknowledged such sta has debtor; attorneys, employ against in case.6 PLC filed this pleadings tus in and to make agents; and accountants interest in Debtor’s to the succeeded bankruptcy pursuant distributions parties, third and against action causes of orders. prose fiduciary duties to the Debtor’s actions, litiga Howard, including the bank supra, at 404. such cute tion, See In re of the investors. on behalf Moreover, provi Plan the Joint (Bankr. Williams, B.R. 128-29 investigate PLC to required which sions N.D.Tex.1992) trustee suc (liquidating on behalf actions pursue and/or as a possession ceeded to the debtor debtors, and to disburse to estates of cause of action on fiduciary prosecute their entitlements and investors creditors estate). We ad bankruptcy behalf entitled the implicitly under Joint notion that the fundamental here to and accu adequate, ongoing, investors to its officers board of directors to deter order reporting rate financial interests of for the best working were of directors whether PLC’s board mine their own constituency, not for their fulfilling their duties. were CEO self-interests. not formulated Plan was The Joint entity, nor for-profit PLC as perpetuate contends PLC also board of directors give the PLC the investors’ denying order court’s 1993 assets, in- over unfettered control CEO report, financial variance for a motion salaries and ex- payment of their cluding wherein prejudice, to ad- they were entrusted penses, directors’ dis- the board of acknowledged Rather, was to their commission minister. dissemi- of information in the area cretion assets, and to consummate liquidate nation, subsequent the court’s precludes the inves- the benefit of Plan for Joint not forever bar That order did orders. and other creditors. tors merely It dealt with by PLC. accountings particular request at that discrete liquidat- its function as a In addition to aspect prejudice” The “with point time. trust, record and agree, we on this ing safe haven for perennial provide did not facts, the succes- that PLC was also these conduct. arrogant irresponsible and future debtor. reorganized to the sor-in-interest hearing on fact, at the the court noted had been dis- debtor entities Since the failure to that PLC’s that motion solved, entity to suc- was no other there its abili- might impact willingly information post- Debtor’s duties phantom ceed to Plan. At such a the Joint ty confirmation, presi- perform except for PLC. PLC’s would have the court point, operating reports filed and CEO dent in, step pursuant authority reorganized debtor.” of the “former behalf provisions. successor-in-interest If were not the Cir.1996) (PLC (9th aff'd, 91 F.3d opinion this case published 6. At least one reorganized debtor by plan "successor in as the to PLC as both the created has referred reorganized proofs and "the to the debtor was to examine interest” of its duties one claim). Mortgage, Pioneer In re Consolidated debtor." 1995), (9th BAP 223-24 Cir. 178 B.R. *10 addition, subsequent proceedings requiring production 1142. In tion for an order of later, years and orders which court asserted financial information. Several authority continuing over PLC arose from later mo- the investors’ dissatisfaction relief, requesting tions other substantive not be ignored. responded could PLC itself, ie., by made suggestions by motions PLC the court’s making unrea- for extension of the board of directors and sonable demands the court and at parties, the historical record such requesting CEO. looks other myopic eye, any with a and fails to acknowl- refuse to consider more investor edge litigation of many years type. motions of this so doing, PLC preceded particular displayed only paramount both and followed that sense of self- preservation arrogance, order. and circled wagons, extending good- rather than Therefore, hold that we to the extent the cooperation will and to those who were record, court reviewed evidence and the intended beneficiaries its work. It thus history, and the case its determination that appeared to the PLC had lost corporate was trust its focus regarding legitimate requests for clearly form not erroneous. information, considering them to be a tres- pass against its exclusive inter- Delay ii. Unreasonable and Failure Although ests. the court encouraged the to Account Were “Causes” for parties to discuss reasonable methods Conversion information, sharing the record indicates Prejudicial delay is for con cause simply adopted that PLC a “take it or 1112(b)(3). version under The court it” acceptance leave attitude toward of its delay found that in providing PLC’s ade proposal. quate financial information to the investors prejudicial was unreasonable caused On the issue undue delay, delay (b)(3) the Joint goals because were first contends that subsection di being met. record substantiates to delay formulating rected and confirm finding that PLC’s failure to account ing reorganization plan. argument This all report for disbursements was is unpersuasive. The Code does not limit impeding the delay” administration of the solely pre-confirmation “undue pre case. The case was disputes, converted and certainly PLC’s resistance to remaining serve the assets for providing the intend meaningful information at By case, ed converting stage easily beneficiaries. falls catego within this broad the court properly ry. also removed the re sponsibility implementing the Joint Similarly, PLC also contends that there PLC, Plan from whose board of directors delay could be no undue where substantial apparently CEO felt that supervision consummation place.7 had taken of their was an activities unwarranted im contention that the Joint Plan was sub-

position upon them. stantially by consummated is belied that, through asset, record reveals position the largest the bank years, patient court was extremely litigation, unliquidated. remains with PLC and expressed sensitive to its court did not make a specific autonomy needs for confidentiality. finding regarding substantial consumma- tion, The court denied investors’ first mo- it can but be inferred from the evi- by 7. "Substantial management consummation" is defined the business or of the or of all the Code as: substantially all dealt with (A) substantially transfer plan; of all or all of the property proposed by (C)commencement to be of distribution under transferred; plan. (B) assumption by the debtor 1101(2). successor to the debtor under the *11 in automati- assets would vest to effectuate estate that PLC was unable dence Plan consummation of the Joint the effective date of the con- cally upon substantial all of its perform that, on its failure to based if firmed PLC contends even plan. PLC did on behalf of the investors. duties exists,- there will be cause for conversion by producing prove offer to otherwise not administer once the case is no estate to Moreover, if the Joint financial records. converted, the confirmed Joint because fact, had, substantially con- in been Plan in PLC. property Plan vested all estate summated, have moved for PLC should question the of argument This raises Fed. a final decree. entry the an to administer whether there is estate that The record reflects R.Bankr.P. 3022. that conversion post-confirmation, such light of this it has never done so. not in the interest of the best omission, it difficult to divine is significant split the estate. Courts are creditors and allegedly substantial consummation how analysis in their this issue. record, an the facts and occurred. On chapter of a Upon the confirmation was not sub- implicit finding plan the effect of confirmation is deter- plan, clearly er- stantially consummated was 1141(b) (c): § & by mined roneous. (b) also contends in Except provided States Trustee as otherwise United delay in re- providing confirming or the order plan financial investors constituted

porting to it and the plan a vests all plan, the confirmation of respect with to the Joint a material default of the estate in the property that there could not Plan. PLC contends debtor. respect with to the have been a default (c) Except provided in subsections Plan Plan because neither the Joint (d)(3) (d)(2) except of this section ad it to compelled nor a court order provided as otherwise or A bankruptcy financial information. confirming plan, after con- the order to find cause under this has discretion dealt plan, property firmation of been payments subsection when have not and clear of all is free the confirmed Joint made under creditors, equity claims and interests of expressly whether or not the Joint holders, security general and of the contingency of default within covers in the debtor. partners Bankruptcy See 7 CollieR on provisions. (15th ed.1999). § The court’s 1112.04[5] § U.S.C. accounting for finding of PLC’s lack of pre-confir- opine courts Some disbursements, light receipts available for administra- mation estate is signif- to the investors that were payments trustee, while tion estimated, sup- icantly less than what PLC of other hold growing number courts based on a ma- ports cause conversion of the estate vests once terial default.8 (or by virtue of the entity), another debtor 1141(b)(2) vesting provision of automatic in the Best B. Was Conversion subsequent then plan provisions, Interests of the Estate does not revest that conversion Creditors 7 estate. Existed i. Post-confirmation Estate view are Representative of the former that title provided The Joint Plan Corp., 188 B.R. In re Calania investor and all of the interests However, the bank- cause for conversion. cause for dismissal or conversion 8. Another 1112(b) ruptcy cite this cause as nonpayment court's order did not under dispo- charges. grounds for conversion. Based on Both United States Trustee's fees or far, development of lack of alleged sition thus and the parties argue the of PLC’s non- merits below, panel de- nonpayment in the record reporting this issue of disbursements clines to reach this issue. greater amount than the minimum fee as (Bankr.M.D.Fla.1995) Smith, and In re 201 debtor’s case to chapter even *12 (D.Nev.1996), 267, aff'd, B.R. 274 141 F.3d though plan had already been con- decision), (9th Cir.1998) (unpublished 1179 table firmed, because the debtor had not com- denied, 1018, t. 525 U.S. cer plied with the plan provisions that would (1998).9 544, 142 S.Ct. L.Ed.2d 453 In Ca- have paid allowed the creditors to pur- be tania, chapter after a case was convert plan. suant to the chapter ed to 7 for failure to plan make payments, the issue arose toas whether The rejected District Court the debtor’s post-confirmation the debtor’s mail was argument plan that precluded confirmation property 7 estate. conversion because confirmation vested debtor,

The estate’s examined 1141(b) § conjunction in with other Code reasoned that to hold otherwise would ren sections, 348 and 1112. der the provisions Code for conversion or “property Section 541 defines of the es- altering 1141(b) vesting provision § tate” legal equitable as “all interests of meaningless. Smith followed the reason in property debtor the com- of Catania, ing of where the court concluded 541(a) § mencement the case.” (empha- of it would be “utterly pointless” for added). sis provi- Section 348 contains the Congress provisions create the regarding sions the effect of conversion. 1112(b)(7-9) 1141(b) §if meant there It states that the conversion does not ef- would be no assets to administer. Cala fect a change in the date of the commence- nia, 188 B.R. at 43. ment of the case. No new estate is created upon the conversion of a case from one plan The in provided Smith also another, chapter to thus the of bankruptcy jurisdiction court would retain the estate “fixed is as of the date of the to enforce the and for purposes. other original id. at filing.” See 42-43. Section Smith, 201 B.R. at 274. The District 1112(b) provides for the conversion of Court held that the bankruptcy court had a chapter 11 case to 7 for jurisdiction over the property, and that the “cause” post-confirmation. creditors, who paid would have been ex- 1112(b)(7)-(9). cept for the debtor’s nonperformance un- court concluded as fol- der plan, must not be entirely left lows: without a remedy. Id. A analysis careful provi- the Code sions permits only one conclusion that similar, facts Smith are and properties which subject were persuasive rationale in the instant case. properties confirmed Smith, Like actually, Joint Plan if not cognizable the Debtor had a legal expressly, limited vesting the estate by or equitable ownership interest on the making the proceeds assets subject and/or date of confirmation will properties to the interests of the investors. The Chapter case, estate in a but prop- provided Plan also for the broad clearly erties which are acquired by the retention of bankruptcy post-confirmation Debtor will not be over the continuing enforcement of the subject to administration the Chapter Joint Plan. 7 trustee. 188 B.R. at 43. however, PLC’s contrary authority, pro- Smith, the District vides counter-argument. Court held Representative the bankruptcy court properly converted Industries, a of this line of cases are T.S.P. espousing (Bankr.N.D.Ill. 9. Other cases this view 1990). include: In B.R. See also Inc., (Bankr. Midway, Furniture, re Inc., 166 B.R. 589-91 In re D & D 239 B.R. D.N.J.1994); Industries, Inc., (Bankr.E.D.Pa.1999) authorities). In re NTG (citing Inc., and dismissed were no assets Printing, 210 there and In re K & M supra (Bankr.D.Ariz.1997).10 case, between noting further the tension 583, 584 B.R. § 726 and the scheme of the distribution Industries, the United States In T.S.P. plan. of the confirmed binding provisions a post-confirma- to convert moved Trustee chosen, effect this has the “If 726 is section investigate in order to 11 ease tion the limi- without revoking confirmation subject to any assets there were whether power placed on the revocation tations bankruptcy court found liquidation. 1144.” Id. at 585. The court stat- section instead conversion that dismissal *13 in only a be the because would of the creditors ed that conversion best interest authority not have the following best interest under chapter 7 trustee creditors’ circumstances; belonged to that now liquidate assets Id., B.R. at 376. 117 the debtor. However, plan if the or confirmation that argued Trustee States The United revesting provides for expressly order chap- no there would be determining that conversion, circum- particular 1112(b) would render nulli- ter 7 estate avoid- justify (e.g., conversion stances found, however, that The court ty. exist), transfers then prepetition able 1141(b) in conflict 1112 were not in best can be the creditors’ conversion in the best might be because conversion interest. provid- if the plan the creditors interest of Id. at 585-86. jur- retention of and the ed for conversion in the event of property isdiction over this Ninth has not discussed Circuit addition, In the court default. Id. at 379. controversy or these cases. particular comported result with that this determined However, opinion, the Court 1992 provision Code of a the absence what con- the issue of Appeals addressed rendering a stay, automatic reinstate the in a property 7 estate chapter stitutes provisions for 7 trustee and chapter 11 chapter post-confirmation converted “rather toothless.” revocation of Motors, F.2d at 587-90. case. Hillis 997 Id. at 378-79. Hillis Motors held that the “reversion Nevertheless, con- court stated that to the debtor from the estate property interest of the be the best might version subject ... explicitly upon confirmation or a preference is a creditors “when there Id. at 587. provisions plan.” to the that occurred be- conveyance fraudulent Motors did not state in Hillis 11 chapter fore the commencement that unambiguous terms currently has the debtor proceeding revest in the debtor. estate did not In that situation the assets. significant no However, “unambiguously provide[d] questionable transac- it to avoid the power were dis- postconfir- lost if the case the estate tion would be the continuation of (1) missed.” Id. plan: mandated mation” because the the debt- payment percentage Printing, In K M& bankruptcy the es- profits into post-confirmation or’s which assets was asked to determine (2) distribution; protected later tate for 7 after a estate belonged to post-confirmation from certain the estate Following conversion. post-confirmation (3) claims; court treat- Indus- reasoning of T.S.P. the “better” tries, post-confirmation allowed certain ed and court determined debtor, normally revest in the which would Enter include: In re Troutman 10. Other cases Inc., Inc., (Bankr. BMW, authorities); 766 201 prises, citing 244 B.R. In re 2000) (agreeing Congress in (Bankr.S.D.Ala.1996); S.D.Ohio In re 849 B.R. recap alone does tended that conversion ture Die, Inc., B.R. 621 & Winom Tool debtor); D vests in the & (Bankr.E.D.Mich.1994); Auto In re H.R.P. Furniture, (stating in dicta 239 B.R. at 59 D Inc., (Bankr. Center, 256-57 130 B.R. might not conversion post-confirmation 1991). N.D.Ohio only are those justified when the assets expenses. claims as administrative Id. at support cases which position 588-89. recognize remaining causes of action would be property of a In determining that the stay automatic estate. See Enterprises, Troutman effect, still in of Appeals was Court B.R. at 765 (only non-administered assets plan provided noted that the for a “future” possible such as may causes of action re- addition, discharge of the debtor. main); Furniture, Inc., D D& 239 B.R. at manage trustee was retained to and con- 58; Industries, 379; T.S.P. business, 117 B.R. at subject trol the bankrupt- Center, H.R.P. Auto 130 B.R. at cy jurisdiction. 257. See court’s “Hillis was not free Park, also Storage to do Drive pleased what it assets and its. Greenfield 917-18, B.R. property but rather at where the distribution of the the. Ninth Circuit BAP company’s profits strictly affirmed an converting post- controlled.” order Id. at 589. confirmation case to chapter in which the significant had asset been case, In the instant the Joint Plan con- *14 upon revenue, foreclosed and there was no provisions tained explicit for the distribu- but where “unresolved concerning matters liquidation proceeds tion of to the inves- the estate to be remainfed] decided.” tors, primary its beneficiaries. The Joint corporate Plan created a liquidating entity, Finally, panel is concerned that PLC, but left bankruptcy court heavily PLC’s refusal to a financial ac- management involved the selection of counting of its receipts and disbursements shareholders of that if liqui- years over several pending of this case completed dation was not within years five be, effect, may a concealment of assets. after confirmation.11 The bankruptcy In one case concealed, where assets were court powers retained broad over both bankruptcy court held that the default Joint Plan implementation and interpreta- 1141(b) by § rule established prop- —that tion in disputes, the event of erty of the estate vests in reorganized involving controversies the board of di- debtor confirmation of a plan of reor- rectors. Notwithstanding the transfer of ganization apply. Troutman —does PLC, assets to the transfer was not “free Enterprises, 244 B.R. at 768. and clear” of the investors’ interests or the bankruptcy supervision. court’s Applying the rationale of Hillis Motors to unambiguous case,

Another factor in favor of the in this bankrupt- cy court’s action this case is the nature based on the foregoing analysis, panel administered, yet i.e., the assets to be that holds there would estate for the and, the bank litigation possibly, the mal- 7 trustee to consisting administer practice by action initiated Even PLC.12 of the assets held for the benefit plan provided However, that PLC would have a Brief at 30. the same case law seven board member of directors who would suggest against pro- that such claims also be the sole shareholders of PLC. No case, fessionals during for their conduct director could serve years more than five in which the part recovered funds would be permission without bankruptcy of the investors, the assets for distribution to the Plan, court. Joint Art. 5.3. If a director would be of the 7 estate. ceased capacity, to serve in that the director Furniture, 58; See D D& 239 B.R. at see also effectively ceased to be a shareholder. Inc., Computer Systems, In re Atlantic Art. 5.2. The respect is silent with (Bankr.S.D.N.Y.1994) (discuss- B.R. what to would occur if the bankruptcy court ing "related to” bankruptcy of the grant permission declined to of the court over an action affected the debtor’s directors to extend their term as members of estate, i.e., recovery of funds for the benefit of the board of directors. estate, versus funds collected a debtor that would not be turned over 12. PLC malpractice contends that the action it, trustee). "personal” part and was not a pre-confirmation bankruptcy Opening estate. that, argued alleged remaining also as the creditors and investors.13 asset, major the court’s order for such additionally bankrupt- We hold not in the best interests of disclosure was necessary jurisdiction to cy court had the arguments These are with- the investors. for preserve the assets convert the case There reasonable out merit. are several unpaid classes of creditors. U.S.C. confidentiality ways protect 167(b)(l)(2). 1334(b); § information, as out pointed PLC’s financial by the United States Trustee and the Loss of ii. The NOLs and Possible court, the panel agrees. with which PLC’s Confidentiality Argu- Further alternatives, and refusal to consider these against ments Conversion terms, were un- its insistence on dictated are other rea- argues there and a clear of its duties reasonable breach convert, example, possi- sons not to the PLC creditors/investors. confidentiality, and of ble loss the NOLs could, correctly deter presumably, jeopardize expressed reasons for mined litigation. bank Sitting were as a nondisclosure frivolous. right carry A debtor’s for ap equity, court of carry ward or back an NOL is a tax attrib duty protect propriately exercised part ute of the debtor that is of the bank the estate for the benefit of the estate, pursuant to the Internal ruptcy in a manner consistent with the creditors Feiler, 1398(g)(1). In re Revenue Code Bankruptcy Cooper Prop In re Code. See *15 (9th 1999). BAP 230 B.R. 168 Cir. Trust, Inc., 61 B.R. Liquidating erties normally This property interest (Bankr.W.D.Tenn.1986); § 105. 537 the 7 trustee. 11 pass chapter to U.S.C. 541(a). it, that not PLC contends since Bankruptcy Did Not Ex- Court C. Debtor, entitlements, the owns the NOL Authority by Ordering ceed its intact the board of directors must remain Accounting and Turn to Make an a to potential because the NOL is benefit Chapter 7 Trustee Assets to the Over the only the investors and creditors can jurisdictional extent that future taxable income a PLC raises issue Thus, it. that against offset PLC contends court im alleges bankruptcy and that the the pass million would not if it were the properly NOL treated PLC as $31 bankruptcy court chapter chapter estate. The 7 case. debtor in the converted the board of di left the continuation of the Consequently, PLC contends open investigation jurisdiction rectors’ tenure and bankruptcy court exceeded chapter authority by ordering recommendation the trustee. PLC to dis and/or final on that issue was regarding As the decision information its assets or close postponed, we hold that the issue the 7 trustee. its assets over to a turn us. premature NOLs is and is before obfuscation, Notwithstanding PLC’s in this case. Al- is not what occurred PLC maintains that the disclosure in court included though bankruptcy the the of its financial information and access provision requiring in the conversion order to such information the defendants entities, including that all of the Debtor litigation put litigation the bank will PLC, chapter 7 trustee all turn over to the posture great and at risk. PLC strategy PLC, trustee to up left it to the argues chapter 7 trustee but 13. PLC also necessary PLC was to the contin- standing pursue litigation. determine if will not have the However, litigation. Clearly, chap- bank the uation of the we have held that PLC is suc- turn, power to administer reorganized ter 7 trustee has the debtor. In cessor to estate, including prosecu- property of an chapter 7 trustee will succeed to the estate's 704; existing litigation. 11 U.S.C. third-party claims. In addi- tion interest in tion, bankruptcy Fed.R.Bankr.P. 6009. court did not terminate of their “records the es- order required conversion PLC to control,” 1019(4) comply custody tate under its Order with Fed.R.Bankr.P. (5). 3.a., provides That rule that “the in Converting Chapter debtor para. Case possession” or the serving “trustee” at the bankruptcy that does not mean that time of shall timely conversion turn over made PLC debtor. The estate, records and of the and file court converted the cases of Consolidated various schedules. The rule is intended to Entities, Mortgage Pioneer are which apply the person entity or who was consolidated debtors. previously charge of the estate expressly provided The Joint Plan Bankruptcy superceded case. NoRton Law bankruptcy jurisdic- court would retain 2D, Comment, Editor’s at 67- ANDPractice tion all disputes arising over in connection (1999-2000 ed.). Rule 1019 is derived Plan, with the Joint the actions from former Bankruptcy Rule of the board of directors the share- trustee, receiver, “any referred to or debt- Motors, holders of PLC. See Hillis in possession previously acting addition, F.2d at 589. the court had BanKruptcy chapter case.” 9 Collier jurisdiction liquidation (15th core over the ed.1999). § 1019.RH It would be PLC, disbursement of the estate pursuant illogical assets to exclude who only was the assets, general charge adminis- estate from contributing required tration this information. estate. 1334(b). 157(b)(1), In summary, while recognizing that the contemplated Joint Plan legal a different clearly juris had form accomplish goals the similar of a accounting by diction to order an trust, the court nevertheless during pendency plan’s imple asserted over in order Furthermore, mentation. gives Code accomplish the Joint Plan’s intended re- court authority to “direct debtor, sults. PLC was not the but it necessary debtor and other party” reorganized succeeded to the debtor’s as- *16 any to perform necessary act to consum sets and It Labilities. became the owner plan, order, mate the “to issue of property that was held in trust for the process or judgment necessary that is or benefit of creditors of the estate. Conver- appropriate carry out provisions” the sion of the case was possible because as- 105(a), 1142(b). the Code. 11 U.S.C. sets still remained to be administered. bankruptcy authority court’s under court properly asserted its 1142(b) post-confirmation extends to ac express, equitable, authority and inherent necessary tivities complete performance over PLC and the remaining prop- estate under plan and close the case. The erty in square order to the unanticipated bankruptcy court believed that chapter results of intransigence PLC’s with the 7 trustee could better fulfill plan goals provisions. Code and Joint Plan regarding the unadministered assets. See 105(a). § 1142 and legal We find no incon- Industries, NTG (chapter 118 B.R. at 611 sistency having in its done so. complete trustee can the administration CONCLUSION preference actions chap initiated committee; ter 11 citing Goodman v. Phil The bankruptcy court did not err R. lip Inc., Curtis Enterprises, 809 F.2d finding that duty PLC owed a to the inves- (4th Cir.1987) and In re Johns-Man provide tors to appropriate financial infor- (Bankr.S.D.N.Y. ville Corp., 97 B.R. 174 mation. The court did not err by finding 1989)(a 1142(b) court’s authority under post-confirmation cause to convert post-confirmation extends to matters con chapter 11 case to chapter 7 based on cerning implementation dereliction, duties, or execution of the PLC’s of these and in plan)). finding that its failure delay caused undue completion reorganization plan. regarding liquidation, States Trustee notwithstanding The court did not abuse its discretion nor the fact that the investors by determining err conversion was were to be liqui- the beneficiaries of the By the best interests of the estate. re- liquidation dation and thus far the had turn over and rec- quiring PLC to assets produced a far smaller distribution than ords, schedules, required and to file projected correspondence had been soli- court not exceed its did citing plan. votes on the authority. Converting The Order case argument PLC’s did not AFFIRMED. impose duty provide on it a financial parties information to interested and that PERRIS, Bankruptcy Judge, fiduciary it not duty did have a to investors concurring. and creditors misses the mark. The PLC Although agree majority’s I with the sought permission directors had to extend conclusion did bankruptcy judge their service. The court wanted to hear not abuse his when he converted discretion parties regarding from interested the re- case, separately I because I write do quest. parties a legiti- interested had reaching not think that this conclusion re- being provided mate interest financial quires resolution of some of the issues they present information so could mean- by majority.14 discussed ingful arguments and evidence to the court out, majority points As the the bank- requested extension. PLC was re- ruptcy may chapter convert a fusing information. case to 7 “for cause.” The facts in circumstances, converting Under the this provided ample case basis case to 7 so a neutral which the court could find “cause” to con- investigate why liqui- trustee could vert. More years elapsed than six had produced dation had substantially less for between confirmation and the time the projected investors than and could make a bankruptcy court decided the motion to neutral and informed recommendation to reorganization convert. The creat- regarding request the court PLC, a corporate liquidating entity, ed but permission PLC directors for to continue heavily left the involved to serve was not an abuse of discretion.15 of management selection and share- I agree majority’s rejection with the liquidation holders of that if the argument that conversion is not in completed years within five after con- creditors, the best interests of the inves- given permission firmation. The court had and the tors estate. for the board of directors members to *17 facing serve four extensions and was

request for a further extension. PLC had

continuously providing resisted financial

information to and the investors United particular,

14. In it I do not think that court order extended the term of the PLC directors. This was better necessary to decide whether assets that have possible result for all concerned than the al- ceased to be of a estate denying ternative of both the motion to con- virtue of confirmation of a denying permission vert and to all the di- again once become of the estate potentially rectors to extend their term. That conversion, liquidat- whether PLC was a have resulted in a form, ing corporate trust in and whether the shareholders, with no because directors or authority court had to order PLC to turn over plan prohibits the confirmed a director from assets to the 7 trustee. The latter serving years five more than without appeal issue was never raised as issue permission provides person that once a and, regardless of the conclusion reached on person serve as a also ceases to director issues, ample the other there was cause for effectively ceases to be a shareholder. There conversion. directors. are no shareholders other than the 5.2 and Articles 5.3. notes promissory fractionalized interests fulfill implement and ate in a manner to trust security agreements or deeds of and (1) Plan,” were: of the which purposes n 2,800 At the approximately investors. to, liquidate all of take title and the investors were bankruptcy, time of the alleged and the inves- of the debtors assets concerning fragmented, disputes (2) and arose interests; resolve claims dis- tor (3) expected their returns. to creditors and and to disburse putes; entitlements under investors their Creditors’ The Debtor the Official 2,11. Plan at Joint Plan. Joint Reorgani- filed a Plan of Committee Joint includ- powers duties and PLC’s broad (“Joint Plan”). Amended, zation, One ed, things, management among other reorganization was purposes compro- properties, of all estate disposition among fragment- to resolve differences claims, objec- of and of examination mise all by treating and Debtor ed investors claims, employment of proofs tion to by operating inde- equally investors charged: further professionals. PLC fac- conflicting investor pendently of (e) necessary actions pursue To all Thus, created under the tions. PLC was to collect indebtedness appropriate all the estate Plan to take title to Joint claims, against claims assets ‡ % # %

[*] Article 5 of the Joint parties. third indicated, Corp; Financial were Naiman 2. The debtors all references 1. Unless otherwise Naimco-Clairemont, Inc.; Inc.; Bankruptcy "chapter” are to the Naimpro, Naimco, Inc.; or "Code” . 101-1330, Code, Corp., while refer- Investment Alvarado to the Federal to "Fed.R.Bankr.P.” are Inc.; ences Corp. and Frontier Service Procedure, Bankruptcy which make Rules of applicable Federal Rules of Civil Pro- certain (“Fed.R.Civ.P.”). cedure (n) all investigate pursue required place proceeds or ter- also on ac- To and/or non-electing on behalf of the Es- minate actions count of investors into an in- appropri- tates the Debtors where terest-bearing account. trust ate and cost-effective. expressly Article of the Joint Plan (o) To disburse to Creditors and Inves- provided retention for the court’s of broad tors their entitlements under (G), jurisdiction, including, paragraph Plan. court would retain Joint Plan at 23-30. controversies, “all over suits Plan, soliciting In disputes may arise in connection sent correspondence investors interpretation, enforcement or projected a on their return claims of 35 consummation of this with- including, addition, cents on the dollar. limitation, out the actions the Board of stated that unconditional transfer of Directors and the shareholders of the Liq- gave assets to investors the best uidating Corporation.” chance to claim million in tax over $100 confirmation, At the time of plan Debt- immediately deductible losses ors’ approximately assets were valued at vesting ownership solely of PLC years million. Within the first five $80 board of directors. Plan, virtually the Joint all existing assets