ELECTRONIC C ITATION: 2004 FED App. 0007P (6th C ir.) File Name: 04 b0007p.06

BA NKRUPTC Y A PPELLA TE PA NEL OF TH E SIXTH CIR CUIT
In re: JOHN FRAN KLIN COPPER , ) ) Debtor. )

_____________________________________ ) ) ATHENA CHEN COPPER and the ) ESTATE OF SUMIKO YAMAOKA , ) ) Plaintiffs-Appe llees, ) ) v. ) No. 04-8002 ) JOHN FRAN KLIN COPPER , ) ) Defendant-Appellant. )

_____________________________________ )

Appeal from the Unite d States Bankruptcy Court for the W estern District of Tennesse e, W estern Division, at Memphis

. Bankruptcy

Case No. 02-23450-L, Adv . Case No. 02- 0610

. Argued : August 4, 2004 Decided and Fi led: September 24, 2004 Before: AUG, GREGG, and HOW ARD , Bankruptcy Appellate Panel Judges.

__________________ COUNSEL ARGUED: Ted I. Jones, VAU GHN, HALL, J ONES &VanDEVEER, M emphis, Tennessee, for Appellant. R . H. Chockl ey, Memph is, Tenn essee, for Appell ee. ON BRIEF: Ted I. Jones, VAUGHN, H ALL, JON ES & Van DEVEER, Memphi s, Tennessee, for Appel lant. Mimi Phill ips, Memphis, Tennessee, for Appell ee.-2- ____________________ OPINION

____________________ J. VINCENT AUG , JR., Chief Bankruptcy Appellate Pan el Judge. The Debtor, John Franklin Copper, appeals the bankruptcy

court’s deni al of his motion to convert his chapter 7 case to one under

chapter 13.
I. ISSUE ON APP EAL
Whether the plain lang uage of 11 U.S.C. § 706(a) prov ides a debto r wi th a one -time absolute right to convert a case filed under c hapter 7 of the Bankruptcy Code to one under chapter 13.
II. JURISDICT ION AND STANDA RD OF REVIEW
The Bankruptcy Appellate Panel of the Sixth Circuit has jurisdiction to decide this appeal. The United States Distric t Court for the Western District of Tennessee h as authorized appeals to the BAP. A "final or der" of a bankruptcy

court may b e appealed by right under 28 U.S.C . § 158(a)(1) . For purpos es of appeal, an order is fina l if it "ends the litigati on on the merits a nd leaves not hi ng for the cour t to do but execute the judg ment." Midland Asphalt Corp. v. United St

ates , 489 U.S. 794, 798 , 109 S. Ct. 1494, 1497 (1989) (citations omitted). “[O]rders denying a debtor’s r equest to convert from Chapter 7 to Chapter 13 pursuant to § 706(a) ar

e final or d ers.” Cabral v. Shamban (In re Cabral) , 285 B.R. 563, 571 (B.A.P. 1st Cir. 2002); see also Mi ller v. U.S. Trustee (In re Miller) , 303 B.R. 471, 472 (B.A.P. 10th Cir. 20 03) (order deny ing debtor’ s motion to convert from chapter 7 to chapter 13 is final, appealable order); see generally Kuntz v. Sh am ba m (I n r

e K un tz) , 233 B.R. 580, 580-81 (B.A.P. 1st Cir. 19 99).
Questio ns of law

are revi ewed de novo. Corz in v. Fordu (In re For

du) , 201 F.3d 693, 696 n.1 (6th Ci r. 1999). U nder a “de novo” standard of re view, the revi ewing court decides an i ssueind epen dent ly of, and without

deference to, the tr ial court’ s determination. Razavi v. Commissioner, 74 F.3d 125, 127 ( 6th Cir.1996) . “Wheth e r a bankruptcy court-3-

properlydenied a debtor’ s request for conversi on is a ques ti on of law requiring de novo review on appeal.” In re Kuntz , 233 B.R. at 581 (citin g Martin v. Martin (I n re Marti

n) , 880 F.2d 857, 858 (5th Cir. 1989) ); In re Mill er , 303 B.R. at 473.
The bankruptcy court’s f actual findin gs are reviewed for clear error. Fed. R. Bankr. P. 8013 & 7052; Fed. R . Civ. P . 52 (a ). “A finding of fact is clear ly err oneous ‘when althou gh there is ev idence to suppor t it, the reviewing court, on the entire evi denc e, i s le ft with the definite and f irm conviction that a mistake has been co mmitted.’” United States
v. Mathews (In re Mathews) , 209 B.R. 218, 21 9 (B.A.P . 6th Cir. 1 997) (quo ting Anderson
v. City of Bes

semer C ity , 470 U.S. 564, 573 , 105 S. Ct. 1504, 1511 (1985)). Adetermination that a debtor hasor has not acted in good faith constitutes a findi ng of fact revi ewed under the “clearly erroneous” standard. Alt v. Uni ted States (In

re Alt) , 305 F.3d 413, 419 (6th Cir. 2002); Hardin v. Caldwell (In re Caldwell) , 895 F.2d 1123, 1127 (6th Cir. 1990).
III. FACTS
The bankruptcy

court’s M emorandum Order entered November 3, 2003, denied the Debtor’s motion to convert his chapter 7 case to one under chapte r 13. The order also concluded that the Debtor is not e ntitled to a discharge pursuant to 11 U.S.C. § 727(a)(4)(A). The Debtor’s appeal state s, however, that the sole issue presented on th is appeal is whethe r or not the ban kruptcy court erred in failing to allow the Debtor to convert his case to one under chapter 13 pursuant to § 706(a) of the Bankr uptcy Code. Therefore,
we need not consider

whether th e bankruptcy court properly determi ned that the Debtor is not entitl ed to a dischar ge.
In making its

decision to d eny the Debtor ’s dischar

ge, the bankruptcy

court made
a detailed rev iew and an al ysis of the Debtor’s pre- and post-petition con duct. The court relied on thos e same fi nding s in ma ki ng its deter mination that the D ebtor’s req uest to convert s hould be denied beca use it was not made in good faith. Over the past nine years, the Debtor has taken evasive action to avoid paying his ex-wi fe, Athena Chen Copper, am ounts she was awarded under the part ies’ divorce de cree. The bankruptcy court’s Memorandum Order outlines this history in detail. Borrowi ng substantiall y from the Memor andum Order, thefacts of this case are as follows:-4-

The Debtor is a Stanley J . Buckman Dist inguished Professor of Int ernational Studi es atRhodes College in Memphis, Tennessee , a post he has held since 1984. He is a worldrenowned expert on China and Taiwan, has autho red some 25 books on Asian affairs, a nd travels to Taipei frequently as the guest of various educational and governmental agencies. The Debtor’s income from Rh odes Col lege for 2003 was $ 89,000. In addition, t he Debtor received in come f rom variou s activitie s such as t eachin g, lecturin g and writing.
The Debtor and Ms . Copper were married i n 1967 and divorce d on October 15, 1993. In the divorce proceeding, Ms. Copper w as awarded $2,000 per month in al imony in futuro and interestsin sever al annuity contracts. I n addition, theDebtor was ordered to pay Ms. Copper’ s parents the s um of $70,657.60, repres enting sums found to be taken from Ms. Copper’s parents, and interest accrued on those am ounts.
In February 1997, Ms. Copper lear ned that the Debtor had converted the value of
some of the annuity contracts awarded to her, s ome $152,211.65, to his own use. The Debtor was found to be in civi l contempt of court and ordered to r eturn the misappr

opriated funds plus attorney

fees to Ms. Copp er. The Debtor’ s efforts to prevent M s. Copper from collecti ng the am ounts d ue to he r include the fo llowing:
In January 1997 , Ms. Copper had a garnishm ent issu ed direc ted to Rh odes Col lege seeki ng to col lect the amounts ow ed to her from the D ebtor’s sal ary. The De btor responded by filing a Motion to Set I nstallmen t Payments on G arnishment. The moti on was gr anted, but the Debto r never made any instal lment payments.
On July 1, 1 997, t he Deb tor filed a chapter 7 petition, which w as dismissed on July 23, 199 7, upon the Debtor’s failure to timely compl ete the filing of documents.
On August 12, 1997, the D ebtor fil ed his second c hapter 7 petiti on. That petition
was dismissed on S eptember 29, 199 8 , when the bankruptcy court refused to e xercise jurisdict ion over the case pursuant to 1 1 U.S.C. § 305( a)(1), upon a finding that the case was “in essence, a two-party dispute.”
On July 12, 2000, the Debtor filed his third bankruptcy peti tion . Duri ng the twent ytwo months between the dismissal of the second petiti on and the filing of the third peti tion, the Debtor did not make any payments to Ms. Coppe r. During that same time period, Ms.-5-

Copper again soug ht payment thr ough garni shment proceeding s, th e Debtor again responded wi th a motion to set installment pay ments, and as noted again filed a petition for chapt er 7 relief. That petition was dismissed on August 25, 200 0, when the D ebtor failed to appear f or the meeting of creditors.
Ms. Copper again attempted to dispos e of the state cour

t motion to set i nstallment payments. However, on December 6, 2000, befo re the state court motion could be he ard, the Debtor filed his fourth ba nkruptcy petition under chapter 7. Tha t case was also dismissed on February 15, 2001, when the Debtor agai n failed to attend themeeting of creditors.
After dismissal of the fourth bankruptcy petition, Ms . Copper was finally s uccessful in getting a hearing on the Debtor’s state court mot ion to set install ment payments. The motion was denied and the garni shment reinstate d on September 28, 2001. The Debtor responded by filing a fifth petition under chapter 7 on N ovember 8, 2001. That case was dismissed on Janu a ry 8, 2002, when the Debtor failed to file required d ocuments to complete the fili ng. O n January 17, 2002, Ms. Copper had the garnishment reissu ed and, o n February25, 2002, the Debtor f iled the instant chapter 7 case, his sixth bankruptcypetition. Ms. Copper filed theadversar y action i n this case as serting t hat the debts owed to her are nondischargeable pursuant to 11 U.S.C. § 523(a)(5), (6) and/or (15) and that the Debt or’s dischar ge should be denied pursuan t to § 727(a)(4)(A). After the adversary case had been pending for fourteen months, on t he Friday before t hat tr ial was to start on the following Monday, the D ebtor filed his motion to convert his cas e to one under chapter 13.
The bankruptcy

court held i ts ruling on the motion to convert until theconclusion of the submission of evidence on thedischarg eability issues.
In the Memorandum Or der the bankruptcy court states that “[ i]n the course of trial, the Court discovered a number of serious f alse statements in the schedules a nd statement of financial affairs fil ed by the Debtor in this case.” Copper v. Copper (In re Copper) , Ch. 7 Case No. 02- 23450-L, Adv. No. 02-0610, slip op. at 5(Bankr. W.D. Tenn. Oct. 31, 2003). The ne xt four pages

of the bankruptcy

court’s M emorandum Order hi ghlight the fals e1 Some of the Debtor’s false statement s inc lude failing to schedule subs tantial

assets, failing to di sclose hi s full i ncome and scheduli ng debts he di d not owe. F or example, according to the bankruptc y court’ s calculati ons, the Debtor was a warded property ( both real and per sonal) va lued at more than $290,000 under t he Final Dec ree. By contrast, the schedules filed by the Debtor i n the present cas e represent that the Debtor has total assets of only $3,330.00. As noted by the bankruptcy court, the D ebtor had been continuously employed as a professor at Rhode s College during the nine yearsbetween the Final Decr

ee and t he fili ng of th e pres ent cas e. Th e Debtor’s schedules also list liabiliti es of $234,417. 01. Of that amou nt, $200,000.00 appears to re present amounts owed to the Appellee. At trial, the Debtor admi tted that two other debt s list ed, i n res pect ive amounts of $8,700.00 and $15,000.00, were no longer owed. The Debtor’s schedules also state that he is di vorced, w hen in fact he remar ried in 1995. The schedules inc lude liabiliti es owed by his current spous e, but disclos e neither her assets nor her $40,000.00 annual income.

-6- statements and inconsistencies made by the Debtor i n this case bot h in his sch edules and duri n g his tr ial te stim ony. 1 Even though the Debtor g ave seve ral expl anations for the multitude of false statements and i nconsistenci es, the bankruptc y court dete rm ined that none of the explanat ions was credible. The b ankruptcy court stated:

The Court found th e Debtor to be a very difficult witness. He refused, for ex ampl e, to acknowl edge the authenticity

of his signature on his bankruptcy petition or on a Conse ntOrder entere d in the state court dealing with th e payment of [two cred itors], claiming thatthe signatures could have been stamped. He claimed tha t he does not know what Chapter 7 is, eve n though he hasfile d five Chapter 7 petitions. At t imes, the Debtor

seemed to be calc ulating the likeliho o d th at his statements could be ver ified. At other times he seemed to be inventing excuses and explanation s on the spot. The Debtor seemed to have vi rtually no appreciati on or

respect for the g ravi ty of t he proceeding s ini tiated by hi m in th e Bankruptcy Court. Given the very high level of the Debtor’s education and stature within the educational and international communities, the Court found the De bto r’s cavalier attit ude and lack of candor to be surpri sing and offensive.
Id. at 10. Apparentl y, the Debto r’s bad conduc t also had as neg ative an i mpact on the divorce proceed ings as it has had o n the proceeding s in the bankr uptcy cour t. During the two-week trial i nvolvi ng the divorce, the tri al judge made t he following observati ons:

Exten sive proof was taken over a two week trial, most of which h ad to do with the property owned by the parties and the-7- extent to which the defendant [the Debtor ] had infringed upon the marital property by secret ing accounts in banks and other places and not di sclosing the amount of marital assets to the plaint i ff. The testimony offered by the defendant w as riddled by inconsiste ncies t o the extent t hat the Court i s unable to beli eve anyof the testimony off ered by the defendan t in his own beha lf.
Id. at 3 (quoti ng Memorandu m Opin ion ofthe trial judge in th e divorce p roceed ings between Debtor and Ms. Copper).
The Panel also notes that at oral argument, the Debtor’s counsel adv ised the Panel thathis client

was the most

sanctioned debtor

in the di stri ct and that counsel himself is probably the most sancti oned attorney in the distr ict. Counsel did not attempt to persuade the Pane l tha t any s anct ions rece ived b y eit her himself or hi s client w ere unjustified but presented the statement as i f it were a badge of honor. C ounsel further conceded that during the Debto r’s t estimo ny given at the trial of this matter hi s client w as “swi mming around the truth.” Then, a s if to clarify, counsel advised this Panel that his client had in f act told some “egreg ious lies”during the trial of the adversary p r oceedin g. Counsel’s admissions leave thi s Panel won dering w hether the Debtor was even swimming in the
same pool as the truth. Obviously, the bankruptcy court’s findings regarding the Debtor’s complete lack of credibilit y are well founded.
In making the dec ision to deny the Debtor’s motion to convert, the ba nkruptcy court stated:
The motion was filed the Friday before trial commenced on Mond ay, some seventeen months after the filing of

the Chapter 7 petition. The Court does not b elie ve that the Debtor has had a sudden change of he art and now wants to re pay [Ms. ] Copper. To the contrary , his testimony at trial i ndicates that

he never intends to rep ay her unle ss forced to do so. The Court believesthat the Debtor and his counsel wanted to av oid the determination of the discharg eability of these debts and the entitlement

of the Debtor to a discharge. The Debtor may also have hoped to obtain a discharg e of his oblig ations by paying less than the full amount owed. The Deb tor wil l not be permitted to manipulate the Bankru ptcyCode in this manner.-8-

Id. at 15. The ban k ruptcy co urt then we nt on to in esse nce find that it w ould be futile to convertthe Debtor’s

case to one under

chapter 13 becaus e a chap ter 13 plan must be proposed in good faith an d the Debtor was not capable of m aking such a proposal:

The pattern of abuse ex hibited by the Debt or over the past nine years l eaves lit

tle room for doubt t hat the Debto r’s pro posal was not made in good faith. . . . Further, the Cou rt has little confidence that an y schedules the Debtor would file in conne ction with a con verted cas e could be rel ied upon to determine whether

the Debtor’s

plan meets the best interes ts of creditors ’ test or

whether th e Debtor has pr oposed to devote all of his dispos able income to his repayment plan . . . . [A] Chapter 13 plan for

this Debtor would be little different than the installment

p ayme nt plans he has sought and ob tained in another court but fa iled to honor.
Id

. at 15-16. Based on these findings, the bankruptcy court denied the Debtor’s moti on to convert and the Debtor filed his appeal.
Stated as succinctl y as possi ble, the Debtor’s ar gument in this

case is that no matter how reprehensibl e or abhorrent his actionshave been, he s till has an absol ute, on e-tim e right to convert his

chapter 7 caseto a chapter 13 case. We do not agree.

IV. DISC USSION The Bankruptcy Code provides:

The debtor may convert a ca se under this chapter

to a case under chapter 1 1, 12, or 13 of this title at any

time, if the case has not been converted unde r sectio n 1 112, 1208, or 1307 of this title. Any waiver of the right to convert a case under this subs ection is unenfor ceable. 11 U.S.C. § 706(a).
Federal Rul e of Bank ruptcy Pr ocedure 1017(f)( 2) provi des that “[c]on version .

. . under §[] 706(a), . . . shall be on moti on filed and served as requi red by Rul e 90 13. ” Bankruptcy Rules 2002 and 9013 provide that co nversio n from chapter 7 to c hapter 13 must be made by a moti on and that parties ar e entitled to 20 days’ noti ce of the motion. Fed. R. Bankr . P. 2002(a)( 4) and 9013.2 Inte rest ingly, the Fifth Cir cuit case of In re Marti

n has been cited by

both sides of the argument, pr

obably becaus e of the followi ng languag e: [T]he cases also support our conclusion that a debtor’s right to convert

under section 70 6(a) i s, as indica ted by the statute and its leg islative history , an absolute one. The courts re fu se to in terf

ere w ith t he rig ht in the a bsen ce of extre me circum stances

. Because Mar tin does not allege facts which if true would provide an adequate ground to deny the debto r’s motion to convert, we agree with the district court’s conclusion that the bankruptc

y court erred in deny ing the conversion. In re Martin , 880 F.2d at 859 (emphasis added). Arg uably, the abo ve emphasiz ed language leaves open the question of whether the F ifth Circui t would find t he right to conve rt is a bsolute or i s subj ect to the li mited e xcep tion t hat it takesextr

eme circumstances

for the rig ht to be denied.

-9- There are two lines of cases interpreting § 706 (a). One line does in fact hold that the debtor has an absolute rig htto convert from a chapter 7 to a chapter 13 pro viding that (i) the case has not already been converted from a chapter 11, 12 or 13 and (ii) the debtor meets the financial el igibili ty requ irements of § 109(e) to be a chapter 13 debtor. The se cases find that the bankr uptcy cour t does not hav e the power to den y conver sion. Peque no v. Sch midt , 307 B.R. 568 ( S.D. Tex. 2004) (provi ding detail ed outline of cases
on both sides of the iss ue). The Bankruptcy Appell ate Panel for the Tenth C ircuit has noted:
The stated policy behind § 706(a) is to prov ide the debtor w ith “the one-time absolu te right of conversion

. . . [in order to give] the debtor . . . t he opportunity to repay hi s debts. . . .” S. Re p. No. 95-989, at 94 (1978), reprinted in 1978 U.S.C.C .A.N. 5787, 5880. Pursuan t to the plain lan guage of § 706, a debtor may convertat any time if the fol l owing t wo elements a re met: (1) the debtor

has not prev iously converted hi s case; and (2) the debtor meets the eligibility require ment s of the chapter to which the debtor wi shes to conv ert.
Miller v. U.S. Trustee (In re Miller) , 303 B.R. 471, 473(B.A.P. 10th C ir. 2 003) (alte ration in original ); see also Martin v. Martin ( In re Marti

n) , 880 F.2d 857, 858 ( 5th Cir. 1989) (right to convert is absolute); 2 see also In r e Gibbons , 280 B.R. 833 ( Bankr. N.D. Ohio 2002) (same). The Debtor before t his Panel has n ot previous ly converted his case and the-10-

Appellees do not dispute th at the De btor meets the i ncome and expense limitations of § 109(e). However, the bankruptcy court determined that th e Debtor was n ot entitl ed to convert hi s case due to hi s bad faith.
In re Mill er finds that the debtor

there ha d an abs olute righ t to conve rt even tho ugh there was substantial evidence of abuse of the system. The panel’s r esolution i n In re Miller indicated that the best place to dea l with abuse of process cause d by the conversion
was during theconfirmation phase of the debtor’ s plan. Id. at 475 (ci ting Mason v. Young (In re Young

) , 237 F.3d 1168 (10t h Cir. 2001) . This line of cases also finds that the converted case can be reconv erted on the basi s of the debtor’s bad faith.
W hile one might cons ider it friv olous to convert onlyto reconvert, such a procedur

e allowsone t o compl y wi th both the Congr e ssional mandate of Section 706( a) and the duty to protect the bankruptcy process from abuse. Pequeno , 307 B.R. at 580.
The other–and in our

opinion, more r

easoned–line of cases , holds that the right to
con vert is not absolu te and that in ex treme circums tances conve rsion can be de nied

. “[T]he trend in other jurisdictions, if indeed one is discernable, is to judiciall y recog nize an exception to the rig ht to conver t in situati on s of b ad fa ith.” Id. at 578. See Kuntz v. Shambam

(I n r e K un tz) , 233 B.R. 580, 585 (B.A.P. 1st Cir. 1999) (debtor’s o ne-time rig ht to conversi on may be denied in “extr eme circumstances” constit uting bad faith) ; Martin v. Cox , 213 B .R. 571, 572-73 ( E.D. Ark. 199 6) (conv ersion denied d ue to falsificatio n o f doc umen ts, failure to disclose assets and oth er information, f alse representations in another court, and other

misconduct); In re Wampler , 302 B.R. 601, 605-06 (Bankr. S.D. Ind. 2003) (conversion denied due to fact ors including timing of motion, motive for moti on, debtor not being forthcoming wi th court and cr editors, and l ack of need for chapter 13); In
re Oblinger

, 288 B.R. 781, 785 (Bankr. N.D. Ohio 2 003) (court “tends to agree with those
cases holding that

conversi on might . . . be denied under ‘extreme circumstan ces,’ such as a debtor’s abuse of process,”but finding that such cir cumstances did no t exist i n that case); In re Johnson , 262 B.R. 75 ( Bankr. E.D. A rk. 2001) ( acknowledg ing oppos i ng precedent

but finding tha t more persuasi ve view is that conversi on from chapter 7 to chapter 13 can be denied in extreme cir cumstance for lack of good fait h as an abuse of-11-

process); In re Lesniak , 208 B.R. 902, 906-07 (Bankr . N.D. Ill . 1997) (conversion denied because schedules were “fraught with dis crepancies”and because of lack of motivation to pay debts); In re Thornton , 203 B.R. 648, 652-53 (Ban kr. S.D. Ohio 1996) (conver sion denied due to omis sions of assets, false testimony , and prepetiti on conduct); see also Finney v. Smith (In re Finney) , 992 F.2d 43, 45 (4th Cir. 1993) (debtor’s fr

aud and filing of motion to convert

only after di scharge was d enied justified immediate reconversion to chapter 7); In re Eu gene Alexander, Inc. , 191 B.R. 920, 923 -24 (Bankr. M.D. Fla. 1994) (finding that chapter 7 debtor has ri ght to convert to chapter 11 but conver

sion should not be permitted if “cause” exists to convert case back to chap ter 7 or to dismiss. “To permit conversion to Chapter 11 in those circumsta nces would be futile and a wasted act.”).
W hile the United States Court of Appeals for the Sixth Circuit has not directly addressed this issue, the denial of a motion to convert for bad faith is consistent w ith Sixth Circuitprecedent. For example, the S ixth Ci rcuit has hel d that a bankruptc y court may dismiss a chapter 13 peti tion that was no t filed in goo d faith. Alt v. Unit ed States (In r

e Alt) , 305 F.3d 413, 418-19 (6th Cir. 2002). “If a cha pter 13 petiti on may be dismissed for lack of good faith, it is logical to conclude that conversi on from chapter 7 to chapter 13 may also be denied in the absence of good faith.” In re Brown , 293 B.R. 865, 870 (Bankr. W .D. Mich. 2003) (after

discussin g Alt ). Accordi ngly, t his Panel ag rees wi th the court in Brown and holds that “[ i]f, upon its review of the facts, the bankruptcy court find s that the debtor’s request for convers ion wasmade in bad faith or represents an attempt to abuse the bankruptcy process, the court may deny the requested conversion.” Id.
The Sixth Circuit

has adopted a “totality of the circumstances” analy sis in evaluating whether a debtor should be permitte d to commence a chap ter 13 case , Alt , 30 5 F.3d at 419 (quoting Society Nat’l Bank v. Barrett (In re Barr ett) , 9 64 F.2d 588, 591 (6th Cir. 1992)), and the same analy sis should app ly in evaluating w het her a debtor should be permitted to convert

a case to chapter

13, Thornton , 203 B.R. at 652. The Sixt h Circuit in Alt listed some of the factors that a bank ruptcy co urt might find appropr iate to be considered under the facts of a par ticular cas e, and stated: “W e have also emphasized tha t good faith is a fact-specific and f lexible determination.” Alt , 305 F.3 d at 419 (citing Metro Employees

Credit Union v. Okoreeh-Baah (In re Okoreeh-Baah) , 836 F.2d 1030, 1032-33 (6th Cir.1988)).-12-

The bankruptcy

court in the appeal before this Panel found th a t the motion to convertwas motivated solely by a desir

e to avoid a determination that the Debtor was not entitled to a dischar

ge (or that

his oblig ations to Ms. Copper are nond ischargeabl e) and not by a desire to r

epay his c reditors, an d that t he mot ion thus repr esented an improper attemptto “manipulate the Bankru ptcy Code.” In re Copper , Ch. 7 Case N o. 02-23450-L, Adv. No. 02-0610, s lip op. at 15. The court also r elied on the “p attern of

abuse exhibi ted by the Debtor over the past nin e years,”the belief that “ the Debto r has alwa ys had the ability to repay t he obligati ons owed to [ Ms.] Copper, ” and misrepr esentations in the Debtor’s schedules. Id. at 15-16. These findings ar e clearly supported by

the evidence. Indeed , at argument counsel for the Debtor all but admi tted a lack of g ood faith, rely ing solelyon h is legal pos ition that g ood faith is ir relevant un der § 706(a) of theCode. Acco rdin gly, those findings were not clearlyerroneous and support the bankruptcy court’s conclusionsthat the Debtor’s actions const itute bad faith and abuse of process such as will justify the denial of a mo tion to convert under § 706(a).
In deciding t hatthis second line of cases is the one that is the more wel l-reasoned and the one that this

Panel will follow, it is not enough that we determine tha t our ruling is the best one to prevent abuse of the bankr uptc y sys tem. We must also consider the Debtor’s argum ent that t he plain language of § 706(a) do es not permit us to adopt th is pos ition but provi des the Debtor with a one-time absolute r ight to convert. See Norwes t Bank Worthington v. Ahlers , 485 U.S. 197, 206 , 108 S. Ct. 963, 969 (198 8) (bankr uptcy courts cannot use theirequitable powers to overr ide the plain l anguage of a prov ision of the Bankruptcy Code). We do not agree that the language of § 7 06(a) has suc h an effect.
As one bankruptcy court has noted, neither the l anguage of the statute itself nor the legis lati ve history

givesa debtor the absol ute right to convert. See In re Stark ey , 179 B.R. 687, 691-92 (Bankr . N.D. Okl a. 1995). We agree wit h the cases finding that the phrase in § 706(a) prov iding that the debtor may convert “at any t ime” refers to a time frame. The phrase does notmean “regardless of circumstance s.” Id. at 692; In re Oblinger , 288 B.R. at785 (by us e of the phrase “at any time,” Congress disavowed a time com ponent in determining a motion to convert from chapter 7to chapter 13)

.-13-

Further, the language protecting the debtor f rom any waiver of the right to convert “is meant to prev entfrustration of the Bankruptcy Code by standard prov isions in contracts of adhesion . . . . This sentencedoes not apply to any impairment of the right to convert for reasons of the debtor ’s own mi sconduct or comparable cir cumstan ce s, more in the nature of estopp el than waiver.” In re Starkey , 179 B.R. at 692
Fina lly, it is als o relevant that § 706(a) us es the wor d “may” mean ing “mig ht” or “used to express

possibili ty” or “ us ed to express opportunity or permission.” Random House Unabridged Dictionary 1189 (2d ed. 1993) . If Congres s had intended to l eave the bankruptcy courts with absolutely no discretion in the matter, it would have used the m ore mandatory phr

ase o f “ shall

be able to convert.” See 11 U.S.C. § 1307(b) (“ On request of the debtor at any

time . . . the court shall

dismiss a case under

this chapter .”); In re Ponz ini , 277 B.R. 399, 404 ( Bankr. E.D. A rk. 2002); In re Marca k is , 254 B.R. 77, 81-82 (Bankr. E.D.N.Y. 2000); In re Hauswir th , 242 B.R. 95, 96 n.2 (Bankr. N.D. Ga. 19 99). Therefore, we find that the p lai n la ngu age of § 706(a) doesnot grant an absolute right to convert.
The language t hat specificall y refers to debtors havi ng a one-time absolute rig htto convertappears only in the legis lative hi story. In re Mill er , 303 B.R. at 475(citing cases). Courts relyin g on the legisla tive his tory, how ever, must r

ead and interpret the history as a whole. That language states:

Subsecti on (A) o f this s ectio n gives the debtor the one -time absolute right of conv

ersion of a liquidation case to a reorganization or indiv idual rep ayme nt case. If the cas e has already once been converted from chapter 11 or 13 to chapter 7, then the debtor does not ha ve that ri ght. The policy of t he provision is that the debtor s

hould always be gi

ven th e opportu nity to repay his debts , and a waiv er of the right to convert a case is unenforceable. S. Rep. No. 95-989, at 94 ( 1978), reprinted in 1978 U.S.C.C .A.N. 5787, 5880 (emphasis added). Thus, the leg islative history suggests

a one-time absol ute right to convert b ut that phrase cannot be implemen ted without also look ing a t the po licy , stat ed in t hat sam e legis lati ve history , behind permitt ing the debtor an absolu te right to convert. That is that-14-

“the debtor

shoul d always b e given the o pportu nity to rep ay hi s debts .” Th e b ankruptcy court here found that

the Debtor never intends to pay his debt to Ms. Copper and that he is abusing the bankruptcy system to thwart all of her efforts toattempt to coll ect the debt. As evidence of this, the bankrup tcy court points out that the Debtor h as been giv en the oppor tunity i n the past to make pa yments under i nstallment plans and utterly

failed to comply with thos e plans. Permitting the Debtor i n this case toconvert to a chapter 13 tur ns on its head the policy reason for providing a debtor with suc h a right. “The rationale for readilygranting conversion under § 706 is to encourage debtors to repay their debts; however, Congressdid not inte nd to allow o r con don e abu se of the b ankr uptc y process.” In re McNal

len , 197 B.R. 215, 219 (Bankr. E.D. Va. 199 5) (citing In re Starkey , 179 B.R. at694 (“This C ourt wil l grant conversion under § 706 readily –but not so readily

as to allow and con done abuse.”)). Neither will this Panel permit such abuse s of the bankruptcy system as those attempted by this Debtor.
V. CONCLUSI ON
The decision of th e bankruptcy court is AF FIRMED

.