Opinion ID: 2973187
Heading Depth: 3
Heading Rank: 2

Heading: Conversion Order

Text: 11 U.S.C. § 1112(c) provides that chapter 11 cases involving debtors who are farmers cannot be converted to chapter 7 “unless the debtor requests such conversion.” In this case, the bankruptcy court held that § 1112(c) was not applicable in light of the chapter 11 trustee’s consent and the practical considerations that favored conversion. On appeal, Appellant alludes to the bankruptcy court’s finding on this point as evidence of the court’s failure to follow “established law,” but he does not challenge the court’s finding on recognizable legal grounds. Under § 1112(b), a bankruptcy court is authorized to convert a chapter 11 case to a chapter 7 case or to dismiss it, whichever is in the best interest of creditors and the estate, for “cause.” 11 U.S.C. § 1112(b). The statute contains a non-exhaustive list of ten grounds that may constitute cause for conversion or dismissal. Id. Generally, proof of any one of these factors is sufficient to justify conversion. See In re Federal Roofing Co., 205 B.R. 638, 641 (Bankr. N.D. Ala. 1996). The court is afforded wide discretion to determine whether cause for conversion exists. See Koerner v. Colonial Bank (In re Koerner), 800 F.2d 1358, 1367 (5th Cir. 1986). In this case, the bankruptcy court’s conversion order was based on findings that the debtor was no longer operating and that the bankruptcy estate was likely to be liquidated. Because Erin Farms was not likely to rehabilitate and because liquidation under chapter 11 would impose unnecessary administrative costs, the court found cause for conversion to chapter 7. Appellant has not challenged the bankruptcy court’s finding that cause for conversion existed. Instead, he asserts that conversion of the case to chapter 7 prejudiced his right to pursue potential claims against Deere Credit and the estate. Conversion of Erin Farm’s bankruptcy case to 10 chapter 7 does not impact Appellant’s ability to pursue his claims relating to loss of the 2003 crop. Conversion to chapter 7 does however reduce the expense of liquidating the bankruptcy estate.