Opinion ID: 3285768
Heading Depth: 2
Heading Rank: 2

Heading: Best Interests of Creditors

Text: Once the bankruptcy court determined that there was cause to convert the case, it had broad discretion to do so if it concluded that conversion was in the best interests of creditors - 10 - and the estate. 11 U.S.C. § 1112(b)(1). Given the court's findings on diminution and rehabilitation, its conclusion that conversion was in the interest of creditors and the estate was hardly surprising. Hoover argues to us, nevertheless, that the creditors will mostly get nothing on liquidation after both the administrative fees and his Massachusetts tax obligation (in part) are paid. Therefore, he reasons, even a long shot at making a go of it under Chapter 11 is worth it for the creditors. Hoover, though, did not make this argument to the bankruptcy court; therefore, we can consider the argument waived. See In Re NetVelázquez, 625 F.3d 34, 40 (1st Cir. 2010) ([A]bsent the most extraordinary circumstances, legal theories not raised squarely in the lower court cannot be broached for the first time on appeal. (quoting Teamsters, Chauffeurs, Warehousemen & Helpers Union, Local No. 59 v. Superline Transp. Co., 953 F.2d 17, 21 (1st Cir. 1992)). Even if not waived, this argument would fail. Confronted with two likely bleak alternative outcomes, the district court had ample discretion to conclude that a prompt conversion rather than further diminution was in the best interests of creditors, especially where no creditor opposed conversion as hostile to its interests. - 11 - We therefore find no error of law or abuse of discretion by the bankruptcy court in converting Hoover's Chapter 11 bankruptcy case to Chapter 7.