The Sixth Circuit Court of Appeals issued In re: Copper, 2004 Fed App. 0007P (6th Cir. 2004)(File Name: 04b0007p.06).
Judge Aug writes (excerpt):
Over the past nine years, the Debtor has taken evasive action to avoid paying his ex-wife, Athena Chen Copper, amounts she was awarded under the parties’ divorce decree. The bankruptcy court’s Memorandum Order outlines this history in detail. . . .
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The Panel also notes that at oral argument, the Debtor’s counsel advised the Panel that his client was the most sanctioned debtor in the district and that counsel himself is probably the most sanctioned attorney in the district. Counsel did not attempt to persuade the Panel that any sanctions received by either himself or his client were unjustified but presented the statement as if it were a badge of honor. Counsel further conceded that during the Debtor’s testimony given at the trial of this matter his client was “swimming around the truth.� Then, as if to clarify, counsel advised this Panel that his client had in fact told some “egregious lies� during the trial of the adversary proceeding. Counsel’s admissions leave this Panel wondering whether 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 credibility are well founded.
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Stated as succinctly as possible, the Debtor’s argument in this case is that no matter how reprehensible or abhorrent his actions have been, he still has an absolute, one-time right to convert his chapter 7 case to a chapter 13 case. We do not agree.
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In deciding that this second line of cases is the one that is the more wellreasoned and the one that this Panel will follow, it is not enough that we determine that our ruling is the best one to prevent abuse of the bankruptcy system. We must also consider the Debtor’s argument that the plain language of § 706(a) does not permit us to adopt this position but provides the Debtor with a one-time absolute right to convert. . . .
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Therefore, we find that the plain language of § 706(a) does not grant an absolute right to convert.
The language that specifically refers to debtors having a one-time absolute right to convert appears only in the legislative history. In re Miller, 303 B.R. at 475 (citing cases). Courts relying on the legislative history, however, must read and interpret the history as a whole. That language states:
Subsection (A) of this section gives the debtor the
one-time absolute right of conversion of a liquidation
case to a reorganization or individual repayment case.
If the case has already once been converted from
chapter 11 or 13 to chapter 7, then the debtor does
not have that right. The policy of the provision is that
the debtor should always be given the opportunity to
repay his debts, and a waiver 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 legislative history suggests a one-time absolute right to convert but that phrase cannot be implemented without also looking at the policy, stated in that same legislative history, behind permitting the debtor an absolute right to convert. That is that “the debtor should always be given the opportunity to repay his debts.� The bankruptcy 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 to attempt to collect the debt. As evidence of this, the bankruptcy court points out that the Debtor has been given the opportunity in the past to make payments under installment plans and utterly failed to comply with those plans. Permitting the Debtor in this case to convert to a chapter 13 turns on its head the policy reason for providing a debtor with such a right. “The rationale for readily granting conversion under § 706 is to encourage debtors to repay their debts; however, Congress did not intend to allow or condone abuse of the bankruptcy process.� In re McNallen, 197 B.R. 215, 219 (Bankr. E.D. Va. 1995) (citing In re Starkey, 179 B.R. at 694 (“This Court will grant conversion under § 706 readily–but not so readily as to allow and condone abuse.�)). Neither will this Panel permit such abuses of the bankruptcy system as those attempted by this Debtor.