In re: Speer

Filing 88

ORDER: The order of the Bankruptcy Court is hereby affirmed. The Clerk may close this appeal. See attached for details. Signed by Judge Robert N. Chatigny on 1/29/2018. (Chenoweth, T.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT

IN RE: SHERI SPEER

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CASE NO. 3:15-cv-646-RNC

ORDER
Sheri Speer, a debtor in bankruptcy, appeals from an order
of the Bankruptcy Court (Hon. Ann M. Nevins) granting a motion by
a creditor, Seaport Capital Partners, LLC, to reconvert the case
from Chapter 11 to Chapter 7.

The Bankruptcy Court granted the

motion initially and on reconsideration.

Review of the Court’s

decision on reconsideration discloses no error.

Accordingly, the

order is affirmed.1
On a showing of cause, the Bankruptcy Court is empowered to
“convert a case under [Chapter 11] to a case under chapter 7 or
dismiss a case under [Chapter 11], whichever is in the best
interest of creditors and the estate.”

11 U.S.C. § 1112(b)(1).

Ms. Speer does not contest the Bankruptcy Court’s determination
that cause existed to convert or dismiss.

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Instead, she

Seaport argues that the order should be summarily affirmed
because Ms. Speer has failed to provide a transcript of the
Bankruptcy Court’s oral decision as required by Federal Rule of
Bankruptcy Procedure 8009(a)(4),(b)(1). Without excusing Ms.
Speer’s procedural default, which is part of a pattern of similar
defaults on her numerous appeals, I think it is preferable to
rule on the merits in this instance, which I am able to do
because a transcript of the underlying decision is available.
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challenges only the decision to reconvert the case to one under
Chapter 7.
In determining whether conversion or dismissal is in “the
best interest of creditors and the estate,”

11 U.S.C. §

1112(b)(1), courts consider whether creditors are in need of a
Chapter 7 case to protect their interests.

See SWJ Mgmt., LLC v.

Coan, No. 3:14-cv-01860 (MPS), 2015 WL 5472501, at *4 (D. Conn.
Sept. 16, 2015).

If creditors would benefit from the appointment

of a Chapter 7 trustee to oversee the liquidation and
distribution of assets, conversion is preferable.

See In re

Westhampton Coachworks, Ltd., 2010 WL 5348422, at *6 (Bankr.
E.D.N.Y. 2010).

If dismissal would prejudice creditors, it

ordinarily will be denied.

See SWJ Mgmt., LLC, at *4.

A court’s

decision to convert a case to Chapter 7 is reviewed for abuse of
discretion.

See id. at *3.

In its initial decision on Seaport’s motion to reconvert the
case to one under Chapter 7, the Bankruptcy Court determined that
Ms. Speer’s failure to abide by court orders and subpoenas, and
the diminution of her estate’s assets during the Chapter 11 phase
of the case militated in favor of granting the motion.

See Tr.

at 35:13-22, In re Speer, No. 14-bk-21007 (Nov. 19, 2015) (ECF
No. 865).

On reconsideration, the Court once again determined

that the case should be reconverted to one under Chapter 7 rather
than dismissed.

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Ms. Speer has not shown that the Bankruptcy Court abused its
discretion in granting the motion to reconvert the case either
initially or on reconsideration.

A court abuses its discretion

when its decision rests on an error of law or a clearly erroneous
factual finding, or when its decision cannot be located within
the range of permissible decisions.

Zervos v. Verizon N.Y.,

Inc., 252 F.3d 163, 169 (2d Cir. 2001).

Ms. Speer has failed to

identify an error of law by the Bankruptcy Court, or a clearly
erroneous finding of fact, and reconverting the case rather than
dismissing it was not unreasonable.
The Bankruptcy Court had ample grounds for concluding that
the case should be reconverted to one under Chapter 7 rather than
dismissed.

As the Court explained, the creditors had

“consistently argued that it [was] in their best interests for
the case to be converted to Chapter 7 rather than being
dismissed.”

Tr. at 44:18-21.

The Court “agree[d]” with the

creditors’ argument that “conversion [was] better for them.”

Tr.

at 48:4-6.
Ms. Speer contends that the Court failed to provide an
adequate statement of reasons for its decision.

I disagree.

In

a lengthy bench decision, Judge Nevins made it clear why she
agreed with the creditors that reconversion rather than dismissal
was in their best interest.

She quoted the reasons given by

Judge Dabrowski when he denied a previous motion to dismiss the

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involuntary petition: a Chapter 7 trustee would cut through
related litigation, provide for orderly review of Ms. Speer’s
assets and liabilities and arrange for liquidation of assets in
an efficient manner.

Tr. at 43:20-44:8.

It is apparent that

Judge Nevins thought the reasons given by Judge Dabrowski
supported reconversion.

Next, Judge Nevins reviewed the history

of the case, including the Chapter 11 phase, which provided even
stronger grounds for reconversion.

The Chapter 11 phase had been

marked by substantial, continuing losses and there was no
reasonable likelihood of rehabilitation.

Tr. at 45:6-10.

With

one exception, none of Ms. Speer’s numerous properties had any
equity.

Ms. Speer had failed to pay real estate taxes when due

and no debt service had been paid.

Ms. Speer was “unable or

unwilling to provide information required . . . of a debtor who
is in bankruptcy to completely account for her assets, income,
expenses, and liabilities.”

Tr. at 46:16-20.

Ms. Speer “ha[d]

failed to comply with the requirements of the Bankruptcy Code,
the Bankruptcy Rules, and direct orders of th[e] Court to produce
information,” Tr. at 45:23-46:2; she had “engage[d] in a pattern
of activity” that had no apparent purpose other than “delay and
obfuscation,” Tr. at 48:8-10; and she “ha[d] not provided
accurate and complete disclosure of financial information to her
creditors, to the Office of the U.S. Trustee, or to the Chapter 7
Trustee.”

Tr. at 48:10-13.

Given these facts and circumstances,

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the Court concluded that reconversion rather than dismissal was
in the best interest of creditors and the estate itself.

Tr. at

48:20-22.
Ms. Speer argues that the Bankruptcy Court erred in failing
to explicitly address various factors courts consider in
determining whether to convert or dismiss a case.
ruling, the Bankruptcy Court listed those factors.

In its bench
Tr. at 41-42.

The Court had no obligation to do a factor-by-factor analysis, as
Ms. Speer suggests.

It is sufficient that the Court fairly

considered the pertinent facts and circumstances and reached a
reasonable decision.
Accordingly, the order of the Bankruptcy Court is affirmed.
The Clerk may close this appeal.
So ordered this 29th day of January, 2018.

/s/ RNC
Robert N. Chatigny
United States District Judge

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