A farmer filed for Chapter 7 bankruptcy in 2019. Eighteen months later he filed a motion to convert to a Chapter 12 case. A Chapter 7 debtor may convert his case to a Chapter 12 case provided that he meets the requirements of that chapter. See 11 U.S.C. § 706(a), (d).
The court in this case did not discuss whether the debtor met the debt limits and income requirements of Chapter 12, but rather discussed the debtor’s behavior since filing for Chapter 7 liquidation. The United States Supreme Court has determined that 11 U.S.C. section 706(d) allows a court to deny a motion to convert when the debtor has engaged in bad faith conduct. Marrama v. Citizens Bank of Massachusetts, 549 U.S. 365, 374 (2007).
After filing for bankruptcy, the debtor attempted to hide valuable assets from the bankruptcy trustee, used the bankruptcy estate assets to continue to farm, and gave false information regarding his salary from his farm LLC as well as the amount of his liabilities. The court concluded that the debtor consistently acted in bad faith and allowing the debtor to convert to a Chapter 12 case without a trustee would be like “putting the fox in charge of the henhouse.” Thus, the court denied the debtor’s motion.
In re Steven Keith Jenkins, Debtor, 2021 WL 1845572 (Bankr. N.D. Miss. May 7, 2021)