Riki Trowe

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POSTED ON WEBSITE
NOT FOR PUBLICATION
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF CALIFORNIA
FRESNO DIVISION
In re
RIKI TROWE,
Debtor.
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Case No. 24-24267-F-B-7
Docket Control No. DNL-14
RULING ON TRUSTEE’S MOTION FOR BAD FAITH DETERMINATION
—————————————————————————————
J. Russell Cunningham, DESMOND, MANNING, LIVAICH & CUNNINGHAM for
Nikki B. Farris, Chapter 7 Trustee, Movant.
Omero Banuelos, for RIKI TROWE, Debtor.
Jeffrey W. Shields, for Colutions, LLC, Creditor.
—————————————————————————————
RENÉ LASTRETO II, Bankruptcy Judge:
INTRODUCTION
The Chapter 13 bargain is in return for committing to a
three to five year payment plan, debtors who elect Chapter 13 can
keep most of their property and at the end of the plan, receive a
discharge.1 	A further benefit is if circumstances prevent
debtors from maintaining plan payments, they have the option of
converting to Chapter 7. § 1307(a). 	If they convert in good
1 Unless otherwise indicated, references to chapters or code sections shall be
references to the United States Bankruptcy Code, 11 U.S.C. § 101 et seq.
References to “Civ. Rule” shall be to the Federal Rules of Civil Procedure.
References to “Rule” shall be to the Federal Rules of Bankruptcy Procedure.
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faith, the Chapter 7 estate is limited to what the debtor still
possesses and controls of the property of the estate when the
petition was filed. § 348(f)(1). 	The debtor avoids the “penalty”
of turning over to a Chapter 7 trustee the property acquired
after filing but before conversion.
Contrast that with what occurs if the debtor converts in bad
faith. 	Under § 348(f)(2), if there is a bad faith conversion,
property of the estate consists of property existing on the date
of conversion.
Here, we examine whether a debtor converted in bad faith and
suffers the penalty. 	Applying controlling circuit precedent, the
court finds the conversion was in bad faith and thus the property
of the estate in this case consists of property of the estate on
the date of the conversion.2
BACKGROUND
To help the reader, here is a list of individuals and
entities that will be discussed.
Riki Trowe (“Debtor” or “Trowe”) the debtor here. 	Debtor
has a tangly list of affiliates.
RJT Consulting, LLC (“RJT”). 	Debtor owns 100% of the
interest in RJT. 	Docs. #195, #197.
Event Horizon Group, LLC (“EHG”). 	Debtor owns a 33.3%
interest in EHG. 	Docs. #195, #197.
Ventura Seed Company, Inc. a corporation wholly owned by
Debtor.
2 This case was originally assigned to the Honorable Fredrick E. Clement. 	It
was later assigned to the undersigned due to Judge Clement’s retirement.
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Four2Nada, Inc. 	Four2Nada is wholly owned by the Debtor.
There is some evidence that there exists both a California and
Oregon corporation by that name. 	Doc. #195.
Ventura Seed Company, LLC (“SeedCo”). 	This affiliate is
partially owned by and is a judgment creditor of the Debtor.
Omero Banuelos, Esq. 	Debtor’s counsel in this bankruptcy
case as well as the counsel for the Debtor in numerous other
litigations.
A. 	Pre-petition events.
In 2020, creditor Colutions, LLC (“Colutions”) obtained an
arbitration award against SeedCo for over $840,000.00 plus
interest for SeedCo’s breach of contract. Doc. #197. 	The
arbitration award was confirmed by the United States District
Court for the District of Colorado. Id.
As the British say, asset “Jiggery-pokery” ensued. 	Alleged
transfers of SeedCo assets led to a second Federal case in 2022
filed in the District Court for the Central District of
California. 	Colutions sued Debtor and some of his affiliated
companies alleging that Debtor and others transferred monies from
SeedCo to SeedCo’s insiders or Debtor affiliated companies
including Four2Nada (both its California and Oregon versions).
Doc. #197. 	This litigation also alleged the transfers left
SeedCo insolvent and unable to pay the judgment. Id.
Colutions’ theories included recovery of avoidable
transfers, conspiracy, breach of fiduciary duty, and unjust
enrichment. Doc. #197. 	Injunctive relief was also sought. Id.
///
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During 2023 and 2024 Debtor’s affiliates filed three
separate bankruptcy cases in this District. Doc. #195:
Affiliate 	Case # 	Filed 	Closed
Four2Nada, Inc. 	23-21498-C-7 	05/08/23 	06/16/23
Four2Nada, Inc. 	23-22267-B-7 	07/10/23 	01/12/24
Ventura Seed Company, Inc. 	24-21327-C-7 	04/01/24 	05/09/24
These filings were used to stifle the Debtor’s scheduled
depositions. Id.
The Debtor and his affiliates stonewalled discovery in the
Central District of California fraudulent transfer case leading
to an order of that Court by Magistrate Judge Standish on July
23, 2024. Doc. #197. 	Judge Standish sanctioned the Debtor
$17,192.00 in attorneys’ fees payable in full in 60 days and an
initial $5,000.00 payment due August 13, 2024. Id. 	Payments were
not made even though the Debtor had available funds to do so.
Doc. #195.3 	Judge Standish summed up the situation:
Frankly, 	the 	Court 	would 	not 	have 	much 	of 	an
issue 	finding 	bad 	faith 	on 	the 	part 	of 	Trowe
here 	– 	bad 	faith 	that 	can, 	in 	proper
circumstances, 	permit 	the 	Court 	to 	issue
terminating 	sanctions 	(or, 	here, 	recommend
such 	sanctions 	to 	the 	District 	Judge) 	without
starting 	with 	a 	lesser 	sanction. 	His 	blatant
disregard 	for 	both 	his 	discovery 	obligations
under 	the 	Federal 	Rules 	and 	his 	apparent
disdain 	for 	authority 	in 	disregarding
directives of the Court support such a finding.
But given that this is a first sanction in this
case, 	the 	Court 	feels 	obligated 	to 	award 	only
monetary sanctions; only against Trowe…
Doc. #197.
///
3 Later, the Chapter 7 Trustee discovered thirteen transfers during the 60 day
period to Debtor’s relatives totaling $34,260.00 from a Debtor controlled
account.
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B. 	Post-Petition, Pre-Conversion Events.
A few days after the expiration of the deadline to pay the
discovery sanctions, on September 24, 2024, Trowe filed this case
as a Chapter 13. Doc. #1.
Trowe’s problems were just beginning.
Trowe’s original schedules and Statement of Financial
Affairs skipped mentioning assets. 	The omissions included a 100%
interest in RJT. Doc. #195. 	Also missing was a 33.5% interest in
EHG.4
Debts were also withheld from the original schedules. 	Trowe
had judgments against him since October 2020 in favor of
Colutions in the amount of over $842,000.00. Doc. #195. 	There
was also a judgment for Trowe’s affiliate, SeedCo, for
$5,698,000.00. Id.
Transfers were also withheld from the original Statement of
Financial Affairs. 	Forty-three transfers totaling over
$236,000.00 made during the Central District litigation were
omitted. 	112 transfers totaling $645,000.00 occurred after that
litigation started. Doc. #195.
The Chapter 13 Plan proposed by Trowe contained
misrepresentations. 	The plan stated in paragraph 3.14 that
general unsecured claims only totaled $16,000.00. Doc. #195.
Neither the Chapter 13 Trustee nor the judgment creditors
were hoodwinked.
In mid-November 2024 both the Chapter 13 Trustee and
judgment creditor objected to plan confirmation disputing Trowe’s
4 This is particularly troubling in this case since Mr. Banuelos directly
received payments from RJT’s bank account. Doc. #195.
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eligibility for Chapter 13 and the feasibility of the Plan. Doc.
#145. 	The Chapter 13 Trustee also raised Trowe’s failure to make
the first Plan payment, attend the scheduled meeting of
creditors, and provide the trustee with requested business
documents. Doc. #195.
On December 5, 2024, acknowledging the imprudence of
continuing the Chapter 13 case, Trowe, through his counsel,
requested conversion of the case to Chapter 7. Doc. #195. 	The
conversion request included a statement that Trowe was ineligible
for Chapter 13 relief. Id. 	The case was converted on December 6,
2024, a little over two months from the date of filing.
C. 	Pertinent Post-Conversion Events.
Nikki Farris, movant here, was appointed Chapter 7 trustee
(“Trustee”). Docket generally.
Trustee hired counsel and started vigorous discovery. Docket
generally.
Trustee discovered Trowe’s interest in RJT by reviewing
Trowe’s response to a records request. 	Among the produced
documents was a balance sheet for RJT showing cash of $12,851.00
in a Chase bank account. 	5 	But the Trustee learned from Chase
that the actual balance at the time of the balance sheet
exceeded $179,000.00. Doc. #195.
The Debtor filed “conversion schedules” under Rule
1019(e)(2) on February 24, 2025. Doc. #56. 	The schedules then
listed RJT but undervalued the interest. 	The later schedules
///
5 This account is referred to in the pleadings as “Chase Account #9819.”
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listed Four2Nada and listed the Colutions debt for $1,000,000.00
and SeedCo’s debt of $5,600,000.00 as “disputed.” Id.
About a month later, the Statement of Financial Affairs was
updated to list the Debtor’s interest in EHG. Doc. #56.
The Trustee started three adversary proceedings.6
One adversary proceeding was against RJT to set aside
certain transfers through EHG deposits into the Chase #9819
account. AP #25-2131. 	The claim is for $1,363,000.00. 	A
default judgment has been entered against RJT.
A second adversary proceeding is against Susan Marron, the
former spouse of the Debtor and other Trowe family members. AP
#25-2135. 	That adversary proceeding is for avoidance of
fraudulent transfers, turnover, and declaratory relief as to
various assets including certain real properties.
A third adversary proceeding is against Trowe for denial of
discharge under §§ 727(a)(2)(A), (B), (4), (6)(A), (a)(7). AP
#25-2136.
The Trustee filed a motion to compel the Debtor to turnover
certain assets. 	The motion was granted July 30, 2025. Doc.
#110. 	Those assets were the 100% interest in RJT, 33% interest
in EHG, turn over control of the of RJT bank accounts at Chase,
a 2022 Audi Q5, a 2023 Land Rover, and premium seating Los
Angeles Dodgers’ season tickets.7
6 Both Colutions and SeedCo each filed their adversary proceedings seeking non
dischargeability for fraud, willful and malicious injury, and embezzlement.
The claims also included an objection to discharge because of Debtor’s alleged
concealed records, false oaths, and unsatisfactory explanations for deficiency
of assets.
7 Three months later the court issued an order for the Debtor to appear at a
debtor’s examination. Doc. #210. 	The examination is to relate to the turnover
of the assets. 	Some of the assets have been turned over. 	See Civ. R.
69(a)(Rule 7069) applicable to contested matters under Rule 9014(c)(1).
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On October 3, 2025, the Debtor filed a motion asking the
court to determine the characterization of certain “earnings” of
the Debtor as post-petition earnings and unavailable to the
Trustee. Docs. ##176-181. 	The Trustee opposed and requested an
evidentiary hearing. Docs. ##188-191; ##208-212. 	The court
denied the motion a month later holding that an adversary
proceeding was necessary. Docs. ##223-224.
On October 20, 2025, this motion was filed by the Trustee.
Docs. ##193-196. 	The first hearing on this motion was scheduled
for November 17, 2025. 	However, the parties have continued the
motion many times by mutual agreement.
At one of the continued hearings, Judge Clement continued
the matter to the undersigned’s March 17, 2026, calendar. Doc.
#279. 	Judge Clement’s order stated that that Banuelos could
augment the record on this motion no later than February 16,
2026. 	Trustee’s counsel could reply no later than February 23,
2026. Id. 	Both parties have waived discovery and aside from
those two augmentations, Judge Clement ordered the record
closed. Id. 	The order states “the matter will be decided based
on written submissions.” Id. and Doc. #281.
Trowe and the Trustee attempted to settle the objections to
discharge. 	Those efforts culminated in a motion brought by the
Trustee for the Debtor to waive the discharge. Docs. ##228-232.
On February 2, 2026, Judge Clement denied the motion because the
Debtor’s declaration did not sufficiently show the Debtor has
“conscious and informed judgment” of the consequences of waiving
the discharge. Docs. #277, 284.
///
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The last hearing on this motion was on March 17, 2026. 	This
motion has one request – a finding that the case was converted
from Chapter 13 to Chapter 7 in bad faith. 	If that finding is
made, the property of the estate would consist of both the
property of the estate as it existed on the date this Chapter 13
was filed, September 24, 2024, plus the property of the estate
as of the date of conversion, December 6, 2024. 	The Trustee
contends that if property of the estate is limited to what was
in existence on the original filing date, approximately
$329,000.00 has yet to be collected by the Chapter 7 trustee.
If the court finds bad faith, the Trustee claims that over
$764,000.00 is property that the Trustee must administer. 	The
court is not asked to characterize any property in this motion
and the court will not do so.8
THE PARTIES CONTENTIONS
The Trustee argues that applying a “totality of
circumstances” test as required in the Ninth Circuit will show
that this case was converted to Chapter 7 in bad faith. 	The
Trustee further argues that the Debtor has the burden of proof to
establish good faith.
The Trustee points to numerous omissions and falsehoods in
the schedules, that affiliates filed three previous petitions to
frustrate collection and avoid paying sanctions ordered by the
District Court, and that the Debtor concealed funds until
discovered by the Trustee.
8 An adversary proceeding is necessary. 	See Rule 7001(b). 	The parties have
stated through counsel that they are working on a resolution of the dollar
amounts involved under either scenario.
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The Debtor argues that he did not oppose conversion since he
filed his own request and that simply agreeing with the Chapter
13 trustee that he was ineligible to file a Chapter 13 does not
demonstrate bad faith. 	He also points to his lack of opposition
to the turnover of his interest in EHG, that he turned over the
vehicles and Dodger tickets to the Trustee. 	He stresses that he
purchased the vehicles with post-petition earnings.
Debtor also maintains that he is entitled to all post-
petition earnings as all the earnings were from his own personal
services. 	He also explains that he paid his former spouse a
lease payment of $8,500.00 and $1,000.00 for the education of one
of his children. 	He also reminds that the net value of any post-
petition earnings should be considered since the Debtor incurred
expenses to generate the earnings through RJT.
The Trustee’s reply posits that the Debtor did not explain
the three affiliate bankruptcy cases that were filed to avoid
collection or explain the failure to pay sanctions when he had
access to the funds to do so. 	The Trustee also stresses that the
Chapter 13 was filed when the Debtor was obviously ineligible and
much was omitted from the original schedules. 	A cogent
explanation for the concealment is also lacking according to the
Trustee. 	The Trustee also raises the Debtor’s untimely
compliance with the turnover order and providing the necessary
bank account records.
The Trustee did raise in the reply that after reviewing
other bank records, gross revenue for Four2Nada between January
1, 2021, and July 10, 2023, was over $721,000.00. Doc. #221.
That there were omitted transfers aggregating over $132,000.00 to
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insiders of Four2Nada, Inc. within two years of Four2Nada’s
petition date. Id.9
JURISDICTION
This court’s jurisdiction is founded on 28 U.S.C. § 1334(b)
and 28 U.S.C. § 157(a). 	This is a matter this court can
adjudicate and finally determine under 28 U.S.C. § 157(b)(2)(A).
DISCUSSION
I. 	Bad faith conversion is determined by a totality of the
circumstances.
A Chapter 13 debtor may convert a case to Chapter 7 at any
time. § 1307(a). 	Absent a bad faith conversion, § 348(f)(1)
limits a converted Chapter 7 estate to property belonging to the
debtor “as of the date” the original Chapter 13 petition was
filed. 	Harris v. Viegelahn, 575 U.S. 510, 516 (2015).
On the other hand, § 348(f)(2) provides:
If the debtor converts a case under Chapter 13
of 	this 	title 	to 	a 	case 	under 	another 	Chapter
under this title in bad faith, the property of
the estate in the converted case shall consist
of 	the 	property 	of 	the 	estate 	as 	of 	the 	date
of conversion.
11 U.S.C. § 348(f)(2). 	The question then becomes what is bad
faith? 	The question posed in Harris was whether post-petition
wages not yet distributed by the Chapter 13 trustee had to be
9 Ordinarily, new evidence raised in the reply would be disregarded by the
court. 	However, Judge Clement gave an opportunity to Trowe and his counsel to
augment the record before it was closed and this court held the final hearing
on the matter. 	The reply declaration setting forth these facts was filed in
this matter on November 5, 2025. Doc. #221. 	Thus, Trowe and his counsel had
over three months to augment the record.
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returned to the debtor upon conversion. 	Harris, 575 U.S. at 513,
518. 	The Court in Harris suggested a broad category of bad
faith:
If a debtor converts in bad faith – for example
by concealing assets in unfair manipulation of
the 	bankruptcy 	system 	– 	the 	converted 	Chapter
7 	estate 	“consists 	of 	property 	of 	the 	Chapter
13 	estate 	as 	of 	the 	date 	of 	conversion.
§ 348(f)(2) 	thus 	penalizes 	bad 	faith 	debtors
by 	making 	their 	post-petition 	wages 	available
for liquidation and distribution to creditors.
575 U.S. at 518, emphasis in original.
The totality of circumstances “test” has been well
established in the Ninth Circuit. 	See Farrar v. Sandoval (In re
Sandoval), BAP No. EC-04-1549-MaSP; 2005 Bankr. LEXIS 3383, *18
(BAP 9th Cir. Aug. 3, 2005) citing Ho v. Dowell (In re Ho), 274
B.R. 867, 876 (BAP 9th Cir. 2002) citing Goeb v. Heid (In re
Goeb), 675 F.2d 1386, 1391 (9th Cir. 1982). 	Under the test, a
bankruptcy court generally considers the following factors:
(1) whether the debtor misrepresented facts in
his 	or 	his 	petition 	or 	plan, 	unfairly
manipulated 	the 	bankruptcy 	code 	or 	otherwise
filed 	the 	Chapter 	13 	petition 	or 	plan 	in 	an
inequitable manner;
(2) 	the 	debtor’s 	history 	of 	filings 	and
dismissals;
(3) whether the debtor’s only purpose in filing
for 	Chapter 	13 	protection 	is 	to 	defeat 	state
court litigation; and
(4) whether egregious behavior is present.
Leavitt v. Soto (In re Leavitt), 171 F.3d 1219, 1224 (9th Cir.
1999).
The existence of bad faith is a factual determination. Id.
at 1222-23; In re Siegfried, 219 B.R. 581, 585 (Bankr. D. Colo.
1998). 	See also Goeb, 675 F.2d at 1390.
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These Leavitt factors have been termed “simply tools that
the bankruptcy court employs in considering the totality of
circumstances.” 	Kahn v. Barton (In re Kahn), 523 B.R. 175, 185
(BAP 9th Cir. 2014).
Once the Trustee has put bad faith at issue, under
§ 348(f)(2) the Debtor here has the burden of proving that he
converted the Chapter 13 case to Chapter 7 in good faith.
Sandoval, at *18.
Applying these “tools” to the facts at issue establishes the
conversion here was in bad faith.
II. 	Totality of Circumstances Evidences a Bad Faith Conversion.
A. Misrepresentation of Facts in Schedules and Plan and
Unfairly Manipulating the Bankruptcy Code.
Misrepresentation and unfair manipulation of the Code has
been found when a debtor’s dishonesty pervades the bankruptcy
proceeding, such as when a debtor fails to fully disclose assets
and financial dealings and fails to correct disclosure or offer
an explanation for his conduct. 	Pancic v. Lokan (In re Lokan),
BAP No. OR-22-1249-CLB; 2023 Bankr. LEXIS 1556 (BAP 9th Cir. June
14, 2023) citing Leavitt, 171 F.3d at 1225; In re Tomlin, 105
F.3d 933, 941 (4th Cir. 1997). 	Some manipulation or abuse of the
Bankruptcy Code for unfair or inequitable purposes must be found
in debtor’s conduct in the Chapter 13 case or in the conversion.
Sandoval, at *23.
Trowe misrepresented many facts here especially in his
original bankruptcy schedules. 	The omissions included the
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interest in RJT, EHG and failure to mention the substantial
judgments outstanding at the time of the filing including the
judgment in excess of $842,000.00 in favor of Colutions and the
judgment in excess of $5,600,000.00 in connection with SeedCo.
Transfers were omitted from the Statement of Financial
Affairs including 43 transfers adding up to $236,000.00 and 112
transfers totaling $645,000.00. 	The Chapter 13 plan Trowe
proposed falsely stated that the general unsecured claims were
only $16,000.00.10 	Manipulation of the Bankruptcy Code is also
evidenced by the inexplicable filing of a Chapter 13 case when
the debtor was certainly ineligible.
Debtor’s arguments that he simply agreed with the Trustee on
the eligibility issue and filed his own conversion motion and his
“cooperation” in eventually turning over certain assets does not
change the result. 	No explanation has been given why the initial
schedules contained so many omissions let alone the Chapter 13
plan containing a clear misrepresentation.
The timing of the filing just after the expiration of the
time to pay the discovery sanctions when coupled with the other
problems indicates a manipulation of the Bankruptcy Code.
It is also not lost on the court that it was not until after
the Trustee began discovery that Trowe’s interest in RJT and other
entities 	was 	revealed. 	The 	documentation 	provided 	to 	the 	Trustee
also 	contained 	a 	substantial 	understatement 	as 	to 	the 	amount 	on
deposit in the Chase bank account.
///
10 These omissions are troubling in and of themselves but significantly more
disquieting because Trowe’s counsel, Mr. Banuelos, represented Trowe and his
affiliates in litigation pending at the time the bankruptcy was filed.
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True 	enough, 	the 	Debtor 	did 	file 	“conversion 	schedules” 	over
two and one-half months after the conversion and finally listed the
interests in RJT and Four2Nada. 	But that was too little too late.
It was not until a month later that the Debtor updated his Statement
of Financial Affairs to list EHG.
Debtor 	urges 	that 	simply 	agreeing 	with 	the 	Trustee 	is 	not
evidence of bad faith. 	But that is of no assistance. 	The finding
of bad faith does not require fraudulent intent by the debtor, nor
is evidence required of the debtor’s ill will directed to creditors,
or that the “debtor was affirmatively attempting to violate the law
– 	malfeasance 	is 	not 	a 	prerequisite 	to 	bad 	faith.” 	In 	re 	Lokan,
quoting, in part, In re Leavitt, 171 F.3d 1224-25. 	So even if the
Debtor 	could 	establish 	that 	his 	intent 	was 	not 	fraudulent, 	it 	is
of 	no 	consequence 	since 	numerous 	other 	factors 	evidence 	bad 	faith
and manipulation of the Bankruptcy Code.11
The court therefore finds that the Debtor misrepresented
facts in the petition, schedules, Statement of Financial Affairs
and Chapter 13 plan. 	The court finds that the Debtor unfairly
manipulated the Bankruptcy Code and otherwise filed the Chapter
13 Petition and Plan in an inequitable manner.
B. 	The Previous Filings and Dismissals Evidence Bad Faith.
The Debtor, through Mr. Banuelos, delayed prosecution of the
District Court fraudulent transfer matter by filing no asset
Chapter 7 cases on behalf of Debtor’s affiliates in this District
for Four2Nada, Inc. in May and then again in July 2023 and one
11 The Supreme Court gave examples of bad faith such as “concealing assets in
unfair manipulation of the bankruptcy system.” 	Harris, 575 U.S. at 518.
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for Ventura Seed Company, Inc. (different from SeedCo) in April
2024. 	These filings were used to frustrate discovery in the
fraudulent transfer case pending in the District Court for the
Central District of California. 	One was dismissed for failure to
file documents. 	The other two each resulted in no distribution
to unsecured creditors. 	Mr. Banuelos was counsel in all three
cases.
The court finds that the history of the filings of
bankruptcy by the Debtor’s affiliates evidences the Debtor’s bad
faith in converting this case to Chapter 7 in bad faith.
C. 	The Purpose of the Filing was to Defeat Pending
Litigation Evidencing Bad Faith.
As indicated, substantial judgments had already been entered
against the Debtor and the Debtor’s affiliates prior to the
filing of the original Chapter 13 case. 	The fraudulent transfer
litigation pending in the Central District of California was
pending at the time of the filing of this bankruptcy case.
The Magistrate Judge of the District Court had entered a
discovery sanction order; the Debtor did not comply.
The filing of the bankruptcies by the Debtor’s affiliates in
2023 and 2024 coincided with discovery events in that litigation.
The court finds that one motive for filing this bankruptcy
case was the defeat of pending litigation which evidences bad
faith.
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D. 	The Egregious Behavior of the Debtor in this Case
Evidences Bad Faith.
Egregious conduct has been found where Debtor’s conduct
demonstrates a blatant disregard for bankruptcy process, such as
refusing to fully and accurately disclose financial affairs,
concealing information from the court, violating injunctions, and
obstructing Trustee’s duties. 	Leavitt, 171 F.3d at 1225; In re
Tomlin, 105 F.3d at 936, 937.
“If a debtor is unable to complete a plan due to a change in
circumstances or financial hardship, bad faith should not be
found.” 	Sandoval, at *16. 	“Further, simply taking advantage of
the statute’s provisions excluding property acquired during the
Chapter 13 case from the Chapter 7 estate after conversion is not
bad faith.” Id. 	Unfortunately, that is not the situation here.
The Debtor has provided no evidence to suggest a change in
circumstances or financial hardship that required the conversion
to Chapter 7. 	What did require the conversion was the Debtor’s
clear ineligibility to remain in Chapter 13.
Further, the Debtor did not attend the meeting of creditors,
nor did the Debtor make any plan payment while the case was
pending as a Chapter 13. 	The usual circumstances requiring a
conversion do not usually amount to bad faith. 	But here, coupled
with the misrepresentations, asset transfers, and the debt
omissions in the schedules, and the timing of Debtor’s
“cooperation” with the Trustee all point to egregious behavior
and a finding of bad faith.
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It is the Debtor’s burden to prove that the Chapter 13
petition was filed in good faith. Leavitt. 	The Debtor has not
met that burden.
The Debtor has not explained why the Chapter 13 was filed
initially. 	The Debtor has not explained why the original
schedules omitted so much critical information. 	The Debtor has
not explained why it was not until after the Chapter 7 trustee
commenced discovery and pursued other litigation when the Debtor
provided some information to the Trustee. 	The Debtor has not
explained misrepresentations as to the balance in the Chase
account. 	The Debtor has not explained why a substantial amount
of the funds the Trustee has discovered have not been turned
over.
The Debtor’s only argument is to contest the
characterization of some of the assets acquired between the
petition filing date and the conversion. 	That does not explain
the other acts and omissions. 	Further, even when given the
opportunity, the Debtor does not explain the Trustee’s discovery
of monies held by affiliate, Four2Nada, when the Trustee revealed
the findings.
The court finds that under the totality of the circumstances
here, the Debtor’s egregious behavior is present.
CONCLUSION
The Debtor has not met his burden of proof to establish the
good faith of the conversion. 	Application of the Ninth Circuit’s
“totality of the circumstances” test as informed by the Leavitt
factors establishes a preponderance of the evidence that the
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conversion of the Chapter 13 case to Chapter 7 was in bad faith.
A separate will issue.12
Dated: 	By the Court
René Lastreto II, Judge
United States Bankruptcy Court
12 The foregoing are the court’s findings of fact and conclusions of law under
Civ. R. 52 (Rule 7052) as incorporated under Rule 9014(c). 	Any finding of
fact deemed a conclusion of law is adopted as such. 	Any conclusion of law
deemed a finding of fact is adopted as such.
Mar 31, 2026
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Instructions to Clerk of Court
Service List - Not Part of Order/Judgment
The Clerk of Court is instructed to send the Order/Judgment
or other court generated document transmitted herewith to the
parties below. 	The Clerk of Court will send the Order via the
BNC or, if checked 	, via the U.S. mail.
Nikki B. Farris
2607 Forest Ave #120
Chico, CA 95928
J. Russell Cunningham
1830 15th St
Sacramento, CA 95811
Office of the U.S. Trustee
Robert T Matsui United States Courthouse
501 I Street, Room 7-500
Sacramento, CA 95814
Omero Banuelos
Omero Banuelos Attorney At Law
415 W. Foothill Blvd., Suite 202
Claremont CA 91711
Jeffrey W. Shields
Shields Law Offices
1920 Main Street, Ste. 980
Irvine, CA 92614
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