Lisa R. Popeck

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
at Greenbelt
IN RE: 	:
:
LISA R. POPECK 	: 	Case No. 08-10237PM
: 	Chapter 7
Debtor 	:
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - :
MEMORANDUM OF DECISION
This case came before the court for hearing on May 28, 2008, on the Debtor’s “Motion to
Vacate Order Converting Case to Chapter 7 or in the Alternative Reconvert Case to Chapter 13.”
The court had the opportunity to hear from the Debtor at length and, based upon the arguments
presented and the testimony offered, the court will deny the Motion.
The Debtor filed this case originally as a case under Chapter 13 on January 4, 2008. On
March 11, 2008, this court denied confirmation of her Chapter 13 Plan filed with the Petition
without leave to amend. The Chapter 13 Plan was not feasible. The Debtor thereupon filed a
Motion on March 31, 2008, to convert her case to a case under Chapter 7, as she had an absolute
right to do so under § 1307(a) of the Bankruptcy Code. The case was thereupon converted by
Order entered April 2, 2008, and Gary A. Rosen was appointed the Chapter 7 Trustee. When the
Chapter 7 Trustee undertook to perform his statutory duties required by § 704(a) of the
Bankruptcy Code and discovered assets of the estate and various omissions and misstatements in
the Debtor’s Schedules, he sought to take possession of non-exempt assets and began a series of
examinations of individuals in an effort to seek additional assets. The Debtor sought to frustrate
these efforts by refusing to turn over the assets and by filing the instant Motion to reconvert this
case to a case under Chapter 13.
Date signed June 06, 2008
Entered: June 09, 2008 Case 08-10237 Doc 113 Filed 06/09/08 Page 1 of 4

The Chapter 7 Trustee opposed the Motion. He argues that the Debtor’s attempt to
reconvert this case is in bad faith and that reconversion would amount to an abuse of the
bankruptcy system. The court agrees with his conclusion that: “The Motion is nothing more
than a desperate attempt by the Debtor to avoid the appropriate consequences of a dishonest
debtor coupled with the diligent and competent Trustee preforming his duties in furtherance of
the purposes and policies of the Bankruptcy Code.” (Trustee’s Opposition, Dkt. No. 95).
The issue presented for decision as aptly stated in the case of In re Marrama, 430 F.3d
474, 477 (CA1 2005) aff’d sub nom. Marrama v. Citizens Bank of Massachusetts, 127 S.Ct. 1105
(2007): “[W]hether Bankruptcy Code § 706(a) confers any discretion upon the bankruptcy court
to forfend against ‘bad faith’ conversions to chapter 13, or the debtor has an ‘absolute’ right to
convert.” The Court of Appeals for the First Circuit concluded: “[S]ubsection 706(a) permits the
bankruptcy court to deny a chapter 7 debtor’s subsection 706(a) motion to convert where the
court determines that the debtor engaged in bad faith conduct.” Id. at 481. In affirming, the
Supreme Court agreed that bad faith conduct may make a debtor unqualified as a debtor under
Chapter 13. Marrama at 1110-1111.
This case is governed by § 706(a) of the Bankruptcy Code that provides:
11 U.S.C. § 706. Conversion
(a) The debtor may convert a case under this chapter to a case under
chapter 11, 12, or 13 of this title at any time, if the case has not been converted
under section 1112, 1208, or 1307 of this title. Any waiver of the right to convert
a case under this subsection is unenforceable.
Marrama instructs that a debtor who files a case under Chapter 7 in bad faith, concealing
significant assets, does not have the right to convert to a case under Chapter 13. Such a debtor
falls within the description of § 706(d) of the Bankruptcy Code as one who does not have the
right to convert because that debtor is not someone who may be a debtor under the Chapter.
Marrama overruled such cases as In re Martin, 880 F.2d 857, 859-860 (CA5 1989) and In re
Croston, 313 B.R. 447, 451-452 (B.A.P. 9 CA9 2004) holding that a debtor’s misconduct and
subjective bad faith are insufficient to abrogate the unqualified right of conversion.
It must be recognized that the Marrama case involved a one time Chapter 13 case. The
subject case involves a failed Chapter 13 case that was converted to a case under Chapter 7 that
the Debtor sought to reconvert when she saw that the Chapter 7 Trustee, acting with due
diligence, discovered undisclosed assets and highlighted various misstatements of fact made by
Case 08-10237 Doc 113 Filed 06/09/08 Page 2 of 4

1 In the course of the hearing, the Chapter 7 Trustee’s counsel examined the Debtor
about a telephone conversation where the Debtor sought advice after the filing of the bankruptcy
case with respect to the sale of a diamond engagement ring.
2 All of this discussion may be mooted by the consideration that the Debtor may have
non-contingent, liquidated unsecured debts in excess of $336,900.00 thus making her ineligible
for relief under Chapter 13. 11 U.S.C. § 109(e). An attempt at conversion to a case under
Chapter 11 is also likely to fail. See In re Finney, 992 F.2d 43 (CA4 1993).
the Debtor in her Schedules and Statement of Financial Affairs and in her testimony.1
The Debtor has insufficient income to support herself much less to fund a plan. She
cannot meet the feasibility requirement of § 1325(a)(6) of the Bankruptcy Code by her
undertaking to find a job or her statement that her close personal friend would contribute the
necessary funds. This latter proposal is subjectively infeasible in that the court has no power to
compel a third party to make the necessary plan payments on behalf of the Debtor for a 5-year
period. 2
The Debtor offered to post a bond in the amount of her assets that could be called upon if
such assets were sold without court order. This process is unduly cumbersome in that it would
involve an inventory and appraisal of all the estate assets that would undoubtedly be contested
and presumably would guarantee the funding of a plan. The court has never encountered any
such creature.
In summary, the court adopts the view espoused in the case of In re Anderson, 354 B.R.
766 (BC S.C. 2006), that a previous conversion in a case precludes conversion as a matter of
right, but a second conversion may be permitted. The court has the discretion to order a second
conversion after scrutinizing the Debtor’s circumstances bona fides and ability to succeed with
the purposes for conversion. After considering the Debtor’s performance to date and her various
misstatements, many under oath, the court finds little likelihood that she would succeed, and it
would be in the interest of her creditors for this case to proceed in Chapter 7. While the Debtor
states that she participates in a twelve-step Debtors Anonymous program and that a successful
Chapter 13 case would assist in her recovery, nothing prevents her from proceeding in a case
under Chapter 7 and in the Debtors Anonymous program at the same time.
An appropriate order will be entered.
Case 08-10237 Doc 113 Filed 06/09/08 Page 3 of 4

cc: 	Lisa R. Popeck, 12490 Ansin Circle Drive, Potomac, MD 20854
John D. Burns, Esq., 6303 Ivy Lane, Suite 102, Greenbelt, MD 20770
Gary A. Rosen, Trustee, One Church Street, Suite 802, Rockville, MD 20850
Rand L. Gelber, Esq., One Church Street, Suite 802, Rockville, MD 20850
United States Trustee, 6305 Ivy Lane, #600, Greenbelt MD 20770
End of Memorandum
Case 08-10237 Doc 113 Filed 06/09/08 Page 4 of 4