- No. 11-6040 (B.A.P. 8th Cir. October 5, 2011)
- Affirmed. The bankruptcy court implicitly found that Midwest Oil and Yehud were substantially the same entity and has had its day in court four times already. First, because the bankruptcy court found that Yehud's Chapter 11 filing in New York, as subsequently transferred to Minnesota, was nothing less than a gross abuse of judicial process, converting Yehud's case to one under Chapter 7 was not an abuse of discretion. Second, while section 1112(c) prevents conversion of a corporation this is not a moneyed, business, or commercial corporation absent consent of the debtor, the bankruptcy court found that Yehud was a moneyed business. Accordingly, Yehud's consent is not required before the bankruptcy court may convert its case to one under Chapter 7. Finally, an evidentiary hearing was not required because Yehud had not identified any evidence it would produce at such evidentiary hearing. And the particular circumstances of the case did not warrant an evidentiary hearing because the record was sufficiently developed to allow the bankruptcy court to draw the inferences necessary to convert the case.
- Procedural context:
- An appeal from a bankruptcy court order converting a Chapter 11 bankruptcy case to one under Chapter 7.
- This case arises from five Chapter 11 filings in three different states during a two-year time period. Dr. R.C. Samanta Roy Institute of Science & Technology placed its wholly owned subsidiary Midwest Oil into a Chapter 11 case on March 16, 2009 in the District of Delaware. This case was dismissed six months later after the Delaware bankruptcy court found that the debtors had abused the bankruptcy process. On July 26, 2010, Midwest Oil filed a bankruptcy case in the District of Minnesota. This second case was dismissed weeks later after the Minnesota bankruptcy court found that the debtors had filed the case in bad faith. On September 1, 2010, Midwest Oil filed a third bankruptcy case in the District of Delaware. This third bankruptcy case was also dismissed shortly thereafter as filed in bad faith. On January 19, 2011, Midwest Oil filed its fourth bankruptcy case in the District of Minnesota. Less that two months later, the case was dismissed as filed in bad faith and the bankruptcy court ordered that the debtor be barred from filing another case for at least one year. Prior to Midwest Oil's fourth bankruptcy case, Yehud-Monosson USA, Inc. ("Yehud") was formed in New York. Sometime after the dismissal of Midwest Oil's fourth bankruptcy case, Midwest Oil merged with Yehud. However, Yehud was nothing more than Midwest Oil by another name. On March 23, 2011, Yuhud filed a fifth bankruptcy case in the Southern District of New York, which was subsequently transferred to the District of Minnesota. The United States Trustee for Region 12, Habbo Fokkena, moved to convert Yehud's case because Yehud had filed the New York case in bad faith to circumvent the Minnesota filing bar and in an effort to frustrate its creditors. Yehud's Chapter 11 case was converted to one under Chapter 7. Yehud appealed and argued (1) conversion of its case was an abuse of discretion, (2) 11 U.S.C. § 1112(c) prevented conversion of its case because it is not a moneyed business, and (3) it was entitled to an evidentiary hearing.
- Venters, Federman, Saladino
3240 in the system
0 Being Processed