Marrama v. Citizens Bank of Massachusetts
Issues
Does the court have discretion to deny a debtor’s motion to convert a Chapter 7 bankruptcy filing to another chapter if the debtor meets the technical requirements for the other chapter?
Robert Marrama sought to convert his Chapter 7 bankruptcy case to a Chapter 13 after meeting the requirements for Chapter 13. The bankruptcy court denied Marrama’s motion to convert based on Marrama’s prior bad faith conduct in failing to report in his bankruptcy schedules the value of a tax refund and vacation home. The Bankruptcy Appellate Panel and Court of Appeals for the First Circuit affirmed. In this case, the Supreme Court will determine whether courts have discretion to deny conversions based on an evaluation of the debtor’s conduct. The decision will hinge on the statutory language and legislative history of the Bankruptcy Code. While this issue may be limited to filings that occurred before Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, it will give the court the opportunity to clarify the scope of the good faith requirement in bankruptcy proceedings and the amount of discretion afforded to bankruptcy judges.
Questions as Framed for the Court by the Parties
Whether the right to convert a Chapter 7 bankruptcy case to another chapter can be denied notwithstanding the plain language of the statute and the legislative history.
Robert Marrama entered the flooring business as a teenager and grew his family’s small enterprise into a multi-million dollar company. Sonia Nezamzadeh, Medill—On the Docket: Marrama, Robert v. Citizens Bank of Massachusetts, et al., posted on June 13, 2006.