Summary of a Recent
Judicial Development in
Bankruptcy

Conversion to Chapter 12 Proper Due to
Retroactive Application

Joshua Thomas Crain
National AgLaw Center Graduate Assistant

Summary of Decision

In In re Campbell, 313 B.R. 871 (10th Cir. BAP), the Bankruptcy Appellate Panel for the Tenth Circuit Court of Appeals held that the United States Bankruptcy Court for the Eastern District of Oklahoma had the authority to convert debtors Chapter 13 case to Chapter 12 even though Chapter 12 was unavailable at the time debtors initially filed their bankruptcy petition.

Background

On August 4, 2003, Debtors John and Judy Campbell filed a Chapter 13 bankruptcy petition. See id. Eleven days after the filing of the debtors' Chapter 13 case and plan, Chapter 12 was reinstated retroactively to July 1, 2003. See id. On September 18, 2003, the debtors moved to have their case converted to Chapter 12. See id. The bankruptcy court denied the debtors' motion because Chapter 12 had expired on January 1, 2004. See id. The debtors appealed to the Bankruptcy Appellate Panel for the Tenth Circuit. See id.

Analysis and Holdings

The appellate panel explained that § 1307 authorizes the conversion from Chapter 13 to Chapter 12 prior to confirmation at the request of the debtor-family farmer. See id. It also explained that Chapter 12 was not available on the day the debtors filed their petition. See id. The panel also explained, however, that the Family Farmer Bankruptcy Relief Act of 2003 reinstated Chapter 12 retroactively to July 1, 2003. See id. The panel explained that because the Act made Chapter 12 available from July 1, 2003, until January 1, 2004 the debtors were eligible to convert their Chapter 13 case filed on August 4, 2003. See id. The panel held that the bankruptcy court had the authority to convert the case to Chapter 12 and therefore reversed and remanded the bankruptcy court's denial of conversion. See id.

The case was decided on August 27, 2004; this summary was posted Dec. 22, 2004.