In Re Gaudet , 1986 Bankr. LEXIS 6351 ( 1986 )

61 B.R. 349 (1986)

In re Enos Julian GAUDET, Debtor.

Bankruptcy No. 8500794.

United States Bankruptcy Court, D. Rhode Island.

April 2, 1986.

Enos J. Gaudet, pro se.

William F. Hague, Jr., Dick & Hague, Ltd., Providence, R.I., for R.I. Hosp. Trust Nat. Bank.

Andrew S. Richardson, Boyajian, Coleman & Harrington, Providence, R.I., for trustee.

DECISION DENYING DEBTOR'S MOTION TO WITHDRAW HIS CHAPTER 13 PETITION, AND GRANTING TRUSTEE'S MOTION TO CONVERT

ARTHUR N. VOTOLATO, Jr., Bankruptcy Judge.

Heard on February 11, 1986, on the debtor's motion to withdraw his Chapter 13 petition, and on the trustee's motion to convert the case to Chapter 7.

The debtor filed a Chapter 13 petition on December 10, 1985, the same date on which his property located at 60-62 Blackstone Boulevard, Providence, Rhode Island, was scheduled to be foreclosed. Based on the entire record of the proceedings in this case, and also considering the ludicrous travel of Mr. Gaudet's prior Chapter 13 case, which was dismissed on March 27, 1985 (see attached docket entries which are incorporated by reference into this order — Rovzar v. Chemical Sales and Service Co. (In re Saco Local Development Corp.), 30 B.R. 862 (Bankr.D.Me.1983)), we find that the instant petition was filed for the sole purpose of preventing the foreclosure, and that the debtor never intended to pay creditors through a Chapter 13 plan. In fact, no plan was filed and no payments were made. We also find that prior to and since the inception of this case, the debtor intended to withdraw the petition, once arrangements for the private sale of his real estate were complete. Statements to the contrary by the debtor at the hearing on the instant motions were unconvincing and without substance, and his testimony generally was not credible.

Although 11 U.S.C. § 1307^[1] gives the debtor the right to withdraw a Chapter 13 petition, that right is not absolute. See In re Jacobs, 43 B.R. 971 (Bankr.E.D.N.Y. 1984). The debtor's general conduct and demonstrated lack of credibility, which we view as a blatant bad faith attempt to misuse the bankruptcy process, require denial of the motion to withdraw his Chapter 13 petition. See In re Zarowitz, 36 B.R. 906 (Bankr.S.D.N.Y.1984); In re Whitten, 11 B.R. 333 (Bankr.D.D.C.1981). Mr. Gaudet's failure to propose a plan in good faith, his unreasonable delay, and failure to commence making timely payments, also constitute tangible cause for conversion. See In re Powers, 48 B.R. 120 (Bankr.M.D. La.1985) (conversion of Chapter 13 case to Chapter 7 is justified, despite debtor's motion to dismiss, where the debtor acted in bad faith). See also 11 U.S.C. § 1325 (requiring a plan to be proposed in good faith).

The debtor has twice sought and obtained the protection of the Bankruptcy Court, but on both occasions has failed to meet his obligations under the Code. To allow withdrawal of the petition would place Mr. Gaudet's creditors, who have received no payments since the filing of this petition, at the whim of a proven untrustworthy debtor. Further, the trustee, who has received an offer to purchase the debtor's real estate for $150,000, represents that a trustee's sale under Chapter 7 will net the estate approximately $5,000 more than the proposed private sale by the debtor for $125,000. See Trustee's Letter to the Court, dated February 21, 1986 (copies circulated to all interested parties). Conversion, therefore, rather than dismissal, is in the best interest of creditors.

Accordingly, the debtor's motion to withdraw the Chapter 13 petition is denied, and the case is converted to Chapter 7.^[2]

Enter judgment accordingly.

APPENDIX

NOTES

[1] 11 U.S.C. § 1307 provides:

(b) On request of the debtor at any time, if the case has not been converted under section 706 or 1112 of this title, the court shall dismiss a case under this chapter . . .

(c) [O]n request of a party in interest and after notice and a hearing, the court may convert a case under this chapter to a case under chapter 7 of this title, or may dismiss a case under this chapter, whichever is in the best interests of creditors and the estate, for cause, including —

(1) unreasonable delay by the debtor that is prejudicial to creditors;

. . . .

(3) failure to file a plan timely under section 1321 of this title;

(4) failure to commence making timely payments under section 1326 of this title. . . .

[2] This decision constitutes our findings of fact and conclusions of law. See Bankruptcy Rule 7052 and Fed.R.Civ.P. 52.