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Case Title Date & Status Case Number(s) Judge & PDF Summary

Rupp v. Wood (In re Wood)

(Internal Ref: Opinion 542)




Judge Mosier

PDF icon 542.pdf

A chapter 7 trustee is not entitled to a default judgment on his complaint objecting to debtor's discharge under § 727 and seeking a money judgment against the debtor unless his complaint contains specific factual allegations which constitute a legitimate cause of action. Mere conclusory allegations without supporting factual averments are insufficient to state a claim upon which relief may be granted.

In re Ruiz

(Internal Ref: Opinion 543)




Judge Mosier

PDF icon 543.pdf

Chapter 7 debtors are not obligated to turnover to chapter 7 trustee funds that debtor's bank paid postpetition to honor checks debtors wrote prepetition.

Carroll v. Key Bank (In re Carroll)

(Internal Ref: Opinion 544)




Judge Mosier

PDF icon 544.pdf

Section 506(d) does not allow a debtor to "strip off" a creditor's lien of the creditor has a claim that is allowed pursuant to § 502.

In re Cranmer

(Internal Ref: Opinion 538)




Judge Thurman

PDF icon 538.pdf

In this chapter 13 case, the Court held that social security income must be included in calculation of projected disposable income under § 1325(b)(1)(B) even though social security income is not included in the calculation for the means test on Official Form 22C and any calculations using that form. In addition, the Court held the Debtor could not exclude part of the social security income by creating a line item expense on Schedule J. Furthermore, the Debtor did not propose the plan in good faith when he excluded part of his social security income from the projected disposable income calculation. Accordingly, the Court denied confirmation of the plan.

In re Duffin

(Internal Ref: Opinion 540)




Judge Mosier

PDF icon 540.pdf

Under U.C.A. § 78B-5-505(1)(a)(xiii) in the absence of a creditor's levy or execution, proceeds or avails of insurance policies are exempt. Because the Trustee's rights and powers as a hypothetical creditor under § 544 are based on hypothetical events Section 544(a)(2) is inapplicable to U.C.A. § 78B-5-505(1)(a)(xiii). In the absence of express Congressional intent the Trustee's rights and powers as a hypothetical creditor under § 544 may not be used to limit state law exemptions provided for and allowed by Congress in § 522.

In re Roger Bryner

(Internal Ref: Opinion 537)




Judge Thurman

PDF icon 537.pdf

The Court ruled that in a chapter 13 case, the mother of two minor children has standing to represent their interests with respect to a proof of claim filed by the putative trustee of a trust for their benefit. The Court further ruled that on a motion to reconsider a ruling on a proof of claim, the Court will consider factors outlined in a rule 60(b) type motion, i.e. mistake, inadvertence, surprise or excusable neglect, reiterating the holding of the U.S. Supreme Court in Pioneer Investment Services v. Brunswick 507 U.S. 380 that excusable neglect is a somewhat elastic concept. Finally, the Court ruled that a trustee of a trust may only be represented by an attorney with respect to contested matters before the Court.

In re Underhill

(Internal Ref: Opinion 536)




Judge Mosier

PDF icon 536.pdf

Chapter 13 debtor filed three bankruptcy petitions within a one year period and the automatic stay did not go into effect in the third case. The debtor proposed a plan that would cure his prepetition default on a secured claim. The secured creditor objected to confirmation arguing: (1) the presumption under § 362(c)(4)(D) establishes that the debtor's petition was not filed in good faith and the plan can not be confirmed, and (2) confirming the chapter 13 plan that proposes to cure the debtor's prepetition default with the debtor is a de facto reinstatement of the automatic stay and impermissibly circumvents the statutory scheme established by Congress to reinstate the automatic stay. The court held; (1) the presumption under § 362(c)(4)(D) is limited in application to § 362(c)(4)(B), (2) even if there is no automatic stay in effect the court may confirm a chapter 13 plan that cures a prepetition default on a secured claim, and (3) if a secured creditor objects to confirmation the chapter 13 debtor has the burden to establish that his petition was filed in good faith and the plan is proposed in good faith. The debtor failed to carry his burden on these issues and confirmation was denied.

Jubber v. Search Market Direct (In re Paige)

(Internal Ref: Opinion 535)




Judge Thurman

PDF icon 535.pdf

In this adversary proceeding, the chapter 11 Trustee sued multiple defendants seeking to recover and/or quiet title to an Internet domain name, <> (the “Domain Name”). The Court found that the Trustee was entitled to recover the domain name from a third party under 11 U.S.C. § 362 where yet another third party surreptitiously acquired the rights to the Domain Name, and purportedly sold it while the Debtor clandestinely and without Trustee's or Court's approval tried to sell the same post petition. The Court concluded that the post-petition transfers of the Domain Name violated the automatic stay under § 362 and, as such, §549 was inapplicable. The Court also determined that the Trustee and a co-plaintiff had standing to prosecute the adversary proceeding under the terms of a confirmed plan, and that the same conferred a benefit on the estate.

Rupp v. Ayres (In re Fabbro)

(Internal Ref: Opinion 534)




Judge Thurman

PDF icon 534.pdf

In this adversary proceeding, the Court considered allegations of fraud asserted by the Chapter 7 Trustee against a number of defendants who participated pre-petition in an alleged short sale of the Debtor's residence. A realtor who specializes in short sales convinced the Debtor to proceed with a listing by producing a sham buyer for the residence and convincing the Debtor's lenders to discount their claims. All the while, and without the knowledge of the Debtor or her lenders, the realtor and his business associates were marketing the property to a third party who had money and financing to buy the home for approximately $100,000 more than the short sale offer. After the sale to the third party closed, the Debtor was induced to sign the documents necessary for the alleged short sale. The Court found fraud, fraudulent transfer under both state and federal law, and negligence, and allowed for an additional hearing for determination of punitive damages.

In re Hughes, In re Ulloa

(Internal Ref: Opinion 533)



08-24736, 08-29072

Judge Mosier

PDF icon 533.pdf

Chapter 13 debtors' confirmed chapter 13 plans required debtors to pay their tax refunds into their plan. Debtors sought to modify their plans to permit them to retain their tax refunds. Held: Prepetition tax refunds are property of the bankruptcy estate and should be considered in §1325(a)(4) liquidation analysis. Agreement to pay tax refunds into plan eliminates need for §1325(a)(4) liquidation analysis of tax refunds for confirmation. Debtors must demonstrate a legitimate reason to modify their confirmed chapter 13 plan and any modification must satisfy §1325(a)(4) liquidation analysis, including value of prepetition tax refunds.

In re Lazerus

(Internal Ref: Opinion 532)




Judge Thurman

PDF icon 532.pdf

In this chapter 7 case, the Court ruled on the appropriate manner to object to the form of order submitted for the Court's signature, and in what instances a Trustee may surcharge exemptions pursuant to 11 U.S.C. § 522(k). The Trustee filed several motions attempting to modify the substance of a prior ruling by this Court, and to compel the turnover of additional records and funds, all after having submitted the Trustee's Final Report. The Court concluded that an objection as to the form of the order is not the mechanism by which the substance of the Court's prior ruling should be challenged. Additionally, the Court held that the Trustee could not surcharge the Debtor's exempted wages under § 522(k) after collecting those unpaid wages from the Debtor's employer, without a showing that there has been an avoidable transfer. The Court finally concluded that it had appropriately ruled on the surcharge issue at a prior hearing, where albeit the Trustee had not formally pled the issue it had nevertheless argued the issue at a hearing on the Debtor's objection to the Trustee's final report.

In re 3H River Turf Farm

(Internal Ref: Opinion 531)




Judge Thurman

PDF icon 531.pdf

In this chapter 7 case, the issue before the Court was whether the Court should take into account all of the liens and encumbrances against real property when considering a motion for relief from stay under 11 U.S.C. § 362(d)(2), or just those liens and encumbrances of the moving party and any senior lienholders. The Court held that the word “equity” in section 362(d)(2) meant that the Court must consider all liens and encumbrances against real property, not just those of the movant and the senior lienholders. The Court granted relief from stay because after subtracting the total amount of the secured encumbrances from the total value of the real property as calculated in the Trustee's Appraisal, there was no equity in the property.

Wilburgene v. Kwon (In re Wilburgene)

(Internal Ref: Opinion 530)




Judge Thurman

PDF icon 530.pdf

In this adversary proceeding, the Plaintiff Wilburgene LLC (the “LLC”) and certain defendants filed cross-motions for summary judgement seeking the determination of whether those defendants held a valid trust deed on the Plaintiff's property that was granted by a purported member of the Plaintiff to secure a personal loan. The Plaintiff argued that the grantor was not a member of the LLC, and could not encumber the its property. It further claimed that even if the grantor were considered a member, his actions could not bind the Plaintiff because they were not in the “ordinary course of the company business” as required by § 48-2c-802(1) of the Utah Code. The Court concluded that the grantor was a member of the LLC at the time the trust deed was granted, he had authority to sign the trust deed, and the exception contained subsection (3) rather than the general rule in subsection (1) of § 48-2c-802 governed. The Court held that under § 48-2c-802(3), the trust deed would be conclusive in favor of the defendants if they gave value without knowledge of the grantor's lack of authority. Although the Court determined that the defendants did give value in exchange for the trust deed, it held that there was a genuine dispute of material fact as to whether they had knowledge of the grantor's lack of authority. That issue was, therefore, reserved for trial.

In re Timothy

(Internal Ref: Opinion 529)




Judge Mosier

PDF icon 529.pdf

Chapter 13 Debtors' Official Form 22C reflected Current Monthly Income of $6,181.31 which exceeded the median family income for a household of the same size in Utah. The Debtors' monthly Disposable Income reflected on Form 22C was -$188.70 (negative $188.70). Trustee objected to confirmation arguing that because this is an above-median income case, the applicable commitment period requires 60 monthly payments under § 1325(b)(4)(A)(ii)(II). Debtors' Schedules I and J disclosed total monthly income of $4,910.00 and total monthly expenses of $4,780.00, resulting in Schedule J monthly net income of $130.00. Debtors' plan proposed payments of $130.00 per month for so long as necessary to return $1,750.00 to non-priority unsecured creditors. The court held; (1) when a debtor's Form 22C Disposable Income is negative, in order for the debtor to propose a confirmable chapter 13 plan, projected disposable income under § 1325(b)(1)(B) may be calculated using Schedules I and J, and (2) when a debtor's Current Monthly Income is above the applicable state median income the "applicable commitment period" is defined by § 1325(b)(4) and is 60 months in all instances. The Court also held that when debtors include social security income to calculate a positive projected disposable income, all of the debtors' projected disposable income, including any amount attributable to social security income, to be received in the applicable commitment period must be applied to make payments under the chapter 13 plan.

Jubber v. Sleater (In re Bedrock Marketing)

(Internal Ref: Opinion 528)




Judge Thurman

PDF icon 528.pdf

This was a hearing on a motion for summary judgment, where the Court considered whether to strike Defendant's declarations and to grant Plaintiff's motion for summary judgment based on the Defendant's default on two promissory notes held by the Debtors. The Court concluded that the majority of the statements contained in declarations constituted inadmissible hearsay, parole evidence, lack of personal knowledge, and inappropriate legal conclusions, and were, therefore, stricken. Relying on sections 70A-3-104 and 70A-3-303 of the Utah Code, the Court concluded that the certain promissory notes were negotiable instruments, that the Defendant was their “maker” under Utah law, and that antecedent debt was sufficient consideration for the notes. Accordingly, the Court granted the Trustee's motion for summary judgment.

In re Christensen

(Internal Ref: Opinion 527)




Judge Thurman

PDF icon 527.pdf

The chapter 7 trustee sought to reopen the Debtors' case and revoke their discharge under 11 U.S.C. § 727(d)(2). Although the request appeared untimely under § 727(e)(2), the Trustee argued that the case was never properly closed pursuant to § 350, and even it was, there are proper basis for tolling the deadlines in § 727(e)92) because the Debtors had fraudulently concealed assets of the estate. The Court concluded that the case was properly closed pursuant to § 350(a), and equitable tolling did not apply to extend the deadlines in § 727(e). Therefore, the Trustee's claims under §727(d)(2) were time barred, and the request to revoke the Debtors' discharge was denied.

In re Garner

(Internal Ref: Opinion 526)




Judge Thurman

PDF icon 526.pdf

In this chapter 13 case, the issue before the Court was whether a plan that proposed to bifurcate a secured claim under 11 U.S.C. § 506(a)(1) for a vehicle purchased within 910 days, and that was not objected to by the creditor, may be confirmed under 11 U.S.C. § 1325(a). The Debtors argued that Citizens Auto Finance's failure to object to the bifurcation of its claim in their chapter 13 plan constituted acceptance of the plan. The Bankruptcy Abuse Prevention and Consumer Protection Act, however, amended § 1325 to give special protection to creditors who finance automobile transactions that occur within 910 days prior to the debtor's filing for chapter 13 relief. The Court concluded that the requirements of § 1325(a) are “clearly mandatory,” and where a plan violates the hanging paragraph of § 1325(a), it cannot be confirmed even if the creditor does not object to the plan. Accordingly, the Court concluded that the hanging paragraph of § 1325(a) applied in this case, and the Debtors could not bifurcate Citizens Auto Finance's claim pursuant to § 506. Therefore, confirmation of the Debtors' plan was denied.

In re Parker

(Internal Ref: Opinion 525)




Judge Thurman

PDF icon 525.pdf

The court determined that a default judgment entered 7 years ago awarding the debtor sanctions against a corporate creditor was void because the debtor failed to properly serve the creditor with the sanctions motion and notice of hearing. The Court determined that Bankruptcy Rule 7004(b)(3) required the debtor to direct her motion and notice of hearing to an officer or an authorized agent of the creditor. Because the motion and the notice of hearing was only sent to a P.O. Box or a street address, and did not identify an officer or a registered agent of the creditor, service was inadequate. Accordingly, when the creditor moved to reopen the case and vacate the judgment, the court concluded that cause existed to grant both motions.

Distad v. United States of America (In re Distard)

(Internal Ref: Opinion 523)




Judge Clark

PDF icon 523.pdf

Debtor filed a number of bankruptcies. In the Debtor's most recent bankruptcy, he received a Chapter 7 discharge. After receiving the Chapter 7 discharge, Debtor's wages continued to be garnished, and tax liens were filed on his property by the IRS. Debtor argued that his tax debts for 1992 and other years had been discharged in the Chapter 7 bankruptcy and that the IRS had violated his discharge injunction under § 524(a). The IRS conceded that Debtor's tax debts from prior years had been discharged, but argued that Debtor's 1992 tax debt had not been discharged because equitable tolling (triggered by the automatic stay imposed by the intervening bankruptcies) prevented the 3 year period under § 507(a)(8)(A)(I) from running. The Court ruled that under Young v. United States, 535 U.S. 43 (2002), equitable tolling prevented the 3 year period from running, and that Debtor's 1992 taxes were not discharged. With respect to the prior year's tax debts, the Court found that no violation of Debtor's discharge injunction could be found with respect to the IRS's efforts to collect discharged tax debts prior to Young v. United States, but after Young v. United States, the IRS efforts to collect the discharged debt was a knowing and willful violation of Debtor's discharge injunction.

In re Espinoza

(Internal Ref: Opinion 524)




Judge Thurman

PDF icon 524.pdf

In this chapter 13 case, the Court considered whether a plan that defers the start of equal monthly payments to a secured creditor beyond confirmation and proposes to pay adequate protection payments of lesser amounts in the interim complies with 11 U.S.C. § 1325(a)(5)(B)(iii)(I). CitiFinancial Auto Corporations objected to confirmation of the plan, arguing that it failed to provide for equal monthly payments in an amount sufficient to adequately protect its interests during the term of the plan. Relying on the reasoning of In re Denton, 370 B.R. 441 (Bankr. S.D. Ga. 2007) and In re Sanchez, 384 B.R. 574 (Banrk. D. Or. 2008), the Court concluded that the Debtor's plan did not comply with chapter 13's equal monthly payment requirement. The Court explained that the term “periodic payments” in § 1325(a)(5)(B)(iii) referred to all regularly-recurring post-confirmation payments to be made to a secured creditor such as CitiFinancial. It follows, then, that unless CitiFinancial agrees otherwise, it must receive equal monthly payments beginning with the first post-confirmation distribution and continuing until its claim is paid in full.

25th Street Associates v. Union Square Associates (In re Union Square Associates)

(Internal Ref: Opinion 522)




Judge Clark

PDF icon 522.pdf

On the eve of foreclosure by a third party, Debtor and Creditor entered into an agreement wherein Creditor agreed to acquire the debt secured by Debtor's real property and bid in the full amount of the debt owed at foreclosure thereby leaving no deficiency claim. In return, Debtor agreed to not file bankruptcy. Shortly after the date of the agreement, another creditor put the Debtor into involuntary bankruptcy. Creditor eventually obtained relief from the automatic stay to proceed with foreclosure, but only after one million dollars worth of the property was sold to various third parties. Approximately $700,000 of the sale proceeds was placed in escrow. At the foreclosure sale, Creditor mistakenly bid-in an incorrect at auction by forgetting to take into account the $700,000 held in escrow. Both Creditor and Debtor claimed entitlement to the $700,000 held in escrow. Creditor filed an adversary proceeding seeking reformation of the foreclosure bid to correct the error. The Court, finding that equitable relief was available to Creditor only if the Court could place the parties in the status quo at the moment of the bid, ruled that: 1) Creditor would be permitted to rescind its incorrect bid and bid-in the correct amount, and 2) Creditor must compensate the Debtor and the insiders for the attorney fees and costs incurred by them as a result of Creditor's mistaken bid.

Markus v. Fried (In re Geneva Steel)

(Internal Ref: Opinion 521)




Judge Clark

PDF icon 521.pdf

Defendants sought summary judgment arguing that the adversary proceeding brought to avoid a transfer was commenced more than 3 years after the petition and thereby barred under § 546(a)(1). Plaintiff, a Chapter 11 trustee appointed more than 3 years after the petition date filed a cross motion for summary judgment arguing that because of misleading information filed with the court by the debtor, and because of the lack of accurate information available to creditors of the estate, that equitably tolling should apply. The Court ruled that based upon the undisputed facts, creditors of the estate were never put on inquiry notice that a fraudulent transfer may have taken place, that creditors of the estate had exercised reasonable diligence and that equitable tolling would apply to the adversary proceeding.

In re Andrews

(Internal Ref: Opinion 520)




Judge Thurman

PDF icon 520.pdf

The Court determined that the Debtors' entitlement to payments pursuant to the Economic Stimulus Act of 2008 were not property of the estate where the Debtors filed for bankruptcy on June 28, 2007.

In re Godfrey

(Internal Ref: Opinion 519)




Judge Thurman

PDF icon 519.pdf

The Court in this case clarified the breadth of Utah's homestead exemption law as it applied to a pre-petition sale of a home. The Chapter 13 Trustee objected to the Debtor's claimed homestead exemption because the Debtor voluntarily transferred a portion of the proceeds derived from the sale of his home prior to filing, but failed to disclose the transfers on his initial Statement or Schedules. The Chapter 13 Trustee asserted that “proceeds” must be kept in their original form and not used to pay for other items in order to qualify for the homestead exemption under Utah law. The Chapter 13 Trustee further asserted that the Debtor's homestead exemption should be denied under bankruptcy law because the Debtor's voluntary transfers were concealed in violation of § 522(g). The Court determined that proceeds from the sale of a home need not be retained in their original form to qualify for the homestead exemption, and sale proceeds may be disbursed for other purposes without jeopardizing the exemption. The Court further determined that the Debtor's homestead exemption should be allowed because there was no evidence of fraudulent intent and, under the facts of this case, sufficient disclosure was made by the Debtor.

In re Austin

(Internal Ref: Opinion 518)




Judge Clark

PDF icon 518.pdf

The Debtors purchased a van using Zions Bank to finance the purchase. Debtors traded in an older vehicle receiving a $2,500 trade-in credit and rolling over a $5,500 balance owed on the older vehicle into the financing of new vehicle. The net effect of the trade-in was for Zions to roll $3,000 of negative equity into the financing. After filing Chapt 13, the Debtor's objected to Zions' proof of claim arguing that the negative equity portion of the proof of claim was not entitled to purchase money interest treatment and therefore not protected from bifurcation by the "hanging paragraph" found under § 1325(a)(9). Zions introduced evidence at the hearing to the effect that rolling the negative equity into the financing was a necessary part of the transaction, that Debtors would not have financially qualified for the loan but for the negative equity financing, and that the negative equity financing was in fact used by the Debtors in conjunction with the purchase of the van. The Court found that Zions' financing met the criteria of Utah Code Annotated § 70A-9a-103(1)(b), and ruled that the entire transaction, including the negative equity financing, was entitled to purchase money interest status. Debtors' objection to Zions' proof of claim was denied.

In re Burt

(Internal Ref: Opinion 517)




Judge Thurman

PDF icon 517.pdf

In this chapter 13 case, the issue before the Court was whether Ford Motor Credit held a purchase money security interest in the Debtor's vehicle. Ford Motor Credit filed an objection to the confirmation of the Debtors' proposed Chapter 13 plan on the basis that the Debtors' plan improperly crammed down Ford Motor Credit's secured claim in violation of 11 U.S.C. §1325(a). BAPCPA amended §1325 to give special protection to creditors who finance automobile transactions that occur within 910 prior to the debtors' filing for chapter 13 relief. This special protection is given to creditors that hold a purchase money security interest in the vehicle. The Court determined that Ford Motor Credit's entire claim, including the portion of the claim attributable to negative equity and costs associated with the purchase of the vehicle, qualified as a purchase money security interest and must be paid in full as a secured claim. Accordingly, the Court concluded that the hanging paragraph of §1325(a) applied in this case and the Debtor could not “cram down” Ford Motor Credit's claim pursuant to §506. Therefore, Ford Motor Credit's objection to confirmation was sustained and confirmation of the Debtor's plan was denied without prejudice.

In re Carrillo

(Internal Ref: Opinion 516)




Judge Thurman

PDF icon 516.pdf

The Debtor filed a motion to reopen his case, vacate his discharge as to one creditor and allow the debtor to file a reaffirmation agreement between he and a secured creditor, and then reimpose the discharge. The Court determined that under sec. 524(c)(1), a reaffirmation agreement is not enforceable if it is entered post-discharge and denied the motion to reopen as granting the relief to vacate the discharge would be futile.

In re Miller

(Internal Ref: Opinion 515)




Judge Boulden

PDF icon 515.pdf

Chapter 13 debtor attempted to comply with 11 U.S.C. § 521(a)(1)(B)(iv) by filing three of the four payment advices he received during the 60 days prepetition, arguing that the year-to-date information on the fourth payment advice constituted adequate “other evidence of payment” as to the information that would be contained on the missing third payment advice. The Court rejected the debtor's interpretation of the statute, holding that the plain language of § 521(a)(1)(B)(iv) is focused on the evidence received from an employer during the 60-day prepetition period rather than the payment received during that period. Further, evidence from the employer must be for the specific pay period, and a non-employer's extrapolation of what the pay advice might have shown using other data received from the employer is insufficient. The Court also rejected the debtor's alternative arguments that the automatic dismissal provision in § 521(i)(1) is unconstitutional both facially and as applied in the debtor's case as a violation of procedural due process. As such, the debtor's case was automatically dismissed by § 521(i)(1) on the 46th day after the petition was filed

In re Martin

(Internal Ref: Opinion 514)




Judge Thurman

PDF icon 514.pdf

In this chapter 13 case, the Court was presented with the issue of whether the Debtors could deduct secured claim payments in calculating their Disposable Income and whether they had proposed their plan in good faith. The Debtors proposed to retain a boat and trailer both of which were unrelated to the debtors' business and were subject to secured claims which were proposed to be paid in full. The chapter 13 Trustee objected.The Court determined that under post-BAPCPA law, a debtor need not show that a proposed expense is "reasonably necessary" for the debtor's maintenance and support to comply with section 1325(b). The court held that under the terms of sections 707(b) and 1325(b), a debtor may claim deductions in calculating Disposable Income for any secured payments owing, regardless of whether those payments are reasonably necessary for a debtor's maintenance and support. However, the Court also determined that the debtors' proposal to retain the boat and trailer was not made in good faith and denied confirmation.

In re George Love Farming

(Internal Ref: Opinion 513)




Judge Thurman

PDF icon 513.pdf

Interpreting In re Marrama, 127 S.Ct. 1105 (2007), the Court held that it has authority to deny a Motion to Convert a case from chapter 7 to 11 where the conversion is sought in bad faith. The Court held that the burden to show bad faith is on the parties objecting to the conversion, and applied the factors considered by the Tenth Circuit Court of Appeals in In re Nursery Land Dev., Inc., 91 F.3d 1414 (10th Cir. 1996) to determine whether bad faith exists in this case. The Court determined that bad faith had been established and denied the Motion to Convert.