The court considered chapter 11 debtors' motion to convert their case to chapter 12. Although the newly enacted Family Farmer Bankruptcy Act provided that the family farmer provision would not apply to cases commenced before the Act's effective date, the court concluded that the legislative history supported an interpretation of that language to mean that the Act would not apply retroactively, and refused to interpret it to penalize farmers already in bankruptcy by requiring them to remain under a chapter that was unworkable. The court then concluded that debtors' requested conversion could only be granted under 11 U.S.C. § 1112(b) after 20 days' notice to all parties in interest, as provided in Bankruptcy Rule 2002(a)(7). The court held that, after such notice, debtors would have to convince the court that conversion would be equitable under the facts of their case.

Movant sought leave to file an untimely proof of claim in debtors' chapter 11 bankruptcies, asserting it was unaware of its potential claim until discovery had been conducted in a different district court action. The court held that Bankruptcy Rules 3003(c)(3) and 9006(b)(1) require a showing of "cause" for extensions of time and, even then, such relief was in the court's discretion. As the extension request was made after expiration of the claims bar, the court ruled that it could only use its discretion to grant the relief if the failure to meet the deadline resulted from "excusable neglect." Given the procedural posture of the case, allowing a new claim would require reworking of the proposed plan and a new disclosure statement. In addition, movant failed to show a probability of success of its claim in debtors' bankruptcy. The court concluded that, even if excusable neglect had been established, it would be inappropriate to exercise its discretion to allow the filing of a late claim.

Debtor obtained a loan and, in exchange, gave lender a trust deed covering five parcels of real property. Debtor subsequently sold one of the five parcels to plaintiff pursuant to a Uniform Real Estate Contract, and plaintiff filed notice of that contract with the county recorder. Debtor then granted lender another trust deed to the five parcels in exchange for a new loan. After plaintiff had fully paid debtor for its parcel, debtor issued it a warranty deed for that parcel, which plaintiff recorded. However, although plaintiff paid debtor in full for its parcel, debtor had not fully paid lender on its loans. After debtor filed its bankruptcy petition, plaintiff filed an action to determine the rights of the parties in the parcel it had purchased. Plaintiff first asserted that the doctrine of inverse order of alienation was applicable and required lender to first look to property retained by debtor for satisfaction of its lien. The court rejected that argument, concluding that the doctrine was inapplicable because the documents related to the sale to plaintiff indicated that plaintiff intended to take the parcel subject to lender's lien. Plaintiff's second argument was that lender's lien was invalid, having been extinguished when the real estate contract payments were completed. The court agreed, based on the doctrine of equitable conversion, concluding that debtor's rights to the property after it was sold under the real estate contract were considered "personalty" since its rights were limited to receipt of payments. Purchaser's rights under such a contract are considered "realty." Once the contract payments were completed, seller's rights to the property were terminated. Since all debtor could transfer to lender was the interest it had, lender's lien terminated upon plaintiff's full payment of the contract, even though debtor had failed to use plaintiff's payments to fully satisfy lender's loan. Judgment was granted to plaintiff.

While debtor's chapter 13 case was pending, prepetition sellers of a business to debtor filed suit in state court against debtor and the sale brokers, alleging fraud in connection with the sale. Brokers sought relief from the bankruptcy stay in order to file a claim for indemnity against debtor, arguing that the indemnity claim did not arise until brokers were sued by sellers and, therefore, it was a postpetition claim that is not subject to the 11 U.S.C. § 362 stay. The court rejected the reasoning in Avellino & Bienes v. M. Frenville Co., Inc. (In re M. Frenville Co., Inc.), 744 F.2d 332 (3rd Cir. 1984) cert. denied, 105 S.Ct. 911 (1985), upon which brokers relied, based on the Bankruptcy Code's inclusion of "contingent" and "unmatured" in the definition of "claim" in 11 U.S.C. § 101(4). The court further held that the Bankruptcy Code also provides an alternate remedy in 11 U.S.C. § 523 for claimants that were unaware of their claims prepetition, which provides that the debtor's discharge does not extend to debts that are not listed or scheduled in time to permit a timely proof of claim. Concluding that brokers' claim against debtor was covered by the automatic stay, and that no cause had been shown for lifting it, the court denied brokers' motion.