Case No. 13-15827-7
The debtors filed a Chapter 11 which was later converted to a Chapter 7. At the time of conversion the debtors maintained a DIP account which contained $8,652.43, 100% of which was post-petition earnings of the debtors. Following conversion, the Chapter 7 trustee sought turnover of the account to the estate, while the debtors argued that under 11 U.S.C. §§ 348(a) & (f), and In re Evans, 464 B.R. 429 (Bankr. D. Colo. 2011), and In re Markosian, 506 B.R. 273 (B.A.P. 9th Cir. 2014), assets of an estate at the time of conversion from Chapter 11 to 7 should be treated in the same way as assets of the estate at the time of conversion from Chapter 13 to 7. That is, only property of the estate that would have been includable in the estate at the time of the filing of the petition under the chapter to which the case has been converted would be includible post-conversion. In this
instance, the debtor’s reading of the Code would have prohibited the inclusion of the DIP
account in the Chapter 7 estate. Relying on In re Ford, 61 B.R. 913, 916 (Bankr. W.D. Wis. 1986), In re Lybrook, 951 F.2d 136 (7th Cir. 1991), and In re Meier, 528 B.R. 162 (Bankr. N.D. Ill. 2015), the court held that absent an express statutory directive to apply the § 348(f) rule to Chapter 11 to 7 conversions, Lybrook was still good law as to those conversions and, thus, personal income of a Chapter 11 debtor is property of the Chapter 7 estate following conversion.