In Re Elmer H. Thomassen; Joan Thomassen, Debtors.elmer H. Thomassen; Joan Thomassen, Appellants, v. Marcy J.k. Tiffany, U.S. Trustee, Appellee, 5 F.3d 540 (9th Cir. 1993)

MEMORANDUM^** 

Elmer and Joan Thomassen appeal pro se the Bankruptcy Appellate Panel's ("BAP") order affirming the bankruptcy court's order converting their Chapter 11 case to one under Chapter 7 pursuant to 11 U.S.C. § 1112(b). The Thomassens also appeal the BAP's order removing the Thomassens' appeal from the oral argument calendar. We have jurisdiction pursuant to 28 U.S.C. § 158(d), and we affirm.

* Background

On March 5, 1990, the Thomassens filed a voluntary petition in Chapter 11 Bankruptcy. On August 28, 1990, the bankruptcy court ordered the Thomassens to file a disclosure statement and a reorganization plan by December 28, 1990 and to have the plan confirmed by February 28, 1991. The Thomassens filed a disclosure statement and plan on December 28, 1990, but failed to have the plan confirmed by February 28, 1991. On January 2, 1991, the Thomassens filed a first amended plan and disclosure statement. On March 19, 1991, they filed a second amended plan and disclosure statement. On April 2, 1991, the bankruptcy court held a hearing on the United States Trustee's application to convert the Thomassens' case from Chapter 11 to one under Chapter 7. The bankruptcy court found the Thomassens' disclosure statement inadequate and converted their case on April 11, 1991.

On April 22, 1991, the Thomassens moved for reconsideration and attempted to file a third amended plan and disclosure statement. On June 12, 1991, the bankruptcy court denied the motion. On March 3, 1992, the BAP affirmed the bankruptcy court's order. The Thomassens timely appeal.

II

Analysis

The Thomassens contend the bankruptcy court abused its discretion by converting their Chapter 11 case to one under Chapter 7. They argue that the order requiring them to have their plan confirmed was unconstitutionally vague. Their contention lacks merit.

We review for abuse of discretion the bankruptcy court's decision to convert a case from Chapter 11 to one under Chapter 7. See Richter v. Klein/Ray Broadcasting (In re Klein), 100 B.R. 509, 511 (Bankr. 9th Cir. 1987). We, like the BAP, review the bankruptcy court's findings of fact under the clearly erroneous standard, and its conclusions of law de novo. Rubin v. West (In re Rubin), 875 F.2d 755, 758 (9th Cir. 1989). The bankruptcy court may convert a Chapter 11 case to one under Chapter 7 for cause, including "(2) inability to effectuate a [reorganization] plan; (3) unreasonable delay by the debtor that is prejudicial to the creditors; and, (4) [the debtor's] failure to propose a reorganization plan within any time fixed by the court." 11 U.S.C. § 1112(b).

Here, the bankruptcy court found that, under section 1112(b), there was cause to convert the Thomassens' case because the Thomassens' disclosure statement was inadequate in that it failed to list assets and excluded any provisions of a plan. The court also found that the Thomassens were "totally ineffectual" at proposing a disclosure statement or plan.

On the record before us, we cannot say that these findings were clearly erroneous. Accordingly, the bankruptcy court did not err by converting the Thomassens' case under section 1112(b), and the BAP did not err by affirming the bankruptcy court's order.¹  See In re Rubin, 875 F.2d at 758.

Moreover, to the extent the Thomassens argue that the bankruptcy court abused its discretion by converting their case because the order requiring their plan to be confirmed was unconstitutionally vague, such argument is irrelevant. As discussed above, the bankruptcy court found the Thomassens ineffectual at proposing a plan. Thus, regardless of whether the order adequately specified the procedure for having a plan confirmed, the bankruptcy court had cause to convert the proceedings. See 11 U.S.C. § 1112(b).² 

The Thomassens contend the BAP violated their due process rights by denying them oral argument seven days before their scheduled hearing. The Thomassens argue that this situation could have been corrected had the BAP granted their motion for reconsideration. This contention lacks merit.

" [I]t is well settled that oral argument is not necessary to satisfy due process." Toquero v. INS, 956 F.2d 193, 196 n. 4 (9th Cir. 1992). Pursuant to the bankruptcy court rules, the BAP may determine, upon examination of the briefs and records, that oral argument is unnecessary. See Bankr.App. II, R. 3(a); Bankr.R. 8012.

On January 15, 1992, the BAP notified the Thomassens that their appeal, originally scheduled for hearing on January 22, 1992, was classified by the BAP for submission without oral argument. Although the Thomassens were informed that they had ten days in which to file a statement as to why oral argument was necessary, they failed to do so. On March 3, 1992, the BAP affirmed the bankruptcy court's order based on the parties' written briefs. Thus, the Thomassens were not deprived of due process. See Bankr.App. II, R. 3(a); Bankr.R. 8012. see also Toquero, 956 F.2d at 196 n. 4.

AFFIRMED.³