United States District Court, D. Colorado
For Samuel Jesse Christian Morreale, Appellant: Jeffrey A. Weinman, LEAD ATTORNEY, Weinman & Associates, PC, Denver, CO; Matthew M. Wolf, Patrick D. Vellone, Allen & Vellone, P.C., Denver, CO.
For 2011-SIP-1 CRE/CADC Venture, LLC, Appellee: Craig K. Schuenemann, LEAD ATTORNEY, Bryan Cave LLP-Denver, Denver, CO.
For United States Trustee, Appellee: Daniel James Morse, LEAD ATTORNEY, U.S. Trustee's Office-Cheyenne, Cheyenne, WY.
For Tom H Connolly, Trustee: Tom Harvey Connolly, LEAD ATTORNEY, Connolly, Rosania & Lofstedt, PC, Louisville, CO.
ORDER AFFIRMING DECISION OF BANKRUPTCY COURT
William J. Martí nez, United States District Judge.
Samuel Jesse Christian Morreale (" Morreale" ) appeals the final judgment of the Bankruptcy Court converting his Chapter 11 proceeding to a Chapter 7 proceeding. For the reasons stated below, the judgment of the Bankruptcy Court is affirmed.
I. STANDARD OF REVIEW
In reviewing a bankruptcy court's decision, the district court functions as an appellate court, reviewing the bankruptcy court's legal conclusions de novo and its factual findings for clear error. 28 U.S.C. § 158(a); In re Warren, 512 F.3d 1241, 1248 (10th Cir. 2008). On mixed questions of law and fact, the Court reviews de novo any question that primarily involves the consideration of legal principles, and applies the clearly erroneous standard if the mixed question is primarily a factual inquiry. In re Wes Dor, Inc., 996 F.2d 237, 241 (10th Cir. 1993).
II. STATUTORY BACKGROUND
This appeal focuses on the Bankruptcy Court's decision to convert a Chapter 11 (reorganization) proceeding to a Chapter 7 (liquidation) proceeding. Before describing the facts of this case, a brief review of the relevant statute, 11 U.S.C. § 1112, is in order.
Section 1112 states that, " on request of a party in interest, and after notice and a hearing, the [bankruptcy] court shall convert a case under [chapter 11] to a case under chapter 7 or dismiss a case under this chapter, whichever is in the best interests of creditors and the estate, for cause . . . ." 11 U.S.C. § 1112(b)(1). In this context, " for cause" can mean several things, including:
(A) substantial or continuing loss to or diminution of the estate and the absence of a reasonable likelihood of rehabilitation;
(B) gross mismanagement of the estate;
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(I) failure timely to pay taxes owed after the date of the order for relief or to file tax returns due after the date ...