IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
|DO NOT PUBLISH
This case disposition has no value as precedent and is not intended for publication. Any publication, either in print or electronically, is contrary to the intent and wishes of the court.
JOHN and JOANN FREEMAN, No. 92-12224
JOHN and JOANN FREEMAN,
v. A.P. No. 97-1140
Memorandum of Decision
Debtors John and Joann Freeman filed a Chapter 11 petition in 1992. Their Chapter 11 plan
was confirmed in 1993. On March 14, 1997, on motion of the U.S. Trustee, the court found that
the debtors had failed to consummate their plan and converted the case to Chapter 7.
On April 10, 1997, defendant Joseph Halligan filed suit in state court against the Freemans
seeking to enforce their promissory note. On May 9, 1997, he obtained a judgment. On June 9,
1997, the Freemans instituted this adversary proceeding to enforce their rights under the
Bankruptcy Code. These facts are undisputed, and the matter is now before the court for
The parties are arguing over the interpretation of the Code when a case is converted from
Chapter 11 to Chapter 7 after a plan has been confirmed. The Freemans argue that Halligan
violated the automatic stay when he sued them to collect on the note. Halligan argues that he is
free to enforce the note because the debt arose post-confirmation. Both sides have got it wrong.
Section 1141(d)(1)(A) of the Code provides that confirmation discharges the debtor. Section
362(c)(2)(C) provides that in a Chapter 11 case the automatic stay terminates when the debtor
is discharged. Conversion of a case does not reinstate the automatic stay. In re Campos
B.R. 791, 792 (Bkrtcy.C.D.Cal. 1991), and cases therein cited. Halligan cannot have violated
the automatic stay because there was none. The primary case relied upon by the Freemans, In
, 198 B.R. 769 (9th Cir. BAP 1996), is not relevant because that was a Chapter 13 case.
In Chapter 13 cases, debtors do not receive a discharge until they successfully complete their
On the other hand, section 348(d) of the Code provides that a debt which arose after filing but
before conversion is treated for all purposes as if it were a prepetition claim. The Freemans were
entitled to a Chapter 7 discharge (see 7 Collier on Bankruptcy
(15th Ed. rev.), para. 1112.02,
p. 1112-14.) and such a discharge was in fact issued on August 7, 1997. By operation of section
348(d), the Freemans' debt to Halligan is subject this to discharge.
For the foregoing reasons, the court will not award damages but will issue a permanent
injunction barring further collection activities by Halligan unless his claim has been determined
to be nondischargeable. Each side shall bear its own costs and attorneys' fees. A judgment so
providing shall be entered.
Dated: October 28, 1997 _______________________