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Frumusa v. Woodard

October 16, 2009

LAWRENCE FRUMUSA APPELLANT
v.
LEE E. WOODARD, TRUSTEE KATHLEEN SCHMITT APPELLEE



The opinion of the court was delivered by: Charles J. Siragusa United States District Judge

BK 09-21527-JCN

DECISION AND ORDER

INTRODUCTION

Now before the Court is Appellant's Motion for Reconsideration (Docket No. [#8]) of the Court's Decision and Order [#3] denying his motion for a stay. For the reasons that follow, the application is denied and this appeal is dismissed.

BACKGROUND

The facts of this case were set forth in the Court's Decision and Order issued on September 22, 2009 (Docket No. [#3]), and need not be repeated here. It is sufficient to note that on June 5, 2009, Lawrence Frumusa ("Appellant") filed the underlying bankruptcy case, Case No. 09-21527, as a Chapter 11.*fn1 On July 15, 2009, Monroe Capital, Inc., one of Appellant's creditors, filed a Motion to Convert Case from Chapter 11 to Chapter 7. (Bankruptcy Docket No. [#72]). The United States Bankruptcy Trustee and creditor Marianela Hernandez joined in the application. Bankruptcy Court scheduled a hearing on the application for August 5, 2009 at 9:30 a.m. Appellant's attorneys, who had moved to withdraw after Appellant terminated their employment, requested an adjournment to allow Appellant to proceed pro se or to retain new counsel, but did not file any substantive opposition to the motion.

On August 5*fn2, 2009, Bankruptcy Court heard oral argument on the application. Appellant did not appear personally at that time, because he was incarcerated based upon a Contempt Order issued in connection with a case pending in New York State Supreme Court.*fn3 Appellant's attorneys appeared by telephone, however, stating that they were appearing in connection with a motion to withdraw as counsel, and further indicating that Appellant had discharged them as his attorneys on July 29, 2009. Judge Ninfo stated that he was aware of these circumstances, but nevertheless found that Appellant had not opposed the motion. In that regard, Judge Ninfo observed that, although Appellant, acting pro se, had filed various documents with the court in connection with his case, he did not file anything which addressed the motion to convert the case to a Chapter 7.*fn4

After hearing argument, Judge Ninfo stated as follows:

At this point, I'm going to grant the motion to convert Mr. Frumusa's case. I think there clearly are grounds under 11.12B4 for cause, including those that have been separately articulated by the US trustee and by Mr. Dove. [Attorney for Monroe Capital, Inc.] And [the] stated causes, those are not all inclusive, in the kinds of actions that we have seen, including diversions after filing the petition, failure to file the necessary schedules and reports, not get insurance on assets which weren't even initially disclosed.

***

I don't see how he can put together a plan. Mismanagement of [Frumusa's] companies -- the mismanagement of everything that has been shown to the Court, including these whole misdirected, [procedurally incorrect] motions and pleadings that keep getting filed with the Court, makes pretty clear to the Court that really, Mr. Frumusa cannot be left in charge of any of the business or other assets that he may own or have interest in, for the sake of the creditors, and that there is plenty of reason or cause to convert this, as we heard today.

The fact that Mr. Frumusa may be incarcerated at this point, although a fact, doesn't change the fact that he never, before his incarceration, which I believe took place yesterday, filed opposition to the pending motion as required by the motion papers. And I can only conclude from that that he is not, in fact, opposed to the conversion.... I think there is cause. I think we have to put an end to this.

(Transcript of August 5, 2009 appearance at 32-33). On August 7, 2009, Bankruptcy Court issued the Order (Bankruptcy Docket No. [#134]) converting Appellant's case to a Chapter 7.

On August 11, 2009, Appellant, proceeding pro se, filed a Notice of Appeal to District Court (Bankruptcy Docket No. [#150]), and a Motion to Stay Pending Appeal with the Bankruptcy Court. (Bankruptcy Docket No. [#148]). The Notice of Appeal did not indicate the grounds for the appeal. However, the Civil Cover sheet contains the notation, "As a result of others Plaintive [sic] was not present at Hearing and had effectively no representation." In connection with the request for a stay pending appeal, Appellant stated, in relevant part: "Conversion of Debtor's case will have irreparable damages on Debtor's assets." (Motion Requesting Stay Pending Appeal, ΒΆ 16). By Decision and Order (Bankruptcy Docket No. [#174]) filed on August 12, 2009, Judge Ninfo denied the application for a stay. In that regard, Judge Ninfo noted: "Frumusa asserts that, '[c]onversion of Debtor's case will have irreparable damages on Debtor's assets,' but he fails to in any way articulate what irreparable damages he believes may result." Id. at 4 (emphasis in original). Judge Ninfo further stated: "[T]he [U.S. Trustee] and other interested parties placed on the record numerous facts and circumstances establishing good cause for conversion, including [the Trustee's] ...


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