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The Supreme Court Speaks in Marrama

By Eugene J. Geekie, Jr., Patricia J. Fokuo and L. Katie Mason
August 29, 2007

With its Feb. 21, 2007 holding in Marrama v. Citizens Bank of Massachusetts, 127 S. Ct. 1105 (2007), the Supreme Court stepped in to resolve a Circuit Court split concerning a debtor's right to convert a Chapter 7 case to a Chapter 13 case under the Bankruptcy Code, pursuant to ' 706(a) of the Code. On its face, ' 706(a) seems clear ' a debtor has an absolute, one-time right to conversion. Such clarity is, in the Supreme Court's view, hazy at best.

In holding that a debtor does not, in fact, have an absolute right to convert from Chapter 7 to Chapter 13 under ' 706(a), the Supreme Court resurrected the equitable power of ' 105(a), and ignored the previously sacrosanct 'plain meaning rule,' see U.S. v. Ron Pair Enterprises, Inc., 109 S. Ct. 1026, 1031 (1989), to reach a result at odds with not only the plain language of the statute, but
also unequivocal statutory history. Although initially appearing to be limited only to a narrow consumer-case issue, Marrama has serious implications for all bankruptcy practitioners, due to its unexpected method of statutory interpretation, and thus its potential impact in the complicated process of deciphering and interpreting the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ('BAPCPA').

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