Legal Case Summary

We will hear argument first this morning in case 14400 trials Harris versus Mary Vagelon, the chapter 13 trustee. Mr. Madden? Mr. Chief Justice, I may please the Court. Bankruptcy cases can proceed under only one chapter of the bankruptcy code at a time. There are three main reasons why when petitioner converted his case from chapter 13 to chapter 7, respondal is required to return post-petition wages she held as chapter 13 trustee. First, the code not just wages, right? I mean, you constantly refer to it as post-petition wages, anything that went into the pot that was still there. That's right. I mean, it would be, you know, lease payments or anything else, right? Yes, Your Honor. Any post-petition property, including wages. Now, in the general chapter 13 case, post-petition property held by the chapter 13 trustee are wages. But because section 348F of the code speaks to what remains property of the estate in the converted case, that section requires that those wages or any other property remain property of the estate, only if the case was converted in bad faith. If the case is converted in good faith, as here, the petitioner gets to keep that property. And second, the code requires that when the case is converted from chapter 13, excuse me, it really doesn't say what happens to it, does it? It just says what becomes the estate of the chapter 7 bankruptcy. That's right. It leaves up in the air what happens to the material that is not described in that provision, right? I think the statute doesn't explicitly say what happens to that material, but what it does say is... Why would it go back to the debtor automatically? Because there's only one estate in the bankruptcy case that's created the commencement of the case. And so when Congress decided what will remain in that estate after conversion and made that decision turn on whether the debtor has acted in good faith or bad faith, Congress has said what should happen in the case going forward. So by creating a penalty for debtors who have converted their case in bad faith, Congress has said that debtors should retain the funds if they have converted the case in good faith. Moreover, what happens in bad faith? In bad faith under Section 348F2 of the code, if the debtor has converted his case to chapter 7 in bad faith, all of the post-petition property remains property of the estate. Effectively, yes. But it seems to me that that is a statutory argument that cuts against your position because the code makes this distinction. Well, no, respectfully, I disagree, Your Honor. I think the code cuts in our favor because, because of this distinction, Congress has decided that it's only when a debtor converts this case in bad faith that this property should remain property of the estate available to creditors in the case. What does that mean? The chapter 13 is over, and chapter 7 is underway

. It remains in non-existent estate, and there is no more chapter 13. It goes to the creditors, right? Not quite, Your Honor. It remains in the estate because a new chapter 7 trustee takes over as the representative of the estate under the code. And so it becomes the chapter 7 trustee's responsibility to administer that estate and make disbursements to creditors according to the code. Now, here- The incidentally, I must say you are correct. I think this does cut in your favor. The idea that a bad faith of conversion means that the estate is the current estate. Okay. I think that code distinction does cut in front of your favor. Right. And I think that's what Congress intended when they enacted Section 34. Oh, they what they said specifically is the property of the estate, and that's the property we're talking about, the property of the 13 estate, right? Because it's the property of the 13 estate that goes into 7 at the moment the petition is filed to convert. That's right. Section 34 says which property of the 13 estate? That remains in the possession or is under the control of the debtor. Is this money which is in trustee in the possession of the debtor? No? Is it under the control of the debtor? Well, that depends on the answer to your question. I mean, if you treat it like an escrow as they want to, it isn't. If you treat it like a, say, a normal trustee, normal trustee, I'll ask them this. He doesn't. And therefore it's outside the statute. And there are no other words in this statute that really cut one way or the other. You can make an excellent argument either way as to any other word. So there we are. I read these and I said, I don't know. So if you're going to point to, if you're going to point to the words, unless I really read them several times in the statute, I couldn't say that you are favored or they are favored. Because I don't know the answer to that word control and I couldn't find anything that really helped. Well, Section 348F intends, essentially two elements to determine whether property is going to remain in the estate

. It has to both be in a good faith conversion. It has to be property that existed as of the date of the petition and it still has to exist in the estate. The debtor doesn't say exists. We got the words that it says. That's right. Now, why is this? You could, why, why is it in his possession? What they're thinking about with F is they're thinking about the Ant left a legacy which he received after he filed the 13 and what they want to do is make certain that that legacy is countered as part of the seven estate. Isn't that right? I think that's part of a Congress intended, but for the fight of word that suggests anything else. You point to it. Well, there's nothing in Section 348F that distinguishes post-petition property that's held by the debtor versus post-petition property that's held by the trustee. When Congress enacted the statute, it intended to define what would remain property of the estate in the case going forward and it didn't distinguish. What's the answer to my first question where I pointed to two words, possession and control? Well, I think when the case ends and the trustee's service has terminated, the property of the estate that the trustee's holding is in the control of the debtor because it becomes the debtor's property if it's no longer property. So is this a revocable or irrevocable trust? If you can confer, you're claiming it's a revocable trust, correct? I think if any analogy from the common law applies just to sort of my or it would be that of a revocable trust because Congress has been very clear in Section 1307A that a debtor has the right to convert his case out of Chapter 13 and into Chapter 7 and any. So if it's a revocable trust, what's the trust law in that situation? A settler in a revocable trust obtained the corpus of the trust upon revocation. That's effectively what Congress has said here because when the case leaves Chapter 13 and enters Chapter 7, it's Chapter 7 that governs. A new Chapter 7 trustee is appointed to administer the case and that trustee- is out, is it common to appoint a different person or is it the same person with a new hand? It's usually a different person. So in this case, when Petitioner converted his case from Chapter 13 to Chapter 7, the court docket reflected that respondent service had terminated and an interim Chapter 7 trustee was appointed the very next day. What's your problem, the issue of the moot in 99 percent of the cases if the trustee decided to adopt a procedure which will provide for a distribution at the end of every day? If a trustee has already distributed the money to creditors, lawfully under a plan, then yes, that property has left the estate. So it would only be the rare situation when this, even rare than now, when this arises and presumably trustees who wish to distribute to creditors can adopt the sort of rule that they desire. Yes, but because trustees are fiduciaries of the estate and represent the estate, they're not allowed to dissipate estate assets by making frequent, even constant distributions. And it's because they're the representative of the estate. Why is it, if there's a particularly difficult, and maybe this is such a case where the trustee has to take some time to figure it out, perhaps, but in a fortuitous case, where the wage is arrive on Wednesday or whatever, it doesn't seem to me that this would raise serious concerns. And the consequence of that is it becomes even more fortuitous when the assets come within the control of the trustee so that a rule that says there's a huge difference based on the fortuity of the timing might not make much sense. Well, I think that's the rule, respectfully, that Congress adopted when they allowed debtors to make the conversion at any time. Congress didn't require debtor to give notice, and Congress didn't make conversion effective only after discerning parties. Can they handle the situation by providing in the chapter 13 agreement that any funds remaining if there should be a conversion will be distributed among the creditors? Well, what they can't do is undermine the effects of conversion because under Section 1307 of the code, the debtors write to convert the case at any time as not. Are your answers no? The parties could not do that

. That's right. The answer is no, and that the parties can't undermine the effective conversion. Why would Congress adopt a rule that depends so much on happenstance? I mean, you know, if the trustee distributes the money properly, there's nothing there. If he waits three months, the debtor gets it all back. It's random. Just utterly, why would anybody adopt a rule like that? I think the rule is adopted here because chapter 13 is in essence of voluntary proceeding. A debtor has to elect to put his future in come into the estate in the first place. But he doesn't know whether this random van is going to happen or not when he does that. So you're saying that Congress is forcing the debtor and the creditors, I suppose, to roll the dice, right? He doesn't know what he's going to get back. It depends on whether the trustee is lazy or not. Sometimes, but there are cases like this one, Your Honor, where it's not in your happenstance. Respondent was holding funds in this case because Chase, the mortgage lender had received relief from this day. So funds that had been earmarked for Chase and that no credit or under the plan was going to get other than Chase were being held while Chase and the debtor, that's no. That's exactly the question I have just, Scalia, just raised. And I'd like you to think about that. You practice bankruptcy law. So you're familiar with it in your experience. Now, I assume with me for the moment that the language does not resolve this. The funds are not in the possession of the debtor. The question is whether he nonetheless still controls them, I.e. gets them back. So that's the assumption. I had exactly the same reaction. Now, I think the Chief Justice and Justice Scalia have, that in the mind run of bankruptcy cases, whether a trustee at the moment of conversion is holding funds that he should just, that will be distributed to creditors, but they haven't been yet. Is a fluke chance? Sometimes there might be a lot

. Sometimes there might be a little. It depends on when the mail went out that day. It depends on unusual circumstances such as the one in this case. And you shouldn't turn a rule of law on that. You'll produce a, you'll produce gaming and who knows what will happen. Now, you've heard the question. Is the thrust of the question, which I think you've now gotten three times, right or wrong? Is it chance? Is it a fluke? And I've talked very slowly, so I want to be sure that you get this question because it's important to me how you answer it. I think the answer is that yes, there are some cases in which this will be happenstance. But Congress has spoken to those cases by allowing me to. But that isn't my question about what Congress wants. I question, is in your experience, what is it that happens stands governs 50, 50, almost never? What's your experience? I don't know from a survey of the Bank of Rome from your experience. Well, my experience may not be as broad as your experience. I would just be curious. I'm trying to get some kind of a rough answer. Here's what I can tell you to Justice Breyer. I think that most chapter 13 cases are converted because the debtor has stopped being able to make his payments. So in the mind run of cases, there's not really funds in that the trustee is holding. I think what happens are cases like these where there were funds have built up in the trustee's possession for a reason. And that's because the creditor to whom they were earmarked can no longer obtain those funds under the plan. Now, Congress has spoken to this by allowing the debtor in this circumstance or any other to make the conversion at any time because chapter 13 has been a voluntary question. I don't understand. The three-once wages have accumulated in the estate. In the ordinary course, if there's no change, they're going to go out to the creditors. And you just said that the creditors can't get them. I didn't quite get that. They can't get them only because there's the questions of indicated that the trustee is doing something else for a week

. Well, they would go to the creditors if in performing the trustee's service, the trustee in following the plan eventually disperses them to creditors. But that's what's important is that the trustee has to be following her service to the dispersed funds in the case. Now, under Section 348E of the code, the trustee's service ends a conversion. Now, I think both parties agree that a core function of that service. But that does answer the fortuity point other than what you say the statute, and that's it. I think that's right. I think at the end of the day, if the case, if funds are in the estate by happenstance because they just haven't gone out in the next disbursement, that Congress has made the election, that the debtor is still entitled to convert his case at any time. So, Mr. Matt, I'd follow up on your statement about in this case, the plan called for the bulk of this money to go to Chase, correct? Matt, yes, that's right, especially early in the plan. Al, early in the plan. And you said Chase couldn't get the bulk of this money, why? Al, because it had four clothes. Matt, yes, they had obtained relief from the automatic stay in the bankruptcy case. So, what happened here is that Petitioner was supposed to make his current mortgage payments, what's called outside of the plan, or directly to Chase. And because of circumstances, debtor found himself unable to make those payments. And so, then when that happened, Chase went to the bankruptcy court and received relief from the automatic stay, which allowed them to foreclose, but that didn't resolve their claim in the case. So, what the trustees explains in her brief that she did was to reserve the funds that had been earmarked for Chase, so that because it's a common circumstance that the mortgage lender and the debtor will then work out a modification of the government. But she didn't give the money to Chase. Matt, no, that's correct. Al, she decided to distribute it to the other creditors. Matt, that's exactly right. What permitted that in the plan? Matt, well nothing permitted that in the plan until both secured creditors had been paid in full. Now, importantly, in this case, neither Petitioner's secured creditors under the plan had been paid in full on the day he converted his case from Chapter 13 to Chapter 9. It was only, respondent ended up filing a document in the bankruptcy court called the trustees recommendation concerning claims in which the treatment of Chase's claims changed. But her service had terminated by that point under Section 348E of the code. And so, this case presents an interesting example of what happens if you end up with two trustees performing the case at the same time. It was never anything, it was never any distribution for these wages that were being collected

. There was never any distribution. They were just out. The funds that issue in this case had just been held. There had been distributions in the case while the case had preceded. So, Chase had received. How is it determined what the frequency of payments will be to the creditors? Well, those are determined both in the trustees service as the trustee in reading the plan terms and the bankruptcy code, but it's generally covered by the confirmed plan. And so, the confirmed plan in this case required secured creditors to get paid first before any unsecured creditors were paid. But the plan said payments will be made once a week or once a month. To some secured creditors, it suggests the plans will be made monthly, but unsecured creditors aren't entitled to payment at any time during the plan. They're effectively entitled to the funds that are left over after creditors who have higher priority are paid first. Mr. Mann, I've been thinking about your response to my earlier question about whether this issue could be covered in the plan. If the plan said that any funds still help by the trustees shall be distributed to the creditors. Your answer was it couldn't because it would contradict the statutory requirement. But there isn't any statutory requirement. I mean, that's what we're dealing with. We're dealing with an absolute void. The statute doesn't say what'll happen to this money. If the statute doesn't say so, what's wrong with having the parties adopt a provision in the plan that says that? And by the way, in my estimation, this helps your case because I am much more willing to buy on to a random rule of law that the parties can contract out of than a random rule of law that has to be applied in the future. And what you're urging upon us is a random rule of law. You're just saying, well, Congress wanted randomness. Well, maybe. The third circuit in deciding this issue did suggest in a footnote that your honors position might be an out that parties could take. I think there would be two constraints on that issue. In another case, that isn't presented here, one is that a plan can only provide with a code allows the plan to provide. So what the Chapter 13 plan can provide is specified in Section 1322 of the code

. And the code provides that a debtor could vest, propitivize state in any other entity. So a debtor could vest property in specific entities. But there's no provision in the code that allows a debtor to vest property generally in creditors. And the second problem, as I mentioned earlier, is that under Section 1307A of the code, a waiver of the right to convert a case at any time is unenforceable. So if there's a provision in a plan that undermines the natural statutory effective conversion by keeping property of the state larger in a case of good faith conversion, or asking the trustee to continue performing the service of the trustee after conversion, those provisions of a plan would be unenforceable. Kagan, there's a policy argument that cuts against you, which the fifth circuit talked about. And of course, it's only relevant if the statute doesn't say much of anything about this. But let's assume for this purpose that the statute doesn't say much of anything about this. And what the fifth circuit said was that Chapter 13 is essentially a quid-broke quo. That the debtor gives up a certain amount of his wages, but in exchange the debtor gets to keep his assets. And here what the debtor is essentially asking for is to get back the wages, but he's gotten the benefit of having kept his assets. So he's kind of asking for the quid without the quid, or the quid without the quid, or whatever it is. So what's your response to that? I think there are a number of problems with viewing Chapter 13 through that lens. Chapter 13 is better for debtors and creditors alike. Everyone comes out ahead because no creditor can receive less under Chapter 13 plan than they would be entitled to receive under Chapter 7 liquidation. So Congress and generally the policy of the bankruptcy code is intended to encourage debtors into Chapter 13 because it's better for everyone. The idea that a debtor sort of rents the benefits of Chapter 13 from his creditors, who stands to gain from him doing so, doesn't make a whole lot of sense under the way the bankruptcy code is structured. What about, I guess there can be payments directly to the creditors? What does that assume they get those without having to worry about this problem? That's correct. Under Chapter 13, either the debtor or the trustee can be the dispersing agent under the plan. But in either case, it's when the money is dispersed by the dispersing agent that the rights shift the creditors. But in the case of the creditor who is paid directly, that's sort of no middleman, right? That's right. But the question is whether that, when they've been paid, the property leaves the estate and becomes property of the creditors. Now, but I guess I'm just trying to highlight another randomness and fortuity and that some creditors will be get their money directly, others that will go through the estate and if you get your money directly, you're not going to have to worry about this. That's true if the debtor keeps up his payments. The reason why thinking most creditors like the trustee to be holding funds in the estate, I'm subject to future disbursements as appropriate, is that that increases the likelihood of success of that. What is that work as a practical matter? Is there direct deposit of a portion of wages with the creditor? It varies from case to case

. In this case, respondent effectively had a, let's call the wage order. So, the petitioner's employer sent a portion of his income directly to the trustee every month. Now, what would happen? Let's suppose you're right. Now, the trustee has given this money to the creditors and she wasn't supposed to do that. The debtor was supposed to get them. What happens now? How do we do what has already been done? Well, respondent may be able to get the money back from the creditors with whom she has relationships and rights. Ultimately, the liability is the trustees for- That would be person liability on the part of the trustee. That's right. And so, the order in the bankruptcy case is in order for respondent to pay this sum of money to the petitioner. Now, that's because when trustee is outside their service, that's how the liability works in the bankruptcy code. And I think both parties agree that it's a core function of the trustee's service in the bankruptcy case to make disbursements to creditors. Under section 340E of the code, that service has to end in conversion. I assume the trustees have insurance, right? That's right. But we don't have to feel sorry for this way. Yes, the hell it's called errors and admissions. Insurance that covers this sort of thing. Well, I assume it also will be a right to recoup from the creditors. The creditors receive something improperly paid. There may be a standard recoupment principles. I think that may well be true, Your Honor. I think, returning to the point about the ending of the trustee's service, the practical significance of that is that Congress didn't want two trustees functioning in case at the same time. Once the case had been converted, all of the claims against the estate in the Chapter 13 case automatically became claims against the State in the Chapter 7 case. And so what happened here is you had a Chapter 13 trustee still acting on and paying claims as though Chapter 13 was still going. All the while, Chapter 7 trustee had taken over the reins of being the representative of the State and dealing with claims. The money that's in the hands of the trustee at the moment that the Chapter 7 petition is filed will probably be wages that under the 13 plan were to be distributed to creditors. And the trustee has to make out a check to somebody

. So the only question is, is the name of the trustee X, which is the creditor to which it is gone, or is the name Y, which is the debtor or the equivalent? So I don't see how we get very far saying that the trustee's services have ended at that point. No one thinks the trustee would keep the money. And again, six of one half it does not know the other. But I think there's a difference here because the trustee's core function while serving as trustee, while serving as the representative of the State under the code, is to disperse funds to creditors. Why do you think that the trustee is filed a brief on the other side? I'm not the, I read the brief, it makes a series of legal arguments. But they must, what do they care? They obviously care. And I don't, I'll ask perhaps them the question, but what's your view of that? Why do they care? Since it's just a matter of writing what name you write in. I think that may be a better question for my colleague. What's your view of it? I don't want to ask them without getting your view. I think the trustee is attempting to send funds to whoever the trustee is supposed to send funds to. I don't know. I think you just see why they care in this case, isn't it? Well, in this case, some of the trustee doesn't want to be liable for the money that she has turned over. Right, the trustee has an easy answer. Who's following it's the whole group. Right, I agree with that. And some of the funds that were dispersed here were funds that were paid to the trustee as her, her percentage fee in the case as well. If there are other questions, I'd like to reserve the balance of my time for review. Thank you, Council. Go, Black. Mr. Chief Justice, and may it please the Court. The funds that issue here were held by the trustee under the terms of a confirmed plan that obligated her to distribute those funds to creditors. Petitioner, you did not. The Court below said reject that your argument that when the money was paid to the trustee, or the trustee got it, that it vested in the creditors. It's actually that part of your argument, correct? That's right, Justice Sotomayor. And so if you don't have a vested right to the money, then what gives you the right? What's the plan, right? It's the plan and the backdrop against which the plan is

. Well, the problem is that on pawn conversion, it nullifies the plan. So what's the remaining power that you have to distribute the funds to creditors to creditors? So Justice Sotomayor, that is a problem that arises not just in bankruptcy, but under the common law all the time. A trust can terminate, and a trustee can be holding funds, and is left with the question of, do these go back to the grantor? Do I pay them backwards, or do I pay them forwards? And long before there was a bankruptcy code, there was an established common law principle that says, first, the trust pays, the obligations of the trust, and the obligations of the trust include matured claims of beneficiaries. That's the rule that comes out of Section 235A of the Secondary Statement and Section 89 of the Third Restatement. And the bankruptcy code was written against that common law backdrop. And where the code, there are indications in the code. We think those indications support the notion that is consistent with the common law that they've been paid forward. But to the extent the court would have concluded that nothing in the bankruptcy code helps to answer the question, there are surely no reason to think that Congress intended to abrogate that established common law background. Kagan, you have to give everything to the Chapter 7, Trustee. So if I can, section, that's in the control or possession of the debtor. But if it hasn't invested in the creditors, then so how would it be? So if I can explain. Section 348F, which is the privilege I believe you're referring to, says the following. It says that upon the conversion of the case, the Chapter 7 estate is made up of the assets that the debtor had on the petition date that they still have on the conversion date. So there's the question. The question Congress was dealing with is exactly the question that Justice Breyer was referring to, which is, let's say during the course of the 13, there's some sort of windfall that comes into the estate. Does that become part of the Chapter 7 estate, and the answer to that is no. But that question, that determination says nothing about funds that the debtor already paid out to the trustee at a time when the debtor was required to pay those funds to the trustee in order to obtain the benefits of being in Chapter 13 at that time. So it at least raises the question, why you should treat differently the, let's say, the inheritance from the new wages. In other words, say the new wages come in, they're garnished, it goes straight to the trustee, but that's also a fortuity. You know, why should you treat the wages differently from the inheritance? S. So Justice Kay, the answer is because the debtor made a decision to pay these funds over to the trustee. Here, the decision was done through a garnishment order, but that itself is, of course, itself a fortuity. What we're talking about are funds that a debtor made a voluntary decision to pay over to a trustee in order to remain in Chapter 13. If the debtor- S. Well, until he decided to switch the petition to Chapter 7. S. That's right. He could have done that at any time. So the debtor here had the ability, as soon as Chase received relief from this day, to convert at that time. The debtor didn't make that decision. The debtor instead decided for the remaining 12 months to remain in Chapter 13 and to obtain the benefits of being in Chapter 13. Precisely, the Court wrote that your honor was describing and that the Court described in when, how does it work in a revocable trust, a revocable trust? So let's imagine that on, under the terms of the trust, on February 1, Joe Smith gets $100. All right? On March 1, the SET law revokes the trust. There is money in the trust that would pay his monthly payment on February 1, on March 1, on April 1. That's $300 that he has, $100 after its revoke, and $100 before its revoke. How does it work under the law of revocable trust? So Justice Breyer, Section 235A of the Second Restatement of Trust deals exactly with this question. The answer is the revocation here, the debtor's decision to convert, effectively operated as a revocation. Because of that, the remaining three years worth of payments that he otherwise would have been obligated to pay, he didn't have to pay. But as to the funds that were already in the trust, where the obligations have matured, the trustee is required to pay those matured obligations. The situation, that's another one, in my example, the January money, which is owed before the revocation, goes to the beneficiary. That's exactly the March money goes back to the SET law. That's exactly what you're saying the same is true here, that the pre-petition seven money that was owed and not paid, should, if in the hands of the trustee, go to the creditor, that any money that he has, which is for the creditors, where they are not yet entitled to it, say like an early payment of yes, next months. They go back to the debtor. Just as far as I think that's exactly right, Section 235A of the Secondary Statement of Trust talks about a life beneficiary who's entitled to all of the income of a trust during their life. Income comes in while they're alive, but before it's paid, they die. The question is, where does that go? Does it go back to the grantor or does it go to the estate of the life beneficiary? And the answer to that Section 235A says is it goes to the estate of the life beneficiary because that obligation matured under the terms of the trust before the revocation. That same principle, I think, is fully applicable here for exactly the reasons that you're on the subject. Sotomayor, maybe this is too abstract a way to envision it, but we talk of an estate, it's somebody's estate. Right? John Smith dies. He leaves an estate. Yes. You call it John Smith's estate

. That's right. He could have done that at any time. So the debtor here had the ability, as soon as Chase received relief from this day, to convert at that time. The debtor didn't make that decision. The debtor instead decided for the remaining 12 months to remain in Chapter 13 and to obtain the benefits of being in Chapter 13. Precisely, the Court wrote that your honor was describing and that the Court described in when, how does it work in a revocable trust, a revocable trust? So let's imagine that on, under the terms of the trust, on February 1, Joe Smith gets $100. All right? On March 1, the SET law revokes the trust. There is money in the trust that would pay his monthly payment on February 1, on March 1, on April 1. That's $300 that he has, $100 after its revoke, and $100 before its revoke. How does it work under the law of revocable trust? So Justice Breyer, Section 235A of the Second Restatement of Trust deals exactly with this question. The answer is the revocation here, the debtor's decision to convert, effectively operated as a revocation. Because of that, the remaining three years worth of payments that he otherwise would have been obligated to pay, he didn't have to pay. But as to the funds that were already in the trust, where the obligations have matured, the trustee is required to pay those matured obligations. The situation, that's another one, in my example, the January money, which is owed before the revocation, goes to the beneficiary. That's exactly the March money goes back to the SET law. That's exactly what you're saying the same is true here, that the pre-petition seven money that was owed and not paid, should, if in the hands of the trustee, go to the creditor, that any money that he has, which is for the creditors, where they are not yet entitled to it, say like an early payment of yes, next months. They go back to the debtor. Just as far as I think that's exactly right, Section 235A of the Secondary Statement of Trust talks about a life beneficiary who's entitled to all of the income of a trust during their life. Income comes in while they're alive, but before it's paid, they die. The question is, where does that go? Does it go back to the grantor or does it go to the estate of the life beneficiary? And the answer to that Section 235A says is it goes to the estate of the life beneficiary because that obligation matured under the terms of the trust before the revocation. That same principle, I think, is fully applicable here for exactly the reasons that you're on the subject. Sotomayor, maybe this is too abstract a way to envision it, but we talk of an estate, it's somebody's estate. Right? John Smith dies. He leaves an estate. Yes. You call it John Smith's estate. Here, you know, we call this Mr. Harris's estate. At least more naturally than we would call it consumer electronics, chase manhattons, whatever's estate. So, isn't that a fairly strong signal of who should get the stuff that's kind of left in the middle? Mr. Chief Justice, the bankruptcy code, it is his estate, but it's his estate to be paid and consistent with the terms of the plan. Now, I understand that. As I said, just sort of looking at a more conceptual level, it does seem that it's, well, I guess I can't say it more than that, that it's his estate. So, stuff that you can't decide where it goes on a go to him. I don't think that nomenclature should overtake the structure and purpose of the code. If I may, while it's, is it normally called the debtor's estate or is it called the chapter 13 estate? Yes. I would normally say the chapter 13 estate. In fairness, Justice Scalia, I've heard, I've heard it used both ways colloquially. Before abandoning the text, though, in fairness, this is not a case in which the language of the code is entirely silent. There are clear indications from the text of the code that you help answer the question of the consistent with the common law backdrop. For example, under section 1328A of the bankruptcy code, it says the debtor's entitled to the discharge upon the debtor's completion of the payments he's required to make under the plan. It doesn't say when the trustee distributes that money to creditors, it says when the debtor makes the last payment he's required to make under the trustee, which is at least a signal that the legally operative moment within that Congress was contemplating was the debtor making the plan. Painted exactly. What did I get back to the trustee just for a moment of a revocouple trust? Yes. Now, the standard trust law, CJA, when the grantor exercises a power of revocation, the interest of the beneficiary ceases, and the assignee of the grantor, namely the grantor, takes the chorus of the trust free from the trust. But what you are saying is, if I look further into that, I will discover that if the grantor revoked the trust on February 1, and if under the trust documents, $100 was due to a beneficiary on January 1, and on March 1, standard trust law is the beneficiary gets the $100 from January, and does not get the $100 from March. That's exactly right. And the thing that I will look up in the trust law to show that you gave me the site. And I didn't know all that. It's section 89 of the Third Restatement. And you're saying that's precisely how we should treat this. That is correct

. Here, you know, we call this Mr. Harris's estate. At least more naturally than we would call it consumer electronics, chase manhattons, whatever's estate. So, isn't that a fairly strong signal of who should get the stuff that's kind of left in the middle? Mr. Chief Justice, the bankruptcy code, it is his estate, but it's his estate to be paid and consistent with the terms of the plan. Now, I understand that. As I said, just sort of looking at a more conceptual level, it does seem that it's, well, I guess I can't say it more than that, that it's his estate. So, stuff that you can't decide where it goes on a go to him. I don't think that nomenclature should overtake the structure and purpose of the code. If I may, while it's, is it normally called the debtor's estate or is it called the chapter 13 estate? Yes. I would normally say the chapter 13 estate. In fairness, Justice Scalia, I've heard, I've heard it used both ways colloquially. Before abandoning the text, though, in fairness, this is not a case in which the language of the code is entirely silent. There are clear indications from the text of the code that you help answer the question of the consistent with the common law backdrop. For example, under section 1328A of the bankruptcy code, it says the debtor's entitled to the discharge upon the debtor's completion of the payments he's required to make under the plan. It doesn't say when the trustee distributes that money to creditors, it says when the debtor makes the last payment he's required to make under the trustee, which is at least a signal that the legally operative moment within that Congress was contemplating was the debtor making the plan. Painted exactly. What did I get back to the trustee just for a moment of a revocouple trust? Yes. Now, the standard trust law, CJA, when the grantor exercises a power of revocation, the interest of the beneficiary ceases, and the assignee of the grantor, namely the grantor, takes the chorus of the trust free from the trust. But what you are saying is, if I look further into that, I will discover that if the grantor revoked the trust on February 1, and if under the trust documents, $100 was due to a beneficiary on January 1, and on March 1, standard trust law is the beneficiary gets the $100 from January, and does not get the $100 from March. That's exactly right. And the thing that I will look up in the trust law to show that you gave me the site. And I didn't know all that. It's section 89 of the Third Restatement. And you're saying that's precisely how we should treat this. That is correct. That there is nothing in the bankruptcy code that is inconsistent with that. That's how you want to treat it. We think that's the correct, yes. In addition to the provision regarding the- Does anyone else, any other circuit bankruptcy court, treated your function as that of a typical trustee? I mean, so they're not a typical trustee. You're- That's an over-esco account. You're a trustee for the estate or for the debtor. So it's a creature created by the bankruptcy code that is in some ways a hybrid of- S.Crow law and trust law. We think that's the best way to think about it. As between the two, they both point in the same direction. So I don't think a great deal turns on whether the lens of the common law here is that of S.Crow or that of trust. There are cases, a number of them, that have talked about the role of the trustee by reference to the common law of trust. It's a common-rested after all, use the term trustee, which is some indication that it was drawing on the common law backdrop of trust and thinking about this questress to go about. What do you do about the argument that what you're asking to be done cannot be done because immediately, upon the conversion, the Chapter 13 trustee no longer has any powers? So, Justice S.Crow, that argument from Section 348E of the bankruptcy code simply proves too much as was suggested earlier. The trustee clearly has to distribute the money to someone. They have to write a check either to the debtor or to creditors. The question is to who is legally entitled to the funds? And that is the answer that drives the resolution of this case, the notion that no one is suggesting the trustee keeps the money herself. She obviously needs to distribute it. And that common law trusts terminate and there is a doctrine about the wind-up obligations of the trustee upon termination. I suppose you're saying that the service of the trustee is owed both to the debtor and the creditors. If it were to the creditors, then you would have a weaker position. In fairness, Justice Kennedy, the obligation that the trustee has is to carry out the terms of the plan. That includes obligations that run for the benefit of creditors. And so, I'm better off the provision that if the conversion is made in bad faith, then the estate consists of the property as of the date of the conversion

. That there is nothing in the bankruptcy code that is inconsistent with that. That's how you want to treat it. We think that's the correct, yes. In addition to the provision regarding the- Does anyone else, any other circuit bankruptcy court, treated your function as that of a typical trustee? I mean, so they're not a typical trustee. You're- That's an over-esco account. You're a trustee for the estate or for the debtor. So it's a creature created by the bankruptcy code that is in some ways a hybrid of- S.Crow law and trust law. We think that's the best way to think about it. As between the two, they both point in the same direction. So I don't think a great deal turns on whether the lens of the common law here is that of S.Crow or that of trust. There are cases, a number of them, that have talked about the role of the trustee by reference to the common law of trust. It's a common-rested after all, use the term trustee, which is some indication that it was drawing on the common law backdrop of trust and thinking about this questress to go about. What do you do about the argument that what you're asking to be done cannot be done because immediately, upon the conversion, the Chapter 13 trustee no longer has any powers? So, Justice S.Crow, that argument from Section 348E of the bankruptcy code simply proves too much as was suggested earlier. The trustee clearly has to distribute the money to someone. They have to write a check either to the debtor or to creditors. The question is to who is legally entitled to the funds? And that is the answer that drives the resolution of this case, the notion that no one is suggesting the trustee keeps the money herself. She obviously needs to distribute it. And that common law trusts terminate and there is a doctrine about the wind-up obligations of the trustee upon termination. I suppose you're saying that the service of the trustee is owed both to the debtor and the creditors. If it were to the creditors, then you would have a weaker position. In fairness, Justice Kennedy, the obligation that the trustee has is to carry out the terms of the plan. That includes obligations that run for the benefit of creditors. And so, I'm better off the provision that if the conversion is made in bad faith, then the estate consists of the property as of the date of the conversion. Right. So, Justice Kennedy, that yielded. So, the statute appears to make a specific requirement for that, but not for the case we have. So, Justice Kennedy, that provision of 348, of 348 F deals with the situation that Justice Breyer was referring to, which is what if the debtor during the life of the Chapter 13 case received an inheritance. So, money that the debtor still had hadn't yet voluntarily paid over to the State, received an inheritance, but she converted in an act of gamesmanship. But I would suppose we'll apply to your case, too. I'll pay this date as of the date. So, the language of 348 F does the following. It says that the property of the Chapter 7 estate is the property that the question that Congress had when it dealt with 348 F is, the debtor files a Chapter 13 case on day one, lives in Chapter 13 for some period of time and then converts. So, the question is, okay, what universe of property is in the Chapter 7 estate? Is it all the property that the debtor had at the beginning of the case, or is it the property that the debtor had on the day of conversion? That was a fair question, and there was disagreement in the courts on that question until 1994. Congress answered that question by saying, the property of the 13 estate is the property that the debtor had on the petition date, the original petition date that they still have as of the date of conversion. And the reason that makes sense is for the reason Justice Breyer identified, because otherwise someone who came into some sort of windfall during that period of time would essentially have to turn that all over to creditors instead of keeping it. So, the order actually even more directly, and the Third Circuit talks about this in the Enray Michael decision, if the debtors' home reacquired equity during the course of the bankruptcy. Well, if the debtor just saved a lot of work card and saved money, the notion is by defining the estate that way, it allowed the debtor to keep what the debtor had obtained during the life of the Chapter 13 even when it converts. But that doesn't say a word about what happens to funds that the debtor paid during the bankruptcy in order to obtain the benefits of being in Chapter 13. There is a clear quote here, the cost of being in Chapter 13 as this Court explained in Ransom versus Lann, and in Ransom and in Ham, I'm sorry, and in the landing case is that the cost under Section 325A2 is the debtors required to pay all of his projected disposable income for the benefit of his unsecured creditors. That is the cost. The benefit that the debtor obtained on the other side is he gets to keep his assets. But there's also a policy argument, Mr. Goldblatt, that works against you, which is that one of the things we know is that Congress didn't want to disincentivize debtors from use in Chapter 13. And essentially, if you win under your argument, the debtor is worse off for having tried Chapter 13 than if he had gone into Chapter 7 initially, because he's now being put to paying down debt that would have been discharged under Chapter 7. And why should we give him that kind of double whammy, given Congress's view that we should want people to try Chapter 13 first? Goldblatt, so Justice Kagan, a few different answers if I may. First, under Section 707B2A, a debtor with above-median income may not is presumptively abusive if they file for Chapter 7 in the first instance. And here, the record, which includes the description that Joint Appendix page 37 shows that this debtor's income was $49,000 a year. So I understand the question about this. The case case

. Right. So, Justice Kennedy, that yielded. So, the statute appears to make a specific requirement for that, but not for the case we have. So, Justice Kennedy, that provision of 348, of 348 F deals with the situation that Justice Breyer was referring to, which is what if the debtor during the life of the Chapter 13 case received an inheritance. So, money that the debtor still had hadn't yet voluntarily paid over to the State, received an inheritance, but she converted in an act of gamesmanship. But I would suppose we'll apply to your case, too. I'll pay this date as of the date. So, the language of 348 F does the following. It says that the property of the Chapter 7 estate is the property that the question that Congress had when it dealt with 348 F is, the debtor files a Chapter 13 case on day one, lives in Chapter 13 for some period of time and then converts. So, the question is, okay, what universe of property is in the Chapter 7 estate? Is it all the property that the debtor had at the beginning of the case, or is it the property that the debtor had on the day of conversion? That was a fair question, and there was disagreement in the courts on that question until 1994. Congress answered that question by saying, the property of the 13 estate is the property that the debtor had on the petition date, the original petition date that they still have as of the date of conversion. And the reason that makes sense is for the reason Justice Breyer identified, because otherwise someone who came into some sort of windfall during that period of time would essentially have to turn that all over to creditors instead of keeping it. So, the order actually even more directly, and the Third Circuit talks about this in the Enray Michael decision, if the debtors' home reacquired equity during the course of the bankruptcy. Well, if the debtor just saved a lot of work card and saved money, the notion is by defining the estate that way, it allowed the debtor to keep what the debtor had obtained during the life of the Chapter 13 even when it converts. But that doesn't say a word about what happens to funds that the debtor paid during the bankruptcy in order to obtain the benefits of being in Chapter 13. There is a clear quote here, the cost of being in Chapter 13 as this Court explained in Ransom versus Lann, and in Ransom and in Ham, I'm sorry, and in the landing case is that the cost under Section 325A2 is the debtors required to pay all of his projected disposable income for the benefit of his unsecured creditors. That is the cost. The benefit that the debtor obtained on the other side is he gets to keep his assets. But there's also a policy argument, Mr. Goldblatt, that works against you, which is that one of the things we know is that Congress didn't want to disincentivize debtors from use in Chapter 13. And essentially, if you win under your argument, the debtor is worse off for having tried Chapter 13 than if he had gone into Chapter 7 initially, because he's now being put to paying down debt that would have been discharged under Chapter 7. And why should we give him that kind of double whammy, given Congress's view that we should want people to try Chapter 13 first? Goldblatt, so Justice Kagan, a few different answers if I may. First, under Section 707B2A, a debtor with above-median income may not is presumptively abusive if they file for Chapter 7 in the first instance. And here, the record, which includes the description that Joint Appendix page 37 shows that this debtor's income was $49,000 a year. So I understand the question about this. The case case. No, I understand that. So the point being that not every debtor is eligible to file for 7 to begin with. There are some who must file for Chapter 13, including we believe, this debtor. More broadly, because of the happenstance of this case, it is indeed fanciful to believe that any debtor is going in decision about whether to file for Chapter 13 is going to be affected. The debtor, of course, has no control over when the trustee makes payments. And if you— It seems to me it is always a disadvantage to the debtor who converts to have begun in Chapter 13, whether there is any money left in the pot or not. He will have paid his wages to his creditors, whereas if he had filed for Chapter 7 immediately, he wouldn't have had to do that. Justice Scalia, that's in fairness, that's probably right, that after the view— after the fact— It is absolutely right, but you're exacerbating the effect of that under your proposed rule. But Justice Kagan, not in a way that it could possibly provide a material effect on anyone's incentives after all, but the debtor— No, possibly, but it's at least an extra penalty that you're imposing on him. And, you know, one way to look at what Congress wanted to do here is in terms of incentives another way is just to say we couldn't penalize people for going into Chapter 13 first. But Justice Kagan, in fairness, this isn't a penalty. After all, had the trustee distributed these funds to creditors before the data conversion, no one would say that that operated to penalize the debtor. So viewing it as a penalty, I think, begins with the conclusion that there's a baseline entitlement to these funds to begin with. And that assumption is incorrect and inconsistent with the fact that Congress's baseline is to the extent possible to make, to encourage Chapter 13 and not to impose extra costs on the people who go there. Right. But it's, with respect, it's not an extra cost. It is clear that the cost of being in Chapter 13 by function of the statute is the debtor is obligated to pay all of his projected disposable income to the plan for the benefit of his unsecured creditors as the price of being in Chapter 13. Here, the debtor obtained those benefits. He was able to keep his property throughout the time he was in Chapter 13. To address Justice Sotomayor's question, he also was able to seek to negotiate with Chase the effort to modify his mortgage. So what happened in this case is he reached the conclusion that he couldn't keep his house under the monthly payments on the mortgage as it existed. But as commonly occurs, particularly since the financial crisis, he then undertook to negotiate with Chase for a modification of the mortgage. Could he reduce the plan payments? If he could have gotten to a mortgage modification, that would have been implemented by a modified plan. Here, they tried, they tried for a year, they were ultimately unsuccessful. But the opportunity to try is the benefit of Chapter 13. And it can't be the case that because he was ultimately unsuccessful, you can say that he didn't obtain the benefit during the period in which he was trying to do that

. No, I understand that. So the point being that not every debtor is eligible to file for 7 to begin with. There are some who must file for Chapter 13, including we believe, this debtor. More broadly, because of the happenstance of this case, it is indeed fanciful to believe that any debtor is going in decision about whether to file for Chapter 13 is going to be affected. The debtor, of course, has no control over when the trustee makes payments. And if you— It seems to me it is always a disadvantage to the debtor who converts to have begun in Chapter 13, whether there is any money left in the pot or not. He will have paid his wages to his creditors, whereas if he had filed for Chapter 7 immediately, he wouldn't have had to do that. Justice Scalia, that's in fairness, that's probably right, that after the view— after the fact— It is absolutely right, but you're exacerbating the effect of that under your proposed rule. But Justice Kagan, not in a way that it could possibly provide a material effect on anyone's incentives after all, but the debtor— No, possibly, but it's at least an extra penalty that you're imposing on him. And, you know, one way to look at what Congress wanted to do here is in terms of incentives another way is just to say we couldn't penalize people for going into Chapter 13 first. But Justice Kagan, in fairness, this isn't a penalty. After all, had the trustee distributed these funds to creditors before the data conversion, no one would say that that operated to penalize the debtor. So viewing it as a penalty, I think, begins with the conclusion that there's a baseline entitlement to these funds to begin with. And that assumption is incorrect and inconsistent with the fact that Congress's baseline is to the extent possible to make, to encourage Chapter 13 and not to impose extra costs on the people who go there. Right. But it's, with respect, it's not an extra cost. It is clear that the cost of being in Chapter 13 by function of the statute is the debtor is obligated to pay all of his projected disposable income to the plan for the benefit of his unsecured creditors as the price of being in Chapter 13. Here, the debtor obtained those benefits. He was able to keep his property throughout the time he was in Chapter 13. To address Justice Sotomayor's question, he also was able to seek to negotiate with Chase the effort to modify his mortgage. So what happened in this case is he reached the conclusion that he couldn't keep his house under the monthly payments on the mortgage as it existed. But as commonly occurs, particularly since the financial crisis, he then undertook to negotiate with Chase for a modification of the mortgage. Could he reduce the plan payments? If he could have gotten to a mortgage modification, that would have been implemented by a modified plan. Here, they tried, they tried for a year, they were ultimately unsuccessful. But the opportunity to try is the benefit of Chapter 13. And it can't be the case that because he was ultimately unsuccessful, you can say that he didn't obtain the benefit during the period in which he was trying to do that. That was a voluntary decision on his part. As the petitioner explained, could have converted any time. So if he didn't want to continue to devote his projected disposable income under the terms of the plan while he was doing so, he had every right to convert as soon as Chase received favor. I ask you the same question. I ask your friend on the other side. Assuming we find against you and for the petition on the issue of who gets this money, would the parties be able to alter that disposition in the plan? So just as clearly, that's a really good question. And one with which we have struggled, we believe that the indications of congressional intent that Congress did not mean to permit this. So you agree with the other side on that point? Well, on the flip side, we think that the better view of the code is that, let me up or answer if I can, there are two different questions. One is, if there was language in a plan that did that in that language, that plan was confirmed, would it govern? The answer to that under Espinoza is obviously yes. The question I think you're under intends to ask is, if a plan said that and someone objected, could that properly be confirmed? And our view is that, well, that's a close question and thankfully not the one presented here, that the better view is that a plan that said the money goes back to the debtor is sufficiently inconsistent with the structure of the code that such a plan couldn't be confirmed, but that is a much closer question than the one you have here, where there is no language in the so the language of the plan should be read against the common law backdrop, which enters this question decisively in our favor. Typically, how often are distributions made for every three months every year? So in the ordinary case, my understanding and experience is that trustees will make monthly distributions here, as long as sufficient funds have accumulated to make that worthwhile, here what the trustee did, but the trustee did here makes good sense. So when Chase got state relief, the trustee was holding money. Once it got relief, and again, this in response to just a sort of my earlier question, the plan says what happens there, the joint appendix on page is 34 and 35, and it sets out a priority of payment under the plan, and Chase, when it got state relief, that satisfied in full, it's secured claim. Just when any time a secured creditor gets back its collateral, that satisfies the secured claim of the secured creditor. So then just going through to use the bankruptcy vernacular, the waterfall created by the plan, the funds flowed according to their to the unsecured creditors after the payment of administrative claims. That's a very common feature of plans, and typically trustees when there are material funds to be distributed will distribute on a monthly basis. Here, the trustee didn't distribute those funds because the debtor presumably wanted the opportunity to take this time to try to save their house. So the trustee was facilitating the debtor's efforts to save their house by holding those funds to see if a modification could be reached. And when it wasn't reached, the trustee said, okay, now under the plan, this money goes to unsecured creditors, and sounds like she's acting in the interests of the debtor, then. And she was seeking to serve the objectives of the code and the plan. Chapter, the reason people file for Chapter 13 primarily is to save their house. And so that was why the debtor filed, and the trustee was trying to do consistent with the plan, what the purpose of the case was. When those efforts failed, the trustee can't obviously cause that to succeed. When it failed, the trustee then did what the plan obligated to do. At that moment, at that very moment, when the think of the instant when he filed the conversion, as of that particular moment, have the efforts failed? Yes. By converting what the, in Chapter 7, the debtor is required to turn over all of their non-exempt assets to the government

. That was a voluntary decision on his part. As the petitioner explained, could have converted any time. So if he didn't want to continue to devote his projected disposable income under the terms of the plan while he was doing so, he had every right to convert as soon as Chase received favor. I ask you the same question. I ask your friend on the other side. Assuming we find against you and for the petition on the issue of who gets this money, would the parties be able to alter that disposition in the plan? So just as clearly, that's a really good question. And one with which we have struggled, we believe that the indications of congressional intent that Congress did not mean to permit this. So you agree with the other side on that point? Well, on the flip side, we think that the better view of the code is that, let me up or answer if I can, there are two different questions. One is, if there was language in a plan that did that in that language, that plan was confirmed, would it govern? The answer to that under Espinoza is obviously yes. The question I think you're under intends to ask is, if a plan said that and someone objected, could that properly be confirmed? And our view is that, well, that's a close question and thankfully not the one presented here, that the better view is that a plan that said the money goes back to the debtor is sufficiently inconsistent with the structure of the code that such a plan couldn't be confirmed, but that is a much closer question than the one you have here, where there is no language in the so the language of the plan should be read against the common law backdrop, which enters this question decisively in our favor. Typically, how often are distributions made for every three months every year? So in the ordinary case, my understanding and experience is that trustees will make monthly distributions here, as long as sufficient funds have accumulated to make that worthwhile, here what the trustee did, but the trustee did here makes good sense. So when Chase got state relief, the trustee was holding money. Once it got relief, and again, this in response to just a sort of my earlier question, the plan says what happens there, the joint appendix on page is 34 and 35, and it sets out a priority of payment under the plan, and Chase, when it got state relief, that satisfied in full, it's secured claim. Just when any time a secured creditor gets back its collateral, that satisfies the secured claim of the secured creditor. So then just going through to use the bankruptcy vernacular, the waterfall created by the plan, the funds flowed according to their to the unsecured creditors after the payment of administrative claims. That's a very common feature of plans, and typically trustees when there are material funds to be distributed will distribute on a monthly basis. Here, the trustee didn't distribute those funds because the debtor presumably wanted the opportunity to take this time to try to save their house. So the trustee was facilitating the debtor's efforts to save their house by holding those funds to see if a modification could be reached. And when it wasn't reached, the trustee said, okay, now under the plan, this money goes to unsecured creditors, and sounds like she's acting in the interests of the debtor, then. And she was seeking to serve the objectives of the code and the plan. Chapter, the reason people file for Chapter 13 primarily is to save their house. And so that was why the debtor filed, and the trustee was trying to do consistent with the plan, what the purpose of the case was. When those efforts failed, the trustee can't obviously cause that to succeed. When it failed, the trustee then did what the plan obligated to do. At that moment, at that very moment, when the think of the instant when he filed the conversion, as of that particular moment, have the efforts failed? Yes. By converting what the, in Chapter 7, the debtor is required to turn over all of their non-exempt assets to the government. And wondering is that as of that instant, is it the case that under the 13 plan, as of that instant, the funds were already, there was already on the trustee, at that instant, a fixed obligation to write a check to the creditors. Then and there. Certainly by no later than the moment of conversion, there was a fixed obligation. So that's what, but if there had been money in that pile, which he was simply keeping for the fulfillment of an obligation that came up later, that would have under the plan, that she would have had to return, you can see. So the question of prepayments is more complicated, and I think I feel it wouldn't exactly have been prepayments. There would have been money there because of the situation you described. And if there was not an obligation as of the Section 7 filing instances, too, paid the money then and there to the unsecured creditors, then I think under your view of the case, that money would and should have gone, too, the debtor. So the same reason, as you've just said, it would occur in a revocable trust. So Justice Breyer, just in fairness, I think there's a difference between when the creditors write to payment attaches and when the debtor's obligation to make the payment is. And what would happen if a debtor prefunks the plan strikes me just without having thought about it as hard as perhaps I should have before today as a different and perhaps more complicated? No. Okay, it's not a no. You know, you've provided an easy principle. The principle is as in a revocable trust, the money that is in the trust, that is already under an obligation, then and there, at the matter of revocation, to go to the beneficiary goes. But where that obligation under the trust document has not yet arisen, it goes back to the floor. That's what you've told me. I agree with that principle 100 and it would end by the same here. If that's how that principle plays out, then I agree, I guess I say. Kagan Still have problems, which is if you're talking about the fifth circuit saying, you don't have a vested right, where does the obel-until repaid by the trustee and the trustee has in pageant? So where's the pre-existing obligation? So, just a sort of my or the language of the creditor. So just a matured right of the creditor. So exactly. So the language of vested rights is fraught. And if what is meant by a vested right, you made the argument, well, in fact, right. And if what is meant by vested right is there's a matured obligation of the trust, if that's what is meant by vested right, then the court below was wrong in that regard. If it meant by vested right, something beyond that, maybe it was right. I think the legal standard is there a matured obligation of the trust. And that clearly did exist, whether that does or doesn't give rise to a vested right under some different definition of vesting is unclear to me

. And wondering is that as of that instant, is it the case that under the 13 plan, as of that instant, the funds were already, there was already on the trustee, at that instant, a fixed obligation to write a check to the creditors. Then and there. Certainly by no later than the moment of conversion, there was a fixed obligation. So that's what, but if there had been money in that pile, which he was simply keeping for the fulfillment of an obligation that came up later, that would have under the plan, that she would have had to return, you can see. So the question of prepayments is more complicated, and I think I feel it wouldn't exactly have been prepayments. There would have been money there because of the situation you described. And if there was not an obligation as of the Section 7 filing instances, too, paid the money then and there to the unsecured creditors, then I think under your view of the case, that money would and should have gone, too, the debtor. So the same reason, as you've just said, it would occur in a revocable trust. So Justice Breyer, just in fairness, I think there's a difference between when the creditors write to payment attaches and when the debtor's obligation to make the payment is. And what would happen if a debtor prefunks the plan strikes me just without having thought about it as hard as perhaps I should have before today as a different and perhaps more complicated? No. Okay, it's not a no. You know, you've provided an easy principle. The principle is as in a revocable trust, the money that is in the trust, that is already under an obligation, then and there, at the matter of revocation, to go to the beneficiary goes. But where that obligation under the trust document has not yet arisen, it goes back to the floor. That's what you've told me. I agree with that principle 100 and it would end by the same here. If that's how that principle plays out, then I agree, I guess I say. Kagan Still have problems, which is if you're talking about the fifth circuit saying, you don't have a vested right, where does the obel-until repaid by the trustee and the trustee has in pageant? So where's the pre-existing obligation? So, just a sort of my or the language of the creditor. So just a matured right of the creditor. So exactly. So the language of vested rights is fraught. And if what is meant by a vested right, you made the argument, well, in fact, right. And if what is meant by vested right is there's a matured obligation of the trust, if that's what is meant by vested right, then the court below was wrong in that regard. If it meant by vested right, something beyond that, maybe it was right. I think the legal standard is there a matured obligation of the trust. And that clearly did exist, whether that does or doesn't give rise to a vested right under some different definition of vesting is unclear to me. But what is clear is that the trust had a matured obligation to pay the funds over to the beneficiaries. That's where I've always thought of this arrested right. Well, then the Fifth Circuit in saying there wasn't a vested right was incorrect. So if that's what is meant by vested. But you might not be able to answer this question. But I take it from the fact that the solicitor general is not here in this case. The government, the trustees don't care who they pay this money to, as long as they have a clear rule, is that correct? I don't think that that's right, Justice Kagan here. But National Association of Chapter 13 trustees has come in in support of our position. The executive office of the United States trustee plays a very different role in bankruptcy cases. And so their absence, I think, is evidence that the role of that office is different. And do you think that matters to the trustees, to any of them, whether we view this as a rule, rule, or only as a default rule that can be changed by the plan? Is there any reason why they would care about that question? I don't, in fairness, I don't know the answer to that. It seems clear to me that in the absent, that as a default rule, this is the right answer. I think the prudent thing to do would be to wait for a case in which someone sought to change the default to address the next question of, can you change the default? My answer, I believe that the better view is probably that you cannot, because there are indications in the code that suggests that Congress intended the application of what we're calling the default rule. But whether that's right or wrong, it seems to me, should properly await a case in which it's actually presented. In some, the question here is, the debtor is entitled to convert his case to chapter seven at any time. Everyone agrees that when he does, that terminates his obligations to make payments into the trust. The question is whether the decision to terminate essentially is retroactive, that by, by making the decision to convert, he not only excuses himself of future obligations, but is able to undo payments he previously made when he enjoyed the benefits. And for those reasons, the judge should be affirmed. Thank you, Council. Mr. Madden, you have four minutes remaining. Thank you. Two main points in a rebuttal, Your Honor. First, this case isn't one where you can make a jump to trust law in the restatements, because to make that jump, respond and requires the Court to declare that a chapter 13 trustee doesn't hold property of the estate and isn't a representative of the estate. But instead holds a new species of property as a bankruptcy trustee that already belongs to creditors and acts as an escrow agent to creditors and still a representative of the estate. In our reply brief, pages six to seven, we point to a number of indications in the code where that would be inconsistent with the way the bankruptcy code is structured

. But what is clear is that the trust had a matured obligation to pay the funds over to the beneficiaries. That's where I've always thought of this arrested right. Well, then the Fifth Circuit in saying there wasn't a vested right was incorrect. So if that's what is meant by vested. But you might not be able to answer this question. But I take it from the fact that the solicitor general is not here in this case. The government, the trustees don't care who they pay this money to, as long as they have a clear rule, is that correct? I don't think that that's right, Justice Kagan here. But National Association of Chapter 13 trustees has come in in support of our position. The executive office of the United States trustee plays a very different role in bankruptcy cases. And so their absence, I think, is evidence that the role of that office is different. And do you think that matters to the trustees, to any of them, whether we view this as a rule, rule, or only as a default rule that can be changed by the plan? Is there any reason why they would care about that question? I don't, in fairness, I don't know the answer to that. It seems clear to me that in the absent, that as a default rule, this is the right answer. I think the prudent thing to do would be to wait for a case in which someone sought to change the default to address the next question of, can you change the default? My answer, I believe that the better view is probably that you cannot, because there are indications in the code that suggests that Congress intended the application of what we're calling the default rule. But whether that's right or wrong, it seems to me, should properly await a case in which it's actually presented. In some, the question here is, the debtor is entitled to convert his case to chapter seven at any time. Everyone agrees that when he does, that terminates his obligations to make payments into the trust. The question is whether the decision to terminate essentially is retroactive, that by, by making the decision to convert, he not only excuses himself of future obligations, but is able to undo payments he previously made when he enjoyed the benefits. And for those reasons, the judge should be affirmed. Thank you, Council. Mr. Madden, you have four minutes remaining. Thank you. Two main points in a rebuttal, Your Honor. First, this case isn't one where you can make a jump to trust law in the restatements, because to make that jump, respond and requires the Court to declare that a chapter 13 trustee doesn't hold property of the estate and isn't a representative of the estate. But instead holds a new species of property as a bankruptcy trustee that already belongs to creditors and acts as an escrow agent to creditors and still a representative of the estate. In our reply brief, pages six to seven, we point to a number of indications in the code where that would be inconsistent with the way the bankruptcy code is structured. To take just one example, the code gives a trustee the right to deposit money of the estate in an interest-bearing account. But in a respondents view, after a confirmation of a plan, a chapter 13 trustee holds property of the creditors and lacks statutory authorization to make that deposit. It would do violence, I think, to the basic structure of chapter 13, which would have a number of implications in other cases to declare that a chapter 13 trustee is no longer a representative of an estate and a fiduciary of an estate, but instead is an agent of the creditors. Second, the service of the trustee point, which involves section 348E of the code. Congress didn't intend to tell a trustee that they can do nothing at all and they lack any other powers in a case on how to dispose of money. For example, in bankruptcy rule 1019, paragraph four, a chapter 13 trustee upon conversion to chapter seven is required to turn over property of the estate to the new chapter seven trustee. It's no more a service that the trustee performs as the trustee in the case to turn over property that is no longer property of the estate to the debtor. The service that the trustee performs is to take possession of property of the estate, to examine and object to claims, and when appropriate, to pay creditors according to the chapter of the code under which the trustee operates. Now here, that's apparent because to make the payments the trustee made in this case, Respondent had to file a document with the bankruptcy court to recommend how to treat claims. As we explained in the reply brief, Respondent had to tell the court that we should treat Chase's $5,500 claim as being allowed only in the amount of $1,000 because that renders Chase paid in full and allows unsecured creditors to obtain payment under the plan. But all of that only happened after the debtor converted his case to chapter seven. And what Congress is intending to prevent is to have two trustees operating in the same bankruptcy case on the same estate dealing with the same creditors' claims. That's what the termination of the service of a trustee upon conversion means. And let's refer the questions. Thank you, counsel. The case is submitted.

We will hear argument first this morning in case 14400 trials Harris versus Mary Vagelon, the chapter 13 trustee. Mr. Madden? Mr. Chief Justice, I may please the Court. Bankruptcy cases can proceed under only one chapter of the bankruptcy code at a time. There are three main reasons why when petitioner converted his case from chapter 13 to chapter 7, respondal is required to return post-petition wages she held as chapter 13 trustee. First, the code not just wages, right? I mean, you constantly refer to it as post-petition wages, anything that went into the pot that was still there. That's right. I mean, it would be, you know, lease payments or anything else, right? Yes, Your Honor. Any post-petition property, including wages. Now, in the general chapter 13 case, post-petition property held by the chapter 13 trustee are wages. But because section 348F of the code speaks to what remains property of the estate in the converted case, that section requires that those wages or any other property remain property of the estate, only if the case was converted in bad faith. If the case is converted in good faith, as here, the petitioner gets to keep that property. And second, the code requires that when the case is converted from chapter 13, excuse me, it really doesn't say what happens to it, does it? It just says what becomes the estate of the chapter 7 bankruptcy. That's right. It leaves up in the air what happens to the material that is not described in that provision, right? I think the statute doesn't explicitly say what happens to that material, but what it does say is... Why would it go back to the debtor automatically? Because there's only one estate in the bankruptcy case that's created the commencement of the case. And so when Congress decided what will remain in that estate after conversion and made that decision turn on whether the debtor has acted in good faith or bad faith, Congress has said what should happen in the case going forward. So by creating a penalty for debtors who have converted their case in bad faith, Congress has said that debtors should retain the funds if they have converted the case in good faith. Moreover, what happens in bad faith? In bad faith under Section 348F2 of the code, if the debtor has converted his case to chapter 7 in bad faith, all of the post-petition property remains property of the estate. Effectively, yes. But it seems to me that that is a statutory argument that cuts against your position because the code makes this distinction. Well, no, respectfully, I disagree, Your Honor. I think the code cuts in our favor because, because of this distinction, Congress has decided that it's only when a debtor converts this case in bad faith that this property should remain property of the estate available to creditors in the case. What does that mean? The chapter 13 is over, and chapter 7 is underway. It remains in non-existent estate, and there is no more chapter 13. It goes to the creditors, right? Not quite, Your Honor. It remains in the estate because a new chapter 7 trustee takes over as the representative of the estate under the code. And so it becomes the chapter 7 trustee's responsibility to administer that estate and make disbursements to creditors according to the code. Now, here- The incidentally, I must say you are correct. I think this does cut in your favor. The idea that a bad faith of conversion means that the estate is the current estate. Okay. I think that code distinction does cut in front of your favor. Right. And I think that's what Congress intended when they enacted Section 34. Oh, they what they said specifically is the property of the estate, and that's the property we're talking about, the property of the 13 estate, right? Because it's the property of the 13 estate that goes into 7 at the moment the petition is filed to convert. That's right. Section 34 says which property of the 13 estate? That remains in the possession or is under the control of the debtor. Is this money which is in trustee in the possession of the debtor? No? Is it under the control of the debtor? Well, that depends on the answer to your question. I mean, if you treat it like an escrow as they want to, it isn't. If you treat it like a, say, a normal trustee, normal trustee, I'll ask them this. He doesn't. And therefore it's outside the statute. And there are no other words in this statute that really cut one way or the other. You can make an excellent argument either way as to any other word. So there we are. I read these and I said, I don't know. So if you're going to point to, if you're going to point to the words, unless I really read them several times in the statute, I couldn't say that you are favored or they are favored. Because I don't know the answer to that word control and I couldn't find anything that really helped. Well, Section 348F intends, essentially two elements to determine whether property is going to remain in the estate. It has to both be in a good faith conversion. It has to be property that existed as of the date of the petition and it still has to exist in the estate. The debtor doesn't say exists. We got the words that it says. That's right. Now, why is this? You could, why, why is it in his possession? What they're thinking about with F is they're thinking about the Ant left a legacy which he received after he filed the 13 and what they want to do is make certain that that legacy is countered as part of the seven estate. Isn't that right? I think that's part of a Congress intended, but for the fight of word that suggests anything else. You point to it. Well, there's nothing in Section 348F that distinguishes post-petition property that's held by the debtor versus post-petition property that's held by the trustee. When Congress enacted the statute, it intended to define what would remain property of the estate in the case going forward and it didn't distinguish. What's the answer to my first question where I pointed to two words, possession and control? Well, I think when the case ends and the trustee's service has terminated, the property of the estate that the trustee's holding is in the control of the debtor because it becomes the debtor's property if it's no longer property. So is this a revocable or irrevocable trust? If you can confer, you're claiming it's a revocable trust, correct? I think if any analogy from the common law applies just to sort of my or it would be that of a revocable trust because Congress has been very clear in Section 1307A that a debtor has the right to convert his case out of Chapter 13 and into Chapter 7 and any. So if it's a revocable trust, what's the trust law in that situation? A settler in a revocable trust obtained the corpus of the trust upon revocation. That's effectively what Congress has said here because when the case leaves Chapter 13 and enters Chapter 7, it's Chapter 7 that governs. A new Chapter 7 trustee is appointed to administer the case and that trustee- is out, is it common to appoint a different person or is it the same person with a new hand? It's usually a different person. So in this case, when Petitioner converted his case from Chapter 13 to Chapter 7, the court docket reflected that respondent service had terminated and an interim Chapter 7 trustee was appointed the very next day. What's your problem, the issue of the moot in 99 percent of the cases if the trustee decided to adopt a procedure which will provide for a distribution at the end of every day? If a trustee has already distributed the money to creditors, lawfully under a plan, then yes, that property has left the estate. So it would only be the rare situation when this, even rare than now, when this arises and presumably trustees who wish to distribute to creditors can adopt the sort of rule that they desire. Yes, but because trustees are fiduciaries of the estate and represent the estate, they're not allowed to dissipate estate assets by making frequent, even constant distributions. And it's because they're the representative of the estate. Why is it, if there's a particularly difficult, and maybe this is such a case where the trustee has to take some time to figure it out, perhaps, but in a fortuitous case, where the wage is arrive on Wednesday or whatever, it doesn't seem to me that this would raise serious concerns. And the consequence of that is it becomes even more fortuitous when the assets come within the control of the trustee so that a rule that says there's a huge difference based on the fortuity of the timing might not make much sense. Well, I think that's the rule, respectfully, that Congress adopted when they allowed debtors to make the conversion at any time. Congress didn't require debtor to give notice, and Congress didn't make conversion effective only after discerning parties. Can they handle the situation by providing in the chapter 13 agreement that any funds remaining if there should be a conversion will be distributed among the creditors? Well, what they can't do is undermine the effects of conversion because under Section 1307 of the code, the debtors write to convert the case at any time as not. Are your answers no? The parties could not do that. That's right. The answer is no, and that the parties can't undermine the effective conversion. Why would Congress adopt a rule that depends so much on happenstance? I mean, you know, if the trustee distributes the money properly, there's nothing there. If he waits three months, the debtor gets it all back. It's random. Just utterly, why would anybody adopt a rule like that? I think the rule is adopted here because chapter 13 is in essence of voluntary proceeding. A debtor has to elect to put his future in come into the estate in the first place. But he doesn't know whether this random van is going to happen or not when he does that. So you're saying that Congress is forcing the debtor and the creditors, I suppose, to roll the dice, right? He doesn't know what he's going to get back. It depends on whether the trustee is lazy or not. Sometimes, but there are cases like this one, Your Honor, where it's not in your happenstance. Respondent was holding funds in this case because Chase, the mortgage lender had received relief from this day. So funds that had been earmarked for Chase and that no credit or under the plan was going to get other than Chase were being held while Chase and the debtor, that's no. That's exactly the question I have just, Scalia, just raised. And I'd like you to think about that. You practice bankruptcy law. So you're familiar with it in your experience. Now, I assume with me for the moment that the language does not resolve this. The funds are not in the possession of the debtor. The question is whether he nonetheless still controls them, I.e. gets them back. So that's the assumption. I had exactly the same reaction. Now, I think the Chief Justice and Justice Scalia have, that in the mind run of bankruptcy cases, whether a trustee at the moment of conversion is holding funds that he should just, that will be distributed to creditors, but they haven't been yet. Is a fluke chance? Sometimes there might be a lot. Sometimes there might be a little. It depends on when the mail went out that day. It depends on unusual circumstances such as the one in this case. And you shouldn't turn a rule of law on that. You'll produce a, you'll produce gaming and who knows what will happen. Now, you've heard the question. Is the thrust of the question, which I think you've now gotten three times, right or wrong? Is it chance? Is it a fluke? And I've talked very slowly, so I want to be sure that you get this question because it's important to me how you answer it. I think the answer is that yes, there are some cases in which this will be happenstance. But Congress has spoken to those cases by allowing me to. But that isn't my question about what Congress wants. I question, is in your experience, what is it that happens stands governs 50, 50, almost never? What's your experience? I don't know from a survey of the Bank of Rome from your experience. Well, my experience may not be as broad as your experience. I would just be curious. I'm trying to get some kind of a rough answer. Here's what I can tell you to Justice Breyer. I think that most chapter 13 cases are converted because the debtor has stopped being able to make his payments. So in the mind run of cases, there's not really funds in that the trustee is holding. I think what happens are cases like these where there were funds have built up in the trustee's possession for a reason. And that's because the creditor to whom they were earmarked can no longer obtain those funds under the plan. Now, Congress has spoken to this by allowing the debtor in this circumstance or any other to make the conversion at any time because chapter 13 has been a voluntary question. I don't understand. The three-once wages have accumulated in the estate. In the ordinary course, if there's no change, they're going to go out to the creditors. And you just said that the creditors can't get them. I didn't quite get that. They can't get them only because there's the questions of indicated that the trustee is doing something else for a week. Well, they would go to the creditors if in performing the trustee's service, the trustee in following the plan eventually disperses them to creditors. But that's what's important is that the trustee has to be following her service to the dispersed funds in the case. Now, under Section 348E of the code, the trustee's service ends a conversion. Now, I think both parties agree that a core function of that service. But that does answer the fortuity point other than what you say the statute, and that's it. I think that's right. I think at the end of the day, if the case, if funds are in the estate by happenstance because they just haven't gone out in the next disbursement, that Congress has made the election, that the debtor is still entitled to convert his case at any time. So, Mr. Matt, I'd follow up on your statement about in this case, the plan called for the bulk of this money to go to Chase, correct? Matt, yes, that's right, especially early in the plan. Al, early in the plan. And you said Chase couldn't get the bulk of this money, why? Al, because it had four clothes. Matt, yes, they had obtained relief from the automatic stay in the bankruptcy case. So, what happened here is that Petitioner was supposed to make his current mortgage payments, what's called outside of the plan, or directly to Chase. And because of circumstances, debtor found himself unable to make those payments. And so, then when that happened, Chase went to the bankruptcy court and received relief from the automatic stay, which allowed them to foreclose, but that didn't resolve their claim in the case. So, what the trustees explains in her brief that she did was to reserve the funds that had been earmarked for Chase, so that because it's a common circumstance that the mortgage lender and the debtor will then work out a modification of the government. But she didn't give the money to Chase. Matt, no, that's correct. Al, she decided to distribute it to the other creditors. Matt, that's exactly right. What permitted that in the plan? Matt, well nothing permitted that in the plan until both secured creditors had been paid in full. Now, importantly, in this case, neither Petitioner's secured creditors under the plan had been paid in full on the day he converted his case from Chapter 13 to Chapter 9. It was only, respondent ended up filing a document in the bankruptcy court called the trustees recommendation concerning claims in which the treatment of Chase's claims changed. But her service had terminated by that point under Section 348E of the code. And so, this case presents an interesting example of what happens if you end up with two trustees performing the case at the same time. It was never anything, it was never any distribution for these wages that were being collected. There was never any distribution. They were just out. The funds that issue in this case had just been held. There had been distributions in the case while the case had preceded. So, Chase had received. How is it determined what the frequency of payments will be to the creditors? Well, those are determined both in the trustees service as the trustee in reading the plan terms and the bankruptcy code, but it's generally covered by the confirmed plan. And so, the confirmed plan in this case required secured creditors to get paid first before any unsecured creditors were paid. But the plan said payments will be made once a week or once a month. To some secured creditors, it suggests the plans will be made monthly, but unsecured creditors aren't entitled to payment at any time during the plan. They're effectively entitled to the funds that are left over after creditors who have higher priority are paid first. Mr. Mann, I've been thinking about your response to my earlier question about whether this issue could be covered in the plan. If the plan said that any funds still help by the trustees shall be distributed to the creditors. Your answer was it couldn't because it would contradict the statutory requirement. But there isn't any statutory requirement. I mean, that's what we're dealing with. We're dealing with an absolute void. The statute doesn't say what'll happen to this money. If the statute doesn't say so, what's wrong with having the parties adopt a provision in the plan that says that? And by the way, in my estimation, this helps your case because I am much more willing to buy on to a random rule of law that the parties can contract out of than a random rule of law that has to be applied in the future. And what you're urging upon us is a random rule of law. You're just saying, well, Congress wanted randomness. Well, maybe. The third circuit in deciding this issue did suggest in a footnote that your honors position might be an out that parties could take. I think there would be two constraints on that issue. In another case, that isn't presented here, one is that a plan can only provide with a code allows the plan to provide. So what the Chapter 13 plan can provide is specified in Section 1322 of the code. And the code provides that a debtor could vest, propitivize state in any other entity. So a debtor could vest property in specific entities. But there's no provision in the code that allows a debtor to vest property generally in creditors. And the second problem, as I mentioned earlier, is that under Section 1307A of the code, a waiver of the right to convert a case at any time is unenforceable. So if there's a provision in a plan that undermines the natural statutory effective conversion by keeping property of the state larger in a case of good faith conversion, or asking the trustee to continue performing the service of the trustee after conversion, those provisions of a plan would be unenforceable. Kagan, there's a policy argument that cuts against you, which the fifth circuit talked about. And of course, it's only relevant if the statute doesn't say much of anything about this. But let's assume for this purpose that the statute doesn't say much of anything about this. And what the fifth circuit said was that Chapter 13 is essentially a quid-broke quo. That the debtor gives up a certain amount of his wages, but in exchange the debtor gets to keep his assets. And here what the debtor is essentially asking for is to get back the wages, but he's gotten the benefit of having kept his assets. So he's kind of asking for the quid without the quid, or the quid without the quid, or whatever it is. So what's your response to that? I think there are a number of problems with viewing Chapter 13 through that lens. Chapter 13 is better for debtors and creditors alike. Everyone comes out ahead because no creditor can receive less under Chapter 13 plan than they would be entitled to receive under Chapter 7 liquidation. So Congress and generally the policy of the bankruptcy code is intended to encourage debtors into Chapter 13 because it's better for everyone. The idea that a debtor sort of rents the benefits of Chapter 13 from his creditors, who stands to gain from him doing so, doesn't make a whole lot of sense under the way the bankruptcy code is structured. What about, I guess there can be payments directly to the creditors? What does that assume they get those without having to worry about this problem? That's correct. Under Chapter 13, either the debtor or the trustee can be the dispersing agent under the plan. But in either case, it's when the money is dispersed by the dispersing agent that the rights shift the creditors. But in the case of the creditor who is paid directly, that's sort of no middleman, right? That's right. But the question is whether that, when they've been paid, the property leaves the estate and becomes property of the creditors. Now, but I guess I'm just trying to highlight another randomness and fortuity and that some creditors will be get their money directly, others that will go through the estate and if you get your money directly, you're not going to have to worry about this. That's true if the debtor keeps up his payments. The reason why thinking most creditors like the trustee to be holding funds in the estate, I'm subject to future disbursements as appropriate, is that that increases the likelihood of success of that. What is that work as a practical matter? Is there direct deposit of a portion of wages with the creditor? It varies from case to case. In this case, respondent effectively had a, let's call the wage order. So, the petitioner's employer sent a portion of his income directly to the trustee every month. Now, what would happen? Let's suppose you're right. Now, the trustee has given this money to the creditors and she wasn't supposed to do that. The debtor was supposed to get them. What happens now? How do we do what has already been done? Well, respondent may be able to get the money back from the creditors with whom she has relationships and rights. Ultimately, the liability is the trustees for- That would be person liability on the part of the trustee. That's right. And so, the order in the bankruptcy case is in order for respondent to pay this sum of money to the petitioner. Now, that's because when trustee is outside their service, that's how the liability works in the bankruptcy code. And I think both parties agree that it's a core function of the trustee's service in the bankruptcy case to make disbursements to creditors. Under section 340E of the code, that service has to end in conversion. I assume the trustees have insurance, right? That's right. But we don't have to feel sorry for this way. Yes, the hell it's called errors and admissions. Insurance that covers this sort of thing. Well, I assume it also will be a right to recoup from the creditors. The creditors receive something improperly paid. There may be a standard recoupment principles. I think that may well be true, Your Honor. I think, returning to the point about the ending of the trustee's service, the practical significance of that is that Congress didn't want two trustees functioning in case at the same time. Once the case had been converted, all of the claims against the estate in the Chapter 13 case automatically became claims against the State in the Chapter 7 case. And so what happened here is you had a Chapter 13 trustee still acting on and paying claims as though Chapter 13 was still going. All the while, Chapter 7 trustee had taken over the reins of being the representative of the State and dealing with claims. The money that's in the hands of the trustee at the moment that the Chapter 7 petition is filed will probably be wages that under the 13 plan were to be distributed to creditors. And the trustee has to make out a check to somebody. So the only question is, is the name of the trustee X, which is the creditor to which it is gone, or is the name Y, which is the debtor or the equivalent? So I don't see how we get very far saying that the trustee's services have ended at that point. No one thinks the trustee would keep the money. And again, six of one half it does not know the other. But I think there's a difference here because the trustee's core function while serving as trustee, while serving as the representative of the State under the code, is to disperse funds to creditors. Why do you think that the trustee is filed a brief on the other side? I'm not the, I read the brief, it makes a series of legal arguments. But they must, what do they care? They obviously care. And I don't, I'll ask perhaps them the question, but what's your view of that? Why do they care? Since it's just a matter of writing what name you write in. I think that may be a better question for my colleague. What's your view of it? I don't want to ask them without getting your view. I think the trustee is attempting to send funds to whoever the trustee is supposed to send funds to. I don't know. I think you just see why they care in this case, isn't it? Well, in this case, some of the trustee doesn't want to be liable for the money that she has turned over. Right, the trustee has an easy answer. Who's following it's the whole group. Right, I agree with that. And some of the funds that were dispersed here were funds that were paid to the trustee as her, her percentage fee in the case as well. If there are other questions, I'd like to reserve the balance of my time for review. Thank you, Council. Go, Black. Mr. Chief Justice, and may it please the Court. The funds that issue here were held by the trustee under the terms of a confirmed plan that obligated her to distribute those funds to creditors. Petitioner, you did not. The Court below said reject that your argument that when the money was paid to the trustee, or the trustee got it, that it vested in the creditors. It's actually that part of your argument, correct? That's right, Justice Sotomayor. And so if you don't have a vested right to the money, then what gives you the right? What's the plan, right? It's the plan and the backdrop against which the plan is. Well, the problem is that on pawn conversion, it nullifies the plan. So what's the remaining power that you have to distribute the funds to creditors to creditors? So Justice Sotomayor, that is a problem that arises not just in bankruptcy, but under the common law all the time. A trust can terminate, and a trustee can be holding funds, and is left with the question of, do these go back to the grantor? Do I pay them backwards, or do I pay them forwards? And long before there was a bankruptcy code, there was an established common law principle that says, first, the trust pays, the obligations of the trust, and the obligations of the trust include matured claims of beneficiaries. That's the rule that comes out of Section 235A of the Secondary Statement and Section 89 of the Third Restatement. And the bankruptcy code was written against that common law backdrop. And where the code, there are indications in the code. We think those indications support the notion that is consistent with the common law that they've been paid forward. But to the extent the court would have concluded that nothing in the bankruptcy code helps to answer the question, there are surely no reason to think that Congress intended to abrogate that established common law background. Kagan, you have to give everything to the Chapter 7, Trustee. So if I can, section, that's in the control or possession of the debtor. But if it hasn't invested in the creditors, then so how would it be? So if I can explain. Section 348F, which is the privilege I believe you're referring to, says the following. It says that upon the conversion of the case, the Chapter 7 estate is made up of the assets that the debtor had on the petition date that they still have on the conversion date. So there's the question. The question Congress was dealing with is exactly the question that Justice Breyer was referring to, which is, let's say during the course of the 13, there's some sort of windfall that comes into the estate. Does that become part of the Chapter 7 estate, and the answer to that is no. But that question, that determination says nothing about funds that the debtor already paid out to the trustee at a time when the debtor was required to pay those funds to the trustee in order to obtain the benefits of being in Chapter 13 at that time. So it at least raises the question, why you should treat differently the, let's say, the inheritance from the new wages. In other words, say the new wages come in, they're garnished, it goes straight to the trustee, but that's also a fortuity. You know, why should you treat the wages differently from the inheritance? S. So Justice Kay, the answer is because the debtor made a decision to pay these funds over to the trustee. Here, the decision was done through a garnishment order, but that itself is, of course, itself a fortuity. What we're talking about are funds that a debtor made a voluntary decision to pay over to a trustee in order to remain in Chapter 13. If the debtor- S. Well, until he decided to switch the petition to Chapter 7. S. That's right. He could have done that at any time. So the debtor here had the ability, as soon as Chase received relief from this day, to convert at that time. The debtor didn't make that decision. The debtor instead decided for the remaining 12 months to remain in Chapter 13 and to obtain the benefits of being in Chapter 13. Precisely, the Court wrote that your honor was describing and that the Court described in when, how does it work in a revocable trust, a revocable trust? So let's imagine that on, under the terms of the trust, on February 1, Joe Smith gets $100. All right? On March 1, the SET law revokes the trust. There is money in the trust that would pay his monthly payment on February 1, on March 1, on April 1. That's $300 that he has, $100 after its revoke, and $100 before its revoke. How does it work under the law of revocable trust? So Justice Breyer, Section 235A of the Second Restatement of Trust deals exactly with this question. The answer is the revocation here, the debtor's decision to convert, effectively operated as a revocation. Because of that, the remaining three years worth of payments that he otherwise would have been obligated to pay, he didn't have to pay. But as to the funds that were already in the trust, where the obligations have matured, the trustee is required to pay those matured obligations. The situation, that's another one, in my example, the January money, which is owed before the revocation, goes to the beneficiary. That's exactly the March money goes back to the SET law. That's exactly what you're saying the same is true here, that the pre-petition seven money that was owed and not paid, should, if in the hands of the trustee, go to the creditor, that any money that he has, which is for the creditors, where they are not yet entitled to it, say like an early payment of yes, next months. They go back to the debtor. Just as far as I think that's exactly right, Section 235A of the Secondary Statement of Trust talks about a life beneficiary who's entitled to all of the income of a trust during their life. Income comes in while they're alive, but before it's paid, they die. The question is, where does that go? Does it go back to the grantor or does it go to the estate of the life beneficiary? And the answer to that Section 235A says is it goes to the estate of the life beneficiary because that obligation matured under the terms of the trust before the revocation. That same principle, I think, is fully applicable here for exactly the reasons that you're on the subject. Sotomayor, maybe this is too abstract a way to envision it, but we talk of an estate, it's somebody's estate. Right? John Smith dies. He leaves an estate. Yes. You call it John Smith's estate. Here, you know, we call this Mr. Harris's estate. At least more naturally than we would call it consumer electronics, chase manhattons, whatever's estate. So, isn't that a fairly strong signal of who should get the stuff that's kind of left in the middle? Mr. Chief Justice, the bankruptcy code, it is his estate, but it's his estate to be paid and consistent with the terms of the plan. Now, I understand that. As I said, just sort of looking at a more conceptual level, it does seem that it's, well, I guess I can't say it more than that, that it's his estate. So, stuff that you can't decide where it goes on a go to him. I don't think that nomenclature should overtake the structure and purpose of the code. If I may, while it's, is it normally called the debtor's estate or is it called the chapter 13 estate? Yes. I would normally say the chapter 13 estate. In fairness, Justice Scalia, I've heard, I've heard it used both ways colloquially. Before abandoning the text, though, in fairness, this is not a case in which the language of the code is entirely silent. There are clear indications from the text of the code that you help answer the question of the consistent with the common law backdrop. For example, under section 1328A of the bankruptcy code, it says the debtor's entitled to the discharge upon the debtor's completion of the payments he's required to make under the plan. It doesn't say when the trustee distributes that money to creditors, it says when the debtor makes the last payment he's required to make under the trustee, which is at least a signal that the legally operative moment within that Congress was contemplating was the debtor making the plan. Painted exactly. What did I get back to the trustee just for a moment of a revocouple trust? Yes. Now, the standard trust law, CJA, when the grantor exercises a power of revocation, the interest of the beneficiary ceases, and the assignee of the grantor, namely the grantor, takes the chorus of the trust free from the trust. But what you are saying is, if I look further into that, I will discover that if the grantor revoked the trust on February 1, and if under the trust documents, $100 was due to a beneficiary on January 1, and on March 1, standard trust law is the beneficiary gets the $100 from January, and does not get the $100 from March. That's exactly right. And the thing that I will look up in the trust law to show that you gave me the site. And I didn't know all that. It's section 89 of the Third Restatement. And you're saying that's precisely how we should treat this. That is correct. That there is nothing in the bankruptcy code that is inconsistent with that. That's how you want to treat it. We think that's the correct, yes. In addition to the provision regarding the- Does anyone else, any other circuit bankruptcy court, treated your function as that of a typical trustee? I mean, so they're not a typical trustee. You're- That's an over-esco account. You're a trustee for the estate or for the debtor. So it's a creature created by the bankruptcy code that is in some ways a hybrid of- S.Crow law and trust law. We think that's the best way to think about it. As between the two, they both point in the same direction. So I don't think a great deal turns on whether the lens of the common law here is that of S.Crow or that of trust. There are cases, a number of them, that have talked about the role of the trustee by reference to the common law of trust. It's a common-rested after all, use the term trustee, which is some indication that it was drawing on the common law backdrop of trust and thinking about this questress to go about. What do you do about the argument that what you're asking to be done cannot be done because immediately, upon the conversion, the Chapter 13 trustee no longer has any powers? So, Justice S.Crow, that argument from Section 348E of the bankruptcy code simply proves too much as was suggested earlier. The trustee clearly has to distribute the money to someone. They have to write a check either to the debtor or to creditors. The question is to who is legally entitled to the funds? And that is the answer that drives the resolution of this case, the notion that no one is suggesting the trustee keeps the money herself. She obviously needs to distribute it. And that common law trusts terminate and there is a doctrine about the wind-up obligations of the trustee upon termination. I suppose you're saying that the service of the trustee is owed both to the debtor and the creditors. If it were to the creditors, then you would have a weaker position. In fairness, Justice Kennedy, the obligation that the trustee has is to carry out the terms of the plan. That includes obligations that run for the benefit of creditors. And so, I'm better off the provision that if the conversion is made in bad faith, then the estate consists of the property as of the date of the conversion. Right. So, Justice Kennedy, that yielded. So, the statute appears to make a specific requirement for that, but not for the case we have. So, Justice Kennedy, that provision of 348, of 348 F deals with the situation that Justice Breyer was referring to, which is what if the debtor during the life of the Chapter 13 case received an inheritance. So, money that the debtor still had hadn't yet voluntarily paid over to the State, received an inheritance, but she converted in an act of gamesmanship. But I would suppose we'll apply to your case, too. I'll pay this date as of the date. So, the language of 348 F does the following. It says that the property of the Chapter 7 estate is the property that the question that Congress had when it dealt with 348 F is, the debtor files a Chapter 13 case on day one, lives in Chapter 13 for some period of time and then converts. So, the question is, okay, what universe of property is in the Chapter 7 estate? Is it all the property that the debtor had at the beginning of the case, or is it the property that the debtor had on the day of conversion? That was a fair question, and there was disagreement in the courts on that question until 1994. Congress answered that question by saying, the property of the 13 estate is the property that the debtor had on the petition date, the original petition date that they still have as of the date of conversion. And the reason that makes sense is for the reason Justice Breyer identified, because otherwise someone who came into some sort of windfall during that period of time would essentially have to turn that all over to creditors instead of keeping it. So, the order actually even more directly, and the Third Circuit talks about this in the Enray Michael decision, if the debtors' home reacquired equity during the course of the bankruptcy. Well, if the debtor just saved a lot of work card and saved money, the notion is by defining the estate that way, it allowed the debtor to keep what the debtor had obtained during the life of the Chapter 13 even when it converts. But that doesn't say a word about what happens to funds that the debtor paid during the bankruptcy in order to obtain the benefits of being in Chapter 13. There is a clear quote here, the cost of being in Chapter 13 as this Court explained in Ransom versus Lann, and in Ransom and in Ham, I'm sorry, and in the landing case is that the cost under Section 325A2 is the debtors required to pay all of his projected disposable income for the benefit of his unsecured creditors. That is the cost. The benefit that the debtor obtained on the other side is he gets to keep his assets. But there's also a policy argument, Mr. Goldblatt, that works against you, which is that one of the things we know is that Congress didn't want to disincentivize debtors from use in Chapter 13. And essentially, if you win under your argument, the debtor is worse off for having tried Chapter 13 than if he had gone into Chapter 7 initially, because he's now being put to paying down debt that would have been discharged under Chapter 7. And why should we give him that kind of double whammy, given Congress's view that we should want people to try Chapter 13 first? Goldblatt, so Justice Kagan, a few different answers if I may. First, under Section 707B2A, a debtor with above-median income may not is presumptively abusive if they file for Chapter 7 in the first instance. And here, the record, which includes the description that Joint Appendix page 37 shows that this debtor's income was $49,000 a year. So I understand the question about this. The case case. No, I understand that. So the point being that not every debtor is eligible to file for 7 to begin with. There are some who must file for Chapter 13, including we believe, this debtor. More broadly, because of the happenstance of this case, it is indeed fanciful to believe that any debtor is going in decision about whether to file for Chapter 13 is going to be affected. The debtor, of course, has no control over when the trustee makes payments. And if you— It seems to me it is always a disadvantage to the debtor who converts to have begun in Chapter 13, whether there is any money left in the pot or not. He will have paid his wages to his creditors, whereas if he had filed for Chapter 7 immediately, he wouldn't have had to do that. Justice Scalia, that's in fairness, that's probably right, that after the view— after the fact— It is absolutely right, but you're exacerbating the effect of that under your proposed rule. But Justice Kagan, not in a way that it could possibly provide a material effect on anyone's incentives after all, but the debtor— No, possibly, but it's at least an extra penalty that you're imposing on him. And, you know, one way to look at what Congress wanted to do here is in terms of incentives another way is just to say we couldn't penalize people for going into Chapter 13 first. But Justice Kagan, in fairness, this isn't a penalty. After all, had the trustee distributed these funds to creditors before the data conversion, no one would say that that operated to penalize the debtor. So viewing it as a penalty, I think, begins with the conclusion that there's a baseline entitlement to these funds to begin with. And that assumption is incorrect and inconsistent with the fact that Congress's baseline is to the extent possible to make, to encourage Chapter 13 and not to impose extra costs on the people who go there. Right. But it's, with respect, it's not an extra cost. It is clear that the cost of being in Chapter 13 by function of the statute is the debtor is obligated to pay all of his projected disposable income to the plan for the benefit of his unsecured creditors as the price of being in Chapter 13. Here, the debtor obtained those benefits. He was able to keep his property throughout the time he was in Chapter 13. To address Justice Sotomayor's question, he also was able to seek to negotiate with Chase the effort to modify his mortgage. So what happened in this case is he reached the conclusion that he couldn't keep his house under the monthly payments on the mortgage as it existed. But as commonly occurs, particularly since the financial crisis, he then undertook to negotiate with Chase for a modification of the mortgage. Could he reduce the plan payments? If he could have gotten to a mortgage modification, that would have been implemented by a modified plan. Here, they tried, they tried for a year, they were ultimately unsuccessful. But the opportunity to try is the benefit of Chapter 13. And it can't be the case that because he was ultimately unsuccessful, you can say that he didn't obtain the benefit during the period in which he was trying to do that. That was a voluntary decision on his part. As the petitioner explained, could have converted any time. So if he didn't want to continue to devote his projected disposable income under the terms of the plan while he was doing so, he had every right to convert as soon as Chase received favor. I ask you the same question. I ask your friend on the other side. Assuming we find against you and for the petition on the issue of who gets this money, would the parties be able to alter that disposition in the plan? So just as clearly, that's a really good question. And one with which we have struggled, we believe that the indications of congressional intent that Congress did not mean to permit this. So you agree with the other side on that point? Well, on the flip side, we think that the better view of the code is that, let me up or answer if I can, there are two different questions. One is, if there was language in a plan that did that in that language, that plan was confirmed, would it govern? The answer to that under Espinoza is obviously yes. The question I think you're under intends to ask is, if a plan said that and someone objected, could that properly be confirmed? And our view is that, well, that's a close question and thankfully not the one presented here, that the better view is that a plan that said the money goes back to the debtor is sufficiently inconsistent with the structure of the code that such a plan couldn't be confirmed, but that is a much closer question than the one you have here, where there is no language in the so the language of the plan should be read against the common law backdrop, which enters this question decisively in our favor. Typically, how often are distributions made for every three months every year? So in the ordinary case, my understanding and experience is that trustees will make monthly distributions here, as long as sufficient funds have accumulated to make that worthwhile, here what the trustee did, but the trustee did here makes good sense. So when Chase got state relief, the trustee was holding money. Once it got relief, and again, this in response to just a sort of my earlier question, the plan says what happens there, the joint appendix on page is 34 and 35, and it sets out a priority of payment under the plan, and Chase, when it got state relief, that satisfied in full, it's secured claim. Just when any time a secured creditor gets back its collateral, that satisfies the secured claim of the secured creditor. So then just going through to use the bankruptcy vernacular, the waterfall created by the plan, the funds flowed according to their to the unsecured creditors after the payment of administrative claims. That's a very common feature of plans, and typically trustees when there are material funds to be distributed will distribute on a monthly basis. Here, the trustee didn't distribute those funds because the debtor presumably wanted the opportunity to take this time to try to save their house. So the trustee was facilitating the debtor's efforts to save their house by holding those funds to see if a modification could be reached. And when it wasn't reached, the trustee said, okay, now under the plan, this money goes to unsecured creditors, and sounds like she's acting in the interests of the debtor, then. And she was seeking to serve the objectives of the code and the plan. Chapter, the reason people file for Chapter 13 primarily is to save their house. And so that was why the debtor filed, and the trustee was trying to do consistent with the plan, what the purpose of the case was. When those efforts failed, the trustee can't obviously cause that to succeed. When it failed, the trustee then did what the plan obligated to do. At that moment, at that very moment, when the think of the instant when he filed the conversion, as of that particular moment, have the efforts failed? Yes. By converting what the, in Chapter 7, the debtor is required to turn over all of their non-exempt assets to the government. And wondering is that as of that instant, is it the case that under the 13 plan, as of that instant, the funds were already, there was already on the trustee, at that instant, a fixed obligation to write a check to the creditors. Then and there. Certainly by no later than the moment of conversion, there was a fixed obligation. So that's what, but if there had been money in that pile, which he was simply keeping for the fulfillment of an obligation that came up later, that would have under the plan, that she would have had to return, you can see. So the question of prepayments is more complicated, and I think I feel it wouldn't exactly have been prepayments. There would have been money there because of the situation you described. And if there was not an obligation as of the Section 7 filing instances, too, paid the money then and there to the unsecured creditors, then I think under your view of the case, that money would and should have gone, too, the debtor. So the same reason, as you've just said, it would occur in a revocable trust. So Justice Breyer, just in fairness, I think there's a difference between when the creditors write to payment attaches and when the debtor's obligation to make the payment is. And what would happen if a debtor prefunks the plan strikes me just without having thought about it as hard as perhaps I should have before today as a different and perhaps more complicated? No. Okay, it's not a no. You know, you've provided an easy principle. The principle is as in a revocable trust, the money that is in the trust, that is already under an obligation, then and there, at the matter of revocation, to go to the beneficiary goes. But where that obligation under the trust document has not yet arisen, it goes back to the floor. That's what you've told me. I agree with that principle 100 and it would end by the same here. If that's how that principle plays out, then I agree, I guess I say. Kagan Still have problems, which is if you're talking about the fifth circuit saying, you don't have a vested right, where does the obel-until repaid by the trustee and the trustee has in pageant? So where's the pre-existing obligation? So, just a sort of my or the language of the creditor. So just a matured right of the creditor. So exactly. So the language of vested rights is fraught. And if what is meant by a vested right, you made the argument, well, in fact, right. And if what is meant by vested right is there's a matured obligation of the trust, if that's what is meant by vested right, then the court below was wrong in that regard. If it meant by vested right, something beyond that, maybe it was right. I think the legal standard is there a matured obligation of the trust. And that clearly did exist, whether that does or doesn't give rise to a vested right under some different definition of vesting is unclear to me. But what is clear is that the trust had a matured obligation to pay the funds over to the beneficiaries. That's where I've always thought of this arrested right. Well, then the Fifth Circuit in saying there wasn't a vested right was incorrect. So if that's what is meant by vested. But you might not be able to answer this question. But I take it from the fact that the solicitor general is not here in this case. The government, the trustees don't care who they pay this money to, as long as they have a clear rule, is that correct? I don't think that that's right, Justice Kagan here. But National Association of Chapter 13 trustees has come in in support of our position. The executive office of the United States trustee plays a very different role in bankruptcy cases. And so their absence, I think, is evidence that the role of that office is different. And do you think that matters to the trustees, to any of them, whether we view this as a rule, rule, or only as a default rule that can be changed by the plan? Is there any reason why they would care about that question? I don't, in fairness, I don't know the answer to that. It seems clear to me that in the absent, that as a default rule, this is the right answer. I think the prudent thing to do would be to wait for a case in which someone sought to change the default to address the next question of, can you change the default? My answer, I believe that the better view is probably that you cannot, because there are indications in the code that suggests that Congress intended the application of what we're calling the default rule. But whether that's right or wrong, it seems to me, should properly await a case in which it's actually presented. In some, the question here is, the debtor is entitled to convert his case to chapter seven at any time. Everyone agrees that when he does, that terminates his obligations to make payments into the trust. The question is whether the decision to terminate essentially is retroactive, that by, by making the decision to convert, he not only excuses himself of future obligations, but is able to undo payments he previously made when he enjoyed the benefits. And for those reasons, the judge should be affirmed. Thank you, Council. Mr. Madden, you have four minutes remaining. Thank you. Two main points in a rebuttal, Your Honor. First, this case isn't one where you can make a jump to trust law in the restatements, because to make that jump, respond and requires the Court to declare that a chapter 13 trustee doesn't hold property of the estate and isn't a representative of the estate. But instead holds a new species of property as a bankruptcy trustee that already belongs to creditors and acts as an escrow agent to creditors and still a representative of the estate. In our reply brief, pages six to seven, we point to a number of indications in the code where that would be inconsistent with the way the bankruptcy code is structured. To take just one example, the code gives a trustee the right to deposit money of the estate in an interest-bearing account. But in a respondents view, after a confirmation of a plan, a chapter 13 trustee holds property of the creditors and lacks statutory authorization to make that deposit. It would do violence, I think, to the basic structure of chapter 13, which would have a number of implications in other cases to declare that a chapter 13 trustee is no longer a representative of an estate and a fiduciary of an estate, but instead is an agent of the creditors. Second, the service of the trustee point, which involves section 348E of the code. Congress didn't intend to tell a trustee that they can do nothing at all and they lack any other powers in a case on how to dispose of money. For example, in bankruptcy rule 1019, paragraph four, a chapter 13 trustee upon conversion to chapter seven is required to turn over property of the estate to the new chapter seven trustee. It's no more a service that the trustee performs as the trustee in the case to turn over property that is no longer property of the estate to the debtor. The service that the trustee performs is to take possession of property of the estate, to examine and object to claims, and when appropriate, to pay creditors according to the chapter of the code under which the trustee operates. Now here, that's apparent because to make the payments the trustee made in this case, Respondent had to file a document with the bankruptcy court to recommend how to treat claims. As we explained in the reply brief, Respondent had to tell the court that we should treat Chase's $5,500 claim as being allowed only in the amount of $1,000 because that renders Chase paid in full and allows unsecured creditors to obtain payment under the plan. But all of that only happened after the debtor converted his case to chapter seven. And what Congress is intending to prevent is to have two trustees operating in the same bankruptcy case on the same estate dealing with the same creditors' claims. That's what the termination of the service of a trustee upon conversion means. And let's refer the questions. Thank you, counsel. The case is submitted