                                                         FILED
                                                         NOV 18 2016
 1                         NOT FOR PUBLICATION
 2                                                   SUSAN M. SPRAUL, CLERK
                                                        U.S. BKCY. APP. PANEL
                                                        OF THE NINTH CIRCUIT
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )      BAP No. CC-16-1049-McTaF
                                   )
 6   JACK C. PRYOR,                )      Bk. No. 6:15-bk-19998-MH
                                   )
 7                  Debtor.        )
     ______________________________)
 8                                 )
     JACK C. PRYOR,                )
 9                                 )
                    Appellant,     )
10                                 )
     v.                            )      MEMORANDUM1
11                                 )
     UNITED STATES TRUSTEE,        )
12                                 )
                    Appellee.      )
13   ______________________________)
14                  Argued and Submitted on October 21, 2016
                             at Pasadena, California
15
                           Filed - November 18, 2016
16
                 Appeal from the United States Bankruptcy Court
17                   for the Central District of California
18             Honorable Mark Houle, Bankruptcy Judge, Presiding.
                          _____________________________
19
     Appearances:     Stephen R. Wade argued for Appellant Jack C.
20                    Pryor; Russell Clementson argued for Appellee
                      U.S. Trustee.
21
22   Before:     MCKITTRICK,2 TAYLOR and FARIS, Bankruptcy Judges.
23
24        1
             This disposition is not appropriate for publication.
25   Although it may be cited for whatever persuasive value it may
     have, see Fed. R. App. P. 32.1, it has no precedential value,
26   see 9th Cir. BAP Rule 8024-1.
27        2
             The Honorable Peter C. McKittrick, United States
28   Bankruptcy Judge for the District of Oregon, sitting by
     designation.
 1          Debtor Jack Pryor (“debtor”) appeals the bankruptcy court’s
 2   order converting his individual chapter 113 case to a case under
 3   chapter 7.       He argues that he did not have adequate notice and
 4   an opportunity to be heard before the court converted his case.
 5          We AFFIRM.
 6                                     FACTS
 7          Debtor filed an individual chapter 11 case in October 2015.
 8   He had two earlier cases filed and dismissed in the previous
 9   year.
10          Debtor’s schedules show that he owned 1,000 shares of stock
11   in Diversified Products Industries (“DPI”) and 1,000 shares of
12   stock in Access Solar, Inc., which is 100 percent ownership of
13   both businesses.       The Statement of Financial Affairs described
14   the businesses and indicated “Present” for the ending date for
15   each business.       Debtor valued his interest in DPI at $1,100,000,
16   based on accounts receivable.       Debtor’s Schedule I listed DPI as
17   the employer for both debtor and his non-filing spouse and
18   stated that his spouse received a monthly salary of $2,975 from
19   DPI.       Debtor also disclosed that he owned various parcels of
20   real property, including some parcels of bare land.
21          The Bankruptcy Auditor for the United States Trustee
22   (“UST”), Herman Au, conducted an initial debtor interview on
23   October 27, 2015, at which both debtor and his counsel appeared.
24   At the interview, Au gave debtor the UST’s Notice of
25
26          3
             Unless otherwise indicated, all chapter, section, and
27   rule references are to the Bankruptcy Code, 11 U.S.C.
     §§ 101-1532, and to the Federal Rules of Bankruptcy Procedure,
28   Rules 1001-9037.

                                         2
 1   Requirements and Guidelines for Chapter 11 Debtors in
 2   Possession.    The guidelines detailed the information that was
 3   required to be filed with the UST within seven days of the
 4   petition date, including proof of insurance (“the 7-Day
 5   Package”).    Au discussed DPI and Access Solar with debtor.
 6   Debtor did not indicate that either business had ceased
 7   operating.    Au informed debtor that he was required to provide
 8   proof of liability insurance for DPI and Access Solar.    Debtor
 9   did not challenge that requirement.
10        Debtor failed to submit to the UST any of the 7-Day Package
11   documents.    As a result, on November 4, 2015, the UST filed a
12   Motion to Dismiss or Convert debtor’s case, which listed the
13   following missing documents:
14        a.   Real property questionnaire;
          b.   Copy of the recorded petition;
15        c.   Proof of closing of pre-petition bank accounts;
          d.   Proof of opening of Debtor-in-Possession accounts;
16        e.   Proof of insurance;
          f.   Proof of required certificates and licenses (if any);
17        g.   Statement of Major Issues and Timetable Report; and
          h.   A copy of the most recently filed tax returns.
18
19   Motion to Dismiss or Convert at 4:19-23.    The UST’s memorandum
20   in support of the motion described “cause” for dismissal or
21   conversion under § 1112(b)(4)(C), (F), and (H): failure to
22   maintain insurance; failure to provide information requested by
23   the UST; and failure to satisfy timely reporting requirements.
24   The UST’s argument in the memorandum focused on the need for
25   proof of insurance on debtor’s real property, arguing that
26   without insurance there could be significant liability if a
27   person were injured on debtor’s premises.    The motion was
28   supported by Au’s declaration.

                                      3
 1        The court held the initial hearing on the motion on
 2   December 8, 2015.   Debtor appeared pro se; his counsel had
 3   withdrawn due to medical issues.     By the time of that hearing,
 4   debtor had provided proof of insurance for his real properties
 5   and his automobiles.   The court granted the UST’s request for a
 6   continuance to allow debtor time to retain new counsel.    It
 7   directed debtor to file a status report regarding engagement of
 8   counsel by January 27 and directed the UST to supplement its
 9   motion if there were any remaining or new deficiencies.    All
10   parties waived notice of the continued hearing.
11        Later in December, debtor retained new counsel, who
12   appeared with debtor at the February 2 continued hearing on the
13   motion to dismiss or convert.   Debtor did not file a status
14   report and the UST did not supplement his motion before the
15   February 2 hearing.
16        At the February 2 hearing, the UST reported that there were
17   still several outstanding items of compliance as of the hearing
18   date, including that debtor had failed to provide proof that he
19   had liability insurance coverage for some of the real properties
20   and that he had recorded the petition for some of his real
21   properties, and that debtor had failed to submit real property
22   questionnaires for some of the properties, a final bank
23   statement for debtor’s prepetition bank account, and the major
24   issues and timetable report.    The UST also reported that debtor
25   had not paid the quarterly UST fees.    The parties agreed to a
26   continuance of the hearing for a short time to allow debtor’s
27   counsel to address the UST’s position that there were still
28   compliance items missing.

                                      4
 1        The court set the hearing over for one week.    It stated
 2   that, but for the UST’s agreement to the continuance, the court
 3   would have dismissed or converted the case that day.    It said
 4   that it intended to dismiss or convert because, despite the fact
 5   that debtor had retained counsel more than a month before, the
 6   case was four months old and the UST was still missing
 7   significant requested items.   The court then directed counsel
 8   for the UST to review the UST files and to file a statement of
 9   any items still missing by February 8.   It set the continued
10   hearing for February 9.   The court indicated that this would be
11   debtor’s “last shot.”   All parties waived notice of the
12   February 9 hearing.
13        Late in the day of the February 2 hearing, counsel for the
14   UST sent email correspondence to debtor’s counsel listing
15   10 compliance items debtor still had not provided:
16        1)    Real Property Questionnaire for 2 lots in Twenty Nine
                Palms, California;
17        2)    Real Property Questionnaire for 35 acres in Rice,
                California;
18        3)    Property/Liability Insurance for commercial property
                located at 19024 Ruppert Street, N. Palm Springs, CA;
19        4)    Liability insurance for single family home located at
                49965 Fuller Ave., Cabazon, CA;
20        5)    Liability insurance for debtor’s two business
                entities: Diversified Product Industries LTD and
21              Access Solar Inc.;
          6)    Copy of final bank statement for pre-petition bank
22              account (Wells Fargo #0182);
          7)    Proof of recorded petition in county (Los Angeles, San
23              Bernardino, & Riverside);
          8)    Major Issues & Timetable Report;
24        9)    File and serve monthly operating reports for October,
                November and December 2015; and
25        10)   Proof of payment of quarterly fees of $325 for the 4th
                quarter of 2015.
26
27   UST Supplemental Statement in Support of Motion to Dismiss or
28   Convert, Exh. 1 to Declaration of Everett Green.    Debtor’s

                                     5
 1   counsel responded with an email sent at 3:50 p.m. on February 8
 2   that provided many of the items requested.     With regard to proof
 3   of liability insurance for the businesses, counsel indicated
 4   that he was “waiting on client to provide us with proof of
 5   documents.”    Id. at Exh. 2.   He also said that he was “waiting
 6   on client to provide proof of payment” of the UST quarterly
 7   fees.    Id.
 8        The hearing was held the next day at 2:00 p.m.     At
 9   11:53 a.m. that day, debtor’s counsel filed a declaration in
10   opposition to the UST’s motion to dismiss or convert.     In his
11   declaration, counsel stated that neither of debtor’s businesses
12   maintains insurance because neither had conducted business since
13   before the petition date.
14        Debtor’s counsel appeared at the continued hearing on the
15   motion to dismiss; debtor did not attend.4     The UST reported
16   that there were two outstanding items of non-compliance: proof
17   of insurance for debtor’s two businesses, DPI and Access Solar,
18   and payment of the quarterly UST fees for the fourth quarter of
19   2015, which was due by the end of January 2016 and was
20   delinquent on February 1.    The UST acknowledged that debtor’s
21   counsel had tendered an untimely payment of the UST fees earlier
22   in the day of the hearing.      He also pointed out that, although
23   many of the compliance items had been provided, they had not
24   been provided by the deadline set by the court.
25        In response to counsel’s assertion that debtor’s businesses
26
          4
27           Counsel represented to the court that debtor had left
     because he was distraught at the prospect of losing 40 years of
28   work.

                                        6
 1   were not operating, the UST called its analyst, Mr. Au, to
 2   testify.   Au testified that, at the initial debtor interview, he
 3   discussed the two businesses with debtor.   With regard to DPI,
 4   debtor had told him that the business sold steel construction
 5   products, that it had been unprofitable, and that they were
 6   trying to collect some accounts from a vendor.   Debtor had not
 7   indicated that the business had ceased operations.    As to Access
 8   Solar, debtor had told Au that the company installed and sold
 9   solar panels and had an office operating out of one of debtor’s
10   commercial properties.   Au testified that neither debtor nor his
11   counsel at the initial debtor interview had objected when Au
12   indicated that the UST needed proof of liability insurance for
13   the two businesses.
14        Debtor’s counsel then testified as a witness that he had
15   checked the status of Access Solar and that its license with the
16   California Contractors License Board had expired before the
17   chapter 11 petition was filed.   He also stated that he had
18   visited the Access Solar offices and saw no employees or
19   product.   He had reviewed the company records, which showed no
20   business activity since sometime before bankruptcy.
21        Counsel also testified that he had inspected the DPI
22   facility and saw no inventory of steel products or employees.
23   To his knowledge, DPI’s only postpetition activity was its
24   prosecution of an appeal in a case in which it was seeking a
25   million-dollar recovery.
26        Counsel did not request a continuance to allow debtor to
27
28

                                      7
 1   testify about whether the businesses were active.5   He argued
 2   that insurance should not be required because the businesses
 3   were not active.
 4        At the close of the hearing, the court concluded that the
 5   case would be dismissed or converted.   First, it found that
 6   debtor failed “to maintain appropriate insurance that poses a
 7   risk to the estate or to the public.”   Transcript of February 9,
 8   2016 hearing at 97:7-8.   It noted that debtor’s schedules and
 9   Statement of Financial Affairs indicated that the businesses
10   were continuing to operate, that Schedule B showed an account
11   receivable for DPI in the amount of $1.1 million, and that
12   debtor had said at the initial debtor interview that the
13   businesses continued to operate.
14        Second, it found a failure timely to provide information
15   reasonably requested by the UST, including failure to provide
16   information about insurance until approximately four months into
17   the case.
18        Third, the court found that debtor had failed timely to pay
19   the quarterly UST fees, which were due nine days earlier.
20        The court then considered whether to dismiss or convert to
21   chapter 7 and concluded that conversion to chapter 7 was the
22   better alternative.
23                                 ISSUE
24        Whether the bankruptcy court abused its discretion in
25   converting the case from chapter 11 to chapter 7.
26
27        5
             He did ask to leave the record open to provide evidence
28   to challenge Au’s credibility.

                                     8
 1                              JURISDICTION
 2        The bankruptcy court had jurisdiction over this matter
 3   pursuant to 28 U.S.C. § 157(b)(2) and § 1334(a).   This panel has
 4   jurisdiction under 28 U.S.C. § 158(c).
 5                           STANDARD OF REVIEW
 6        The panel reviews a court’s decision to convert a
 7   chapter 11 case to chapter 7 for an abuse of discretion.
 8   Pioneer Liquidating Corp. v. U.S. Tr. (In re Consol. Pioneer
 9   Mortg. Entities), 264 F.3d 803, 806 (9th Cir. 2001).   The court
10   abuses its discretion if it applies the wrong legal standard or
11   if its application of the correct legal standard is “illogical,
12   implausible, or without support in inferences that may be drawn
13   from the facts on the record.”   United States v. Hinkson,
14   585 F.3d 1247, 1263 (9th Cir. 2009) (en banc).
15        Whether the court’s procedure complies with due process is
16   a legal question reviewed de novo.   Beneficial Cal., Inc. v.
17   Villar (In re Villar), 317 B.R. 88, 92 (9th Cir. BAP 2004).
18   Debtor must show that he was prejudiced by any violation of due
19   process.   See Rosson v. Fitzgerald (In re Rosson), 545 F.3d 764,
20   776 (9th Cir. 2008); Rule 9005 (incorporating Fed. R. Civ. P.
21   61) (“court must disregard all errors and defects that do not
22   affect any party’s substantial rights”).
23                               DISCUSSION
24   1.   The court did not abuse its discretion in finding cause
     based on lack of insurance for the business entities
25
26        Debtor argues that the bankruptcy court abused its
27   discretion in converting his case to chapter 7, because he did
28   not have adequate notice of the basis for the motion or an

                                      9
 1   adequate opportunity to be heard on the motion, in violation of
 2   both the Bankruptcy Code requirement of notice and a hearing and
 3   his due process rights under the Fifth Amendment to the United
 4   States Constitution.   He does not argue that the court erred in
 5   finding, based on the evidence, that debtor had failed to
 6   provide proof of insurance for DPI and Access Solar, that lack
 7   of proof of insurance provides cause under § 1112(b), or that,
 8   having found cause, the court abused its discretion in
 9   converting rather than dismissing the case.6
10        Section 1112(b)(1) provides that, with exceptions not
11   applicable here, “on request of a party in interest, and after
12   notice and a hearing, the court shall convert” a chapter 11 case
13   to one under chapter 7, or dismiss, “whichever is in the best
14   interests of creditors and the estate, for cause[.]”   “Cause”
15   includes:
16        (C) failure to maintain insurance that poses a risk to the
          estate or to the public;
17
          . . .
18
          (H) failure timely to provide information or attend
19
20        6
             After oral argument in this appeal, the UST submitted
21   supplemental authority pursuant to Rule 8014(f). He cites a
     November 4, 2016, decision from the District of Massachusetts
22   that addressed whether there is cause for dismissal of a
     chapter 11 case when the debtor fails to maintain insurance on
23   assets of a company wholly owned by the debtor. See Dickey v.
24   Harrington (In re Dickey), Case No. 16-10649-TSH, 2016 WL
     6584905 (D. Mass. Nov. 4, 2016). We have reviewed the decision
25   in Dickey. Because the issue discussed in that case relates to
     the merits of the court’s finding in this case that liability
26   insurance on debtor’s business entities was appropriate, and
27   debtor does not challenge the merits of the court’s decision on
     that point in this appeal, the Dickey decision does not affect
28   our conclusion in this case.

                                     10
 1        meetings reasonably requested by the United States trustee
          . . . ;
 2
          . . .
 3
          (K) failure to pay any fees or charges required under
 4        chapter 123 of title 28; . . . .
 5   § 1112(b)(4).    “[T]he bankruptcy court has wide discretion in
 6   determining what constitutes cause adequate for conversion under
 7   § 1112(b).”    Khan v. Rund (In re Khan), BAP No. CC-11-1542-HPaD,
 8   2012 WL 2043074, at *5 (9th Cir. BAP 2012).
 9        The UST, as the moving party, has the burden to demonstrate
10   that cause exists to dismiss or convert; if the UST establishes
11   cause, the court must convert or dismiss, unless an exception
12   applies.     7 Collier on Bankruptcy ¶ 1112.04[4] (Alan N. Resnick
13   & Henry J. Sommer, eds., 16th ed. 2011) (“Collier”).7
14        Procedurally, § 1112(b) requires notice and a hearing. See
          § 1112(b). Substantively, § 1112(b) establishes “a
15        two-step analysis for dealing with questions of conversion
          and dismissal.” Nelson v. Meyer (In re Nelson), 343 B.R.
16        671, 675 (9th Cir. BAP 2006). The first step is a
          determination whether cause exists for conversion or
17        dismissal. The second step requires the court to apply a
          “balancing test” to choose between conversion and dismissal
18        based upon the “best interests of the creditors and the
          estate.” Id.
19
20   Woods & Erickson, LLP v. Leonard (In re AVI, Inc.), 389 B.R.
21   721, 729 (9th Cir. BAP 2008) (footnote omitted).
22        Section 1112(b) requires “notice and a hearing.”
23   § 1112(b)(1).    “After notice and a hearing” is construed to mean
24
          7
25           Debtor argues that “the harshness of dismissal mandates
     that it result only upon a strong evidentiary showing[,]” and
26   that the panel should closely scrutinize a dismissal.
27   Appellant’s Brief at 12-13. Any special scrutiny for dismissals
     without prejudice is not applicable here, where the court did
28   not dismiss but instead converted the case to chapter 7.

                                       11
 1   “after such notice as is appropriate in the particular
 2   circumstances, and such opportunity for a hearing as is
 3   appropriate in the particular circumstances[.]”    § 102(1)(A).
 4        “[N]otice is not only a statutory requirement, but a
 5   constitutional requirement as well.”    Great Pac. Money Markets,
 6   Inc. v. Krueger (In re Krueger), 88 B.R. 238, 241 (9th Cir. BAP
 7   1988).
 8        An elementary and fundamental requirement of due process in
          any proceeding which is to be accorded finality is notice
 9        reasonably calculated, under all the circumstances, to
          apprise interested parties of the pendency of the action
10        and afford them an opportunity to present their objections.
11   Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314
12   (1950).   The purpose of notice under the Fifth Amendment “is to
13   apprise the affected party of, and permit adequate preparation
14   for, an impending hearing.”    GMAC Mortg. Corp. v. Salisbury
15   (In re Loloee), 241 B.R. 655, 661 (9th Cir. BAP 1999).
16        The statutory and constitutional notice and hearing
17   requirements are similar and, for purposes of this case, will
18   not be discussed separately.
19        Debtor’s arguments distill to two major points: (1) he did
20   not have adequate notice that lack of proof of insurance on his
21   business entities was a basis for the UST’s motion to dismiss or
22   convert and (2) the February 9 hearing procedure was flawed.      As
23   a result, he argues, the only basis for the court’s decision to
24   convert the case was his failure to pay the UST fees on time,
25   which is not sufficient alone to justify converting the case.
26        A.   Notice was sufficient
27        The record supports the bankruptcy court’s conclusion that
28   debtor had sufficient notice that he needed to provide proof of

                                       12
 1   insurance on his two businesses or face possible dismissal or
 2   conversion.   First, the UST’s auditor conducted an initial
 3   client interview in late October 2015, at which time he
 4   discussed the two businesses with debtor and advised him that he
 5   needed to provide proof of liability insurance on those
 6   businesses.   Neither debtor nor his then-counsel objected to
 7   that requirement or told the auditor that the businesses were
 8   not operating.   The auditor gave debtor and his counsel a copy
 9   of the UST Guidelines, which also notified debtor of the
10   requirement to provide proof of insurance coverage within seven
11   days of the petition date.
12        Second, the UST’s motion to dismiss or convert, filed on
13   November 4, 2015, alleged that debtor had not provided specific
14   items that were required to be provided within seven days,
15   including proof of insurance.   The motion was accompanied by
16   Au’s declaration in which he says that, at the initial debtor
17   interview, he asked debtor whether he had liability insurance
18   and that debtor said he was unsure.
19        Motions “must state with particularity the grounds
20   therefor, and the relief or order sought.”   10 Collier at
21   ¶ 9013.03 (2013) (footnote omitted); Rule 9013.   This
22   requirement is flexible, and lack of specificity is allowed
23   “where the opposing party knew or had notice of the particular
24   grounds being relied upon.”   10 Collier at ¶ 9013.03 (2013)
25   (footnote omitted).   “Proof of insurance” was specific enough to
26   provide notice that debtor needed to provide proof of the
27   insurance discussed at the initial debtor interview, including
28   insurance on his business entities.   Certainly by the time of

                                     13
 1   the final hearing on February 9, as discussed below, debtor knew
 2   that the UST sought dismissal or conversion based in part on
 3   lack of proof of insurance on those entities.
 4        Third, after the court held an initial and then a continued
 5   hearing, on February 2, 2016, the UST sent to debtor’s
 6   replacement counsel via email a list of items still out of
 7   compliance, including both proof of liability insurance for
 8   debtor’s two business entities and proof of payment of the UST’s
 9   quarterly fees.
10        This email was sent after business hours on February 2; the
11   continued hearing was February 9, and debtor knew that the court
12   had required the UST to file a declaration detailing any
13   continuing compliance issues by the close of business on
14   February 8.   Further, the court had told debtor at the
15   February 2 hearing that this continuance was his last shot at
16   compliance.   The UST filed the February 8 declaration, which
17   advised the court that debtor had failed to provide proof of
18   insurance on the entities and had failed to pay the UST
19   quarterly fees.
20        Under the circumstances, any lack of specificity in the
21   motion did not deprive debtor of notice that he was required to
22   provide proof either that his two business entities were insured
23   or that insurance was not required.   That specificity was
24   provided at the earliest in late October 2015 and the latest by
25   February 2, 2016, which was a week before the final hearing on
26   the motion.   Under the circumstances, where the case was four
27   months old and debtor had failed timely to provide many items
28   required by the UST until shortly before the February 9 hearing,

                                     14
 1   a week’s notice was sufficient to allow debtor to prepare and
 2   respond to the UST’s request.
 3        Debtor points out that the bankruptcy court sustained an
 4   objection to a question put to Au, asking his “understanding of
 5   the nature of the insurance that’s required” of a debtor in
 6   possession.   Transcript of February 9, 2016 hearing at 47:13-14.
 7   If the question was too vague for testimony, debtor argues, how
 8   could it be sufficient to give debtor notice of what insurance
 9   was being required?
10        The question asked for the “nature” of the insurance that
11   was required; debtor had been told at the initial debtor
12   interview that he needed to provide proof of liability insurance
13   on the business entities, and failure to provide proof of
14   insurance was listed in the motion to dismiss or convert.
15   Debtor was again advised in the February 2 email of the need to
16   prove insurance on the business entities.   Even if the question
17   to Au was vague, the notice to debtor was not.
18        Debtor argues that the notice was not sufficient because he
19   was misled by the UST, who changed his position regarding what
20   was required.   At the December 8 hearing, counsel for the UST
21   advised the court that debtor had provided proof of liability
22   coverage for his real properties and automobiles, which counsel
23   said was “the bulk of our concerns in terms of our motion.”
24   Transcript of December 8, 2015 hearing at 6:22-23.   At the
25   February 2 continued hearing, after first reporting that debtor
26   had not provided proof of insurance, counsel said that they had
27   “seen a few of the compliance items, most critically, proof of
28   insurance coverage for the Rupert property.”   Transcript of

                                     15
 1   February 2, 2016 hearing at 18:4-7.    Then, after the close of
 2   business that same day, the UST sent the email to debtor’s
 3   counsel showing the need for proof of insurance on debtor’s two
 4   business entities.
 5        There is no doubt that the motion and the UST’s comments to
 6   the court could have been more specific as to what insurance
 7   coverage debtor needed to show.    However, there is no dispute
 8   that by the end of the day on February 2, a week before the
 9   continued hearing, debtor was reminded of the need to prove that
10   his business entities had liability insurance, a requirement of
11   which he had been advised at the initial debtor interview in
12   October.   Debtor did not argue to the bankruptcy court that
13   additional time would solve the problem; in fact, counsel told
14   the court that more time would not matter.
15        Debtor had sufficient notice of what was required under the
16   circumstances to apprise him of the basis for the UST’s motion
17   to dismiss or convert and to allow him an adequate opportunity
18   to respond.
19        B.    Debtor had an adequate opportunity to be heard
20        Although he did not raise the issue in his brief, at oral
21   argument debtor argued that he was denied an adequate
22   opportunity to be heard with regard to the insurance on the
23   business entities.   He mentioned two bankruptcy court actions at
24   the February 9 hearing that he claims denied him due process:
25   (1) the court’s denial of a continuance to allow debtor to
26   appear and testify; and (2) the court’s denial of debtor’s
27   attempts to question Au regarding the nature of insurance that
28   was appropriate for the two business entities.

                                       16
 1        We have carefully reviewed the transcript of the February 9
 2   hearing and do not find that debtor’s counsel made a request to
 3   continue the hearing so debtor could testify as to the level of
 4   business activity of the two business entities.    Early in the
 5   hearing, after the court said that it would take testimony from
 6   Au as to whether or not debtor had represented to Au at the
 7   initial debtor interview that the businesses were still
 8   operating, counsel said that “Mr. Pryor should have an
 9   opportunity to attend” the hearing.   Transcript of February 9,
10   2016 hearing at 25:8-9.   Our review of the transcript does not
11   show any time when debtor’s counsel told the court that the
12   hearing should be continued so debtor could testify.    Without
13   such a request, the court did not deny debtor due process by
14   concluding the hearing.   In fact, debtor’s counsel told the
15   court that he was fine with the court’s decision to allow Au to
16   testify and with the court’s comment that it would have taken
17   testimony from debtor if debtor had been there.
18        Debtor had appeared at the first and second hearings on the
19   motion to dismiss.   He did not attend the final hearing, even
20   though the court had made it clear at the February 2 hearing
21   that, but for the agreement of the UST to a short continuance,
22   the court would have dismissed or converted at the February 2
23   hearing.
24        Debtor’s counsel was surprised by the court’s decision to
25   take live testimony at the February 9 hearing.    In fact, the
26   court’s local rules provide that the court may allow live
27   testimony at a hearing on a motion, but that, “[w]hen the court
28   intends to take such testimony, it will give the parties 2 days

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 1   notice of its intention, if possible, or may grant such a
 2   continuance as it may deem appropriate.”      LBR 9013-1(i)(1).   The
 3   record does not show that notice was given.
 4        However, when the hearing was continued to February 9, the
 5   parties waived notice of the hearing.      Further, advance notice
 6   of the evidentiary hearing was not possible in this case.      The
 7   court explained that it was taking testimony as a result of
 8   debtor’s assertion for the first time the morning of the hearing
 9   that his businesses were not operating and therefore did not
10   need to be insured.   Thus, the court allowed Au to testify as to
11   debtor’s representations at the initial debtor interview
12   regarding the activity of the businesses and would have allowed
13   debtor to testify about the businesses had he been there.
14   Because debtor did not raise the factual issue of whether the
15   businesses were operational until the morning of the hearing,
16   the bankruptcy court did not err in taking evidence on the issue
17   without two days’ notice.
18        Debtor also argues that the court erroneously cut off his
19   questioning of Au, thereby denying him due process.      Au
20   testified that he had advised debtor at the initial debtor
21   interview of the need for liability insurance on the businesses,
22   but he was not certain whether he had sent a follow-up email to
23   debtor listing that requirement.       Although debtor’s argument is
24   not clear, it appears that debtor wanted to question Au about
25   the necessity of liability insurance for these two business
26   entities as opposed to casualty or other types of insurance.
27        There is no prejudice shown from the court’s failure to
28   allow the additional testimony.    Debtor must show prejudice from

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 1   any procedural deficiencies.    See Rosson, 545 F.3d at 776-77;
 2   Rule 9005.    The court found that liability insurance was
 3   appropriate; debtor did not have liability insurance or any
 4   other insurance on the businesses.    The court did not deprive
 5   debtor of due process in failing to allow additional questioning
 6   on this issue.
 7   2.   The panel may affirm on any basis supported by the record
 8        Even if there were error in the court’s finding that debtor
 9   failed to maintain appropriate insurance on his businesses,
10   which constituted cause for dismissal or conversion under
11   § 1112(b)(4)(C), the panel can affirm on any basis supported by
12   the record.    See Brown v. State Bar of Ariz. (In re Bankruptcy
13   Petition Preparers), 307 B.R. 134, 140 (9th Cir. BAP 2004) (a
14   reviewing court may affirm on any basis supported by the
15   record); Khan, 2012 WL 2043074, at *7.
16        The UST presented ample evidence to support a finding of
17   cause for dismissal or conversion.    First, there is no dispute
18   that debtor failed timely to make his UST quarterly fees
19   payment; in fact, he did not tender payment until the day of the
20   hearing.    Debtor had been advised on January 6, 2016, that the
21   fees were due; he was advised at the February 2, 2016, hearing
22   that the fees were not paid; he was advised again in an email on
23   February 2, 2016, that the fees needed to be paid.    By late in
24   the day on February 8, 2016, debtor’s counsel advised the UST
25   that he was still “waiting on client to provide proof of
26   payment.”    UST’s Supplemental Statement in Support of Motion to
27   Dismiss or Convert, Exh. 2 to Declaration of Everett L. Green.
28        Even if, as debtor argues, the court had granted an

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 1   extension of time for payment, debtor still did not get the
 2   payment to the UST by that deadline, instead waiting to deliver
 3   the check to the UST at the February 9 hearing.
 4        That failure timely to pay the UST fees alone is cause for
 5   dismissal or conversion under § 1112(b)(4)(K) and supports the
 6   decision to convert.   The court could have raised failure to pay
 7   the quarterly fees sua sponte.   Leeward Subdivision Partners,
 8   LLC v. GDR Lending, LLC (In re Leeward Subdivision Partners,
 9   LLC), BAP No. WW-10-1060-HRuJu, 2010 WL 6259983 (9th Cir. BAP
10   2010); § 105(a) (court may, sua sponte, take any action
11   “necessary or appropriate to enforce or implement court orders
12   or rules”).   The court did not err in finding cause for
13   conversion based on the failure timely to pay the UST quarterly
14   fees.
15        In addition, the court was concerned that debtor had two
16   failed bankruptcy cases in the year before he filed this
17   chapter 11 case.   It was concerned that, despite the UST’s
18   motion to dismiss filed on November 4, 2015, debtor still had
19   not provided a number of items requested by the UST by the time
20   of the second hearing on the motion on February 2, 2016.   This
21   included his monthly operating reports for October 2015,
22   November 2015, and December 2015, each of which was due by the
23   15th of the month following the month that was the subject of
24   the report.   LBR 2015-2(b).   Debtor did not provide a number of
25   the items, including the operating reports, until the eve of the
26   February 9 hearing, long after they were due.
27        That failure timely to provide information reasonably
28   requested by the UST, coupled with debtor’s history of failed

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 1   cases, provided cause for dismissal or conversion under
 2   § 1112(b)(4)(H); failure to timely file the operating reports
 3   provided cause for dismissal or conversion under
 4   § 1112(b)(4)(F).   The fact that debtor finally, four months into
 5   the case and on the eve of the final hearing, provided much of
 6   the information does not mean that the information was timely
 7   provided.
 8        There were multiple grounds supporting the bankruptcy
 9   court’s decision to convert this case for cause.
10                                CONCLUSION
11        The bankruptcy court did not abuse its discretion in
12   converting debtor’s chapter 11 case to a case under chapter 7.
13   Debtor was given adequate notice of the basis for and an
14   opportunity to be heard on the UST’s motion.
15        Therefore, we AFFIRM.
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