, In re Muntenneau, 2007 WL 1987783 (E.D.N.Y. 2007); Spencer v. Steinman (In re Argus), 206 B.R. 757, 763 (E.D. Pa. 1997); In re 183 Lorraine Street Assocs., 198 B.R. 16, 32-33 (E.D.N.Y. 1996); Pleasant Pointe Apartments, Ltd. v. Kentucky Housing Corp., 139 B.R. 828, 832 (W.D. Ky. 1992); In re Starmark Clinics, 388 B.R. 729, 735 (Bankr.S.D.Tex. 2008); In re State Street Assocs., L.P., 348 B.R. 627, 641-42 (Bankr. N.D.N.Y. 2006); In re A-1 Specialty Gasolines, Inc., 238 B.R. 876, 878 (Bankr. S.D. Fla. 1999). In addition, the only two published decisions on this issue after the 2005 BAPCPA modifications to § 1112, Muntenneau, Id. at *8 and Starmark Clinics, 388 B.R. at 735, both held that the bankruptcy court could convert from chapter 11 to chapter 7 on its own motion.
Thus, if a movant demonstrates cause, the court must grant relief and determine whether dismissal, conversion, or appointment of a trustee is in the best interest of creditors and the estate. Although there was no motion pending before the bankruptcy court to convert or dismiss Leeward's bankruptcy case under either § 305 or § 1112(b), a bankruptcy court may dismiss a case sua sponte if there is cause to do so. Argus Group 1700, Inc. v. Steinman (In re Argus Group 1700, Inc.), 206 B.R. 757, 763 (E.D. Penn. 1997) (collecting cases); In re A-1 Specialty Gasolines, Inc., 238 B.R. 876, 878 (Bankr. S.D. Fla. 1999); C-TC 9th Ave. P'ship v. Norton Co. (In re C-TC 9th Ave. P'ship), 113 F.3d 1304, 1312 (2d Cir. 1997). The authority of the court to act on its own is contained in Section 105.
The court has the authority to dismiss a Chapter 11 case sua sponte under 11 U.S.C. § 105(a) and § 1112(b). See In re A-1 Specialty Gasolines, Inc., 238 B.R. 876 (Bankr. S.D. Fla. 1999); In re Starmark clinics, LP, 388 B.R. 729 (Bankr. S.D. Texas 2008). Absent unusual circumstances that would establish that conversion or dismissal is not in the best interests of creditors and the estate, the court shall convert or dismiss a case, whichever is in the best interests of the creditor and the estate, if there is cause. 11 U.S.C. § 1112(b)(1).
Courts addressing the question of whether the court may dismiss a Chapter 11 case sua sponte prior to the 2005 amendments were split. See In re A-1 Specialty Gasolines, Inc., 238 B.R. 876 (Bankr.S.D.Fla.1999); Argus Group 1700, Inc. v. Steinman, 206 B.R. 757 (E.D.Pa. 1997); In re 183 Lorraine Street Associates, 198 B.R. 16 (E.D.N.Y.1996); Pleasant Pointe Apartments, Ltd. v. Kentucky Housing Corp., 139 B.R. 828 (W.D.Ky. 1992); In re Daily Corp., 72 B.R. 489 (Bankr.E.D.Pa.1987) (court has sua sponte authority). See In re Moog, 774 F.2d 1073 (11th Cir.1985) (court lacks sua sponte authority).