Asher Homes, LLC

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA
IN RE:
ASHER HOMES, LLC
Debtor.
Case No. 25-10067-T
Chapter 11
ORDER CONVERTING CASE TO A CASE UNDER CHAPTER 7
THIS MATTER comes before the Court pursuant to the Motion to Convert Case to Chapter
7 (the “Motion”),1 filed by Ilene J. Lashinsky, United States Trustee for Region 20 (the “U.S.
Trustee”); a Joinder to the Motion,2 filed by SpiritBank; a Joinder to the Motion,3 filed by Justin
Fengler and Marissa Fengler, Trustees of The Fengler Family Trust (the “Fenglers”); and an
Objection,4 filed by Asher Homes, LLC (“Debtor”). On June 20, 2025, the Court approved a
Stipulation between Debtor and the U.S. Trustee in which 1) Debtor agreed to take various actions
to implement its duties under the Bankruptcy Code; 2) the U.S. Trustee waived the requirement
1 ECF No. 110.
2 ECF No. 137.
3 ECF No. 139.
4 ECF No. 153.
Dated: September 4, 2026
________________________________________________________________
The following is ORDERED:
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under § 1112(b)(3) that the Court commence a hearing on the Motion within 30 days of its filing;
and 3) the U.S. Trustee reserved the right to request a hearing on the Motion in the event Debtor
did not comply with any provision of the Stipulation.5 On June 2, 2026, the U.S. Trustee filed a
Supplement to the Motion (the “Supplement”)6 and requested the matter be set for hearing.
Executive Homes, LLC filed a Joinder to the Supplement.7 The Court held an evidentiary hearing
on the Motion on August 24, 2026 (the “Hearing”). After receiving evidence and hearing
argument, the Court took the Motion, Objection, Supplement, and various Joinders under
advisement. The following “Findings of Fact” and “Conclusions of Law” are made pursuant to
Federal Rule of Bankruptcy Procedure 7052, which is made applicable to this contested matter
pursuant to Federal Rule of Bankruptcy Procedure 9014. For the reasons set forth below, the Court
finds this case should be converted to a case under chapter 7 of the Bankruptcy Code.
Jurisdiction
The Court has jurisdiction over this bankruptcy case pursuant to 28 U.S.C. § 1334(b).8
Reference to the Court of the bankruptcy case is proper pursuant to 28 U.S.C. § 157(a). This matter
is a core proceeding as defined by 28 U.S.C. § 157(b)(2)(A).
Findings of Fact
Debtor is a Limited Liability Company organized under the laws of the State of Oklahoma,
with its principal place of business in Tulsa, Oklahoma. This case was filed as a voluntary
proceeding under chapter 11 of the Bankruptcy Code on January 20, 2025 (the “Petition Date”).9
5 ECF No. 177.
6 ECF No. 412.
7 ECF No. 419.
8 Unless otherwise noted, all statutory references are to sections of the United States
Bankruptcy Code, 11 U.S.C. § 101 et seq.
9 Petition, ECF No. 1.
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Debtor continues to operate and manage its business as a debtor in possession pursuant to §§ 1107
and 1108. Daniel Ruhl (“Mr. Ruhl”) is the sole member and the designated representative of
Debtor.
Debtor is in the business of residential building construction.10 	Debtor represents that
between 2020 and 2022, it was the victim of embezzlement by a former employee.11 According to
Debtor, the embezzler stole millions of dollars and altered corporate books, invoices, receipts, and
other documents to hide the embezzlement.12 As a result, Debtor was unable to complete building
projects and to pay numerous contractors, subcontractors, and service providers.13 Within one year
of the Petition Date, there were at least 34 civil cases pending in Oklahoma state courts naming
Debtor as a Defendant.14
As of the Petition Date, Debtor’s estate consisted of 24 residential lots with single-family
homes in various states of completion (the “Properties”).15 While the Properties were valued at
more than $12 million in the aggregate, each was subject to one or more secured liens. Debtor has
no on-going business operations; this has effectively become a liquidation case. Debtor initially
projected that the sale of the Properties would generate a substantial return to unsecured creditors.
This projection has not materialized. Debtor reports that it has now sold all but two of its original
Properties. A motion to sell the two remaining Properties is now pending.16 According to Debtor’s
10 ECF No. 18, at 2 ¶ 7(C).
11 ECF No. 1, at 149 ¶ 10; ECF No. 121, at 1 ¶ (A)(4).
12 ECF No. 121, at 1 ¶ (A)(4).
13 Id.
14 ECF No. 1, at 142-48. Elsewhere, Debtor represented that 36 such cases were pending
within 1 year of the Petition Date. See ECF No. 20, at 2.
15 ECF No. 1, at 11-14. An amended petition shows Debtor held fee simple ownership in
23 properties valued at just under $12 million on the Petition Date. See ECF No. 492, at 6-9.
16 ECF No. 406.
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latest monthly operating report, as of June 26, 2026, it held $116,023 in cash for payment of
administrative expenses and distribution to unsecured creditors.
In preparation for the Hearing, the U.S. Trustee and Debtor entered into and filed a
stipulation (the “Second Stipulation”) that “Cause exists in this case pursuant to 11 U.S.C. §
1112(b) for the Court to dismiss the case or convert it to a case under Chapter 7.”17 	The U.S.
Trustee requests that this case be converted to a case under chapter 7 to allow the appointment of
a trustee. Such a trustee would oversee the liquidation and distribution of Debtor’s remaining assets
as well as investigate potential fraudulent transfer actions between Debtor and several affiliated
entities owned by Mr. Ruhl. While it acknowledges that it does not currently have evidence of
such transactions, given the numerous allegations that have been raised in the various state court
lawsuits, the U.S. Trustee believes the most prudent course would be to appoint an independent
chapter 7 trustee authorized to scrutinize Debtor’s pre-petition interactions with related entities.
As noted, creditors SpiritBank, the Fenglers, and Executive Homes, LLC have joined the U.S.
Trustee in seeking conversion of this case to chapter 7.
While Debtor acknowledges that cause exists for dismissal or conversion under § 1112(b),
it believes creditors would be better served by dismissal of the case.18 At the Hearing, Mr. Ruhl
testified that he owns and controls several affiliated companies that have been unfairly entangled
in the state court litigation involving Debtor (together with Mr. Ruhl, the “Ruhl Entities”). Mr.
Ruhl asserts that each of the Ruhl Entities conducts business affairs that are distinct and separate
17 ECF No. 485.
18 On August 7, 2026, Debtor filed a Motion for Dismissal of Chapter 11 Case pursuant to
§ 1112(b) (the “Dismissal Motion”). ECF No. 471. Although the Dismissal Motion was not
separately heard at the Hearing, both parties addressed the issue of dismissal as an alternative to
conversion.
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from Debtor, and that Debtor and the Ruhl Entities do not share common creditors or assets.19
Based on Mr. Ruhl’s belief that no fraudulent or preferential transactions have occurred between
the Ruhl Entities and Debtor, Mr. Ruhl testified that Debtor has not taken any action to investigate
or look for such transactions. Mr. Ruhl testified that, despite Debtor’s best efforts, much of the
anticipated equity in the Properties did not materialize, and only a small amount of cash remains
in the estate. Debtor believes creditors will be best served by using those funds to pay current
administrative fees and distribute the remainder to unsecured creditors. Because Debtor believes
litigation against the Ruhl Entities would be fruitless, it concludes that conversion will result in
additional administrative fees with no corresponding benefit to creditors. Debtor argues that most
secured creditors have pending lawsuits against it in state court, and a conversion of this case to
chapter 7 will further delay resolution of those cases.
Conclusions of Law
Section 1112(b)(1) provides in relevant part that “on request of a party in interest, and after
notice and a hearing, the court shall convert a case under this chapter to a case under chapter 7 or
dismiss a case under this chapter, whichever is in the best interests of creditors and the estate, for
cause[.]”20 	Based on the Second Stipulation, the Court finds cause under § 1112(b) has been
established.21 Therefore, the question before the Court is not whether cause exists to dismiss or
convert this case, only which alternative—conversion or dismissal—is preferable.22
19 See ECF No. 471, at 3.
20 § 1112(b)(1) (emphasis added).
21 ECF No. 485.
22 See In re DB Cap. Holdings, LLC, No. 10-25805, 2011 WL 5520439 (Bankr. D. Colo.
Nov. 14, 2011) (facing similar query).
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The Court has broad discretion to decide whether dismissal or conversion is in the best
interest of creditors and the bankruptcy estate. 23 The best interests of creditors test focuses on the
interest of the entire creditor body, not the interest of any single creditor.24 In applying the test,
courts focus on the economic value of the debtor; the economic value of the debtor in a converted
case is compared to its value after dismissal.25 As one court noted:
Conversion 	supports 	the 	Bankruptcy 	Code 	policy 	of 	“vigorous
maximization of the value of the economic enterprise.” In re Staff Inv. Co., 146
B.R. 256, 261 (Bankr. E.D. Cal. 1992). Value for the estate and creditors may be
enhanced through a trustee’s avoiding powers if the trustee discovers assets to bring
into the estate. See In re Ameribuild Constr. Mgmt., Inc., 399 B.R. 129, 134 (Bankr.
S.D.N.Y. 2009) (Chapter 7 trustee would be “independent fiduciary” who could
examine claims and transactions and prosecute as appropriate). Value also may be
created where, by converting the case, an orderly liquidation of the debtor’s assets
will occur and a prompt conclusion to the bankruptcy process may be anticipated.
And where a majority of creditors favor one result over the other, “the consensus
of a majority of . . . creditors” is another factor which may guide the court in
determining what is in their best interests. Rollex Corp. v. Assoc. Materials, Inc. (In
re Superior Siding & Window), 14 F.3d 240, 242 (4th Cir. 1994).
The 	possible 	benefits 	of 	conversion 	must 	be 	weighed 	against 	the
incremental costs to the estate. Where a trustee would impose an unaffordable
burden, dismissal may well be in the estate’s best interests. Midwest Props., 2010
WL 5258977, at *6. But where there is a prospect of the recovery of assets,
conversion may be in the best interests of the estate and the creditors despite these
costs. See BH S & B Holdings, 439 B.R. at 351.
And a trustee’s ability to examine the estate as an independent fiduciary and
administer it in an orderly fashion protects creditors, just as “the benefits of
bankruptcy protection” benefitted the debtor. Tuscan Sun, 2010 WL 4929444, at
*5. Viewed another way, if “[t]he creditors ... are better served by the centralized
collection and disbursement provided by the bankruptcy process,” then conversion,
rather than dismissal, is in the best interests of creditors and serves as the preferred
remedy. Coachworks, 2010 WL 5348422, at *7.26
23 § 1112(b)(1); Hall v. Vance, 887 F.2d 1041, 1044 (10th Cir. 1989); In re Preferred Door
Co., Inc., 990 F.2d 547, 549 (10th Cir. 1993); In re C.M. Heavy Mach., LLC, 671 B.R. 309, 326
(Bankr. E.D. Okla. 2025).
24 In re DB Cap. Holdings, 2011 WL 5520439, at *3.
25 Id. (citing In re OptInRealBig.com, LLC, 345 B.R. 277, 290 (Bankr. D. Colo. 2006)).
26 In re Babayoff, 445 B.R. 64, 82 (Bankr. E.D.N.Y. 2011).
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Notably, the statutory language of § 1112(b)(1) does not refer to a debtor’s best interests, and the
case law construing that section universally indicates that the debtor’s interest is irrelevant.27
Debtor argues that the added administrative expenses of a trustee under chapter 7 will deplete the
estate of assets that could otherwise be distributed to creditors. The U.S. Trustee, SpiritBank, the
Fenglers, and Executive Homes, LLC each advocate conversion instead of dismissal.
Here, several considerations weigh in favor of conversion of this case to one under chapter
7, rather than dismissal. If this case is converted, a chapter 7 trustee will be appointed and will be
able to investigate pre-petition transactions between Debtor and the Ruhl Entities, with the
possibility of recovering assets for the benefit of the estate. Despite Debtor’s insistence that no
preferential or fraudulent transactions have occurred, the Court finds the better course is to allow
an independent trustee to investigate Debtor’s pre-petition activities. To the extent there is more
value to be realized from this Debtor, the appointment of an independent trustee is the way to find
it.
Debtor has made the unusual request that it be allowed to complete the pending sales of
two additional Properties before the case is converted. Likewise, counsel for Debtor has asked the
Court to delay ruling on this matter pending resolution of its application for payment of
professional fees under § 330. 	Given the Bankruptcy Code’s requirement that a motion under
§ 1112(b) receive expedited resolution, the Court cannot find any authority or rationale for
delaying the effect of conversion of this case to chapter 7.28 A chapter 7 trustee will have the
27 In re J.R. Butler, Inc., No. 25-15598, 2026 WL 1763259, at *16 (Bankr. D. Colo. June
18, 2026) (first citing In re Sullivan, 626 B.R. 326, 335 (Bankr. D. Colo. 2021); then citing In re
Helmers, 361 B.R. 190, 196 (Bankr. D. Kan. 2007)).
28 See § 1112(b)(3). Debtor suggests the Court rely on § 105(a) to place multiple conditions
on the conversion of this case to chapter 7, but provides no authority that would allow the Court
to delay or condition a decision under § 1112(b). See L. v. Siegel, 571 U.S. 415, 421 (2014) (“We
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authority to complete the liquidation of estate assets, pay professionals according to the priority
scheme found in § 726, and investigate any causes of action that may be available for the benefit
of creditors.
Conclusion
Based on the entire record, the Court finds that conversion of this case to one under chapter
7 is in the best interests of creditors and the estate under § 1112(b).
Accordingly,
IT IS HEREBY ORDERED that the Motion to Convert Case to Chapter 7, filed by Ilene J.
Lashinsky, United States Trustee for Region 20, at ECF No. 110, is hereby GRANTED.
IT IS FURTHER ORDERED that this case be converted to a case under chapter 7 of the
United States Bankruptcy Code.
IT IS FURTHER ORDERED that the Clerk of this Court shall give notice of this Order as
required under Federal Rule of Bankruptcy Procedure 2002(f)(1)(B).
###
have long held that whatever equitable powers remain in the bankruptcy courts must and can only
be exercised within the confines of the Bankruptcy Code.”) (internal quotation omitted).
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