LAWDOG BANKRUPTCY: CHAPTER 11

LAWDOG is intended to assist in the understanding of basic concepts. See Disclaimer. Always obtain legal advice from legal professionals.

Conversion is the process whereby a bankruptcy case is converted from one chapter to another. The debtor may convert a Chapter 11 case to a case under Chapter 7 unless a trustee has been appointed, the case originally was commenced as an involuntary case, or the case was converted to a Chapter 11 involuntarily. See Section 1112(a) reproduced here for illustration purposes only.

On the request of the debtor, other party in interest, or the United States trustee or bankruptcy administrator, and after notice and a hearing, the court may convert a case under Chapter 11 to a case under Chapter 7, or may dismiss the Chapter 11 case, whichever is in the best interest of creditors and the estate, for causes listed in Section 1112 (b). These include continuing loss to or diminution of the estate and absence of a reasonable likelihood of rehabilitation, inability to effectuate a plan, unreasonable delay by the debtor that is prejudicial to creditors, and others. See Section 1112(b) reproduced here for illustration purposes only.

Unless the court, for cause, orders otherwise, the dismissal of a case under Chapter 11 does not bar the discharge, in a later case under this title, of debts that were dischargeable in the case dismissed; nor does the dismissal prevent the debtor from filing a subsequent petition. See Section 349(a) reproduced here for illustration purposes only.

The conversion of a case generally does not change the original date of the bankruptcy filing or the automatic stay. Except for administrative expenses, debts of a debtor incurred between the date of the bankruptcy filing and the date of conversion may be treated as pre-petition claims. See Section 348 (d) of the Bankruptcy Code, reproduced here for illustration purposes only. Actual cases should always be discussed with your actual legal advisor or legal department.

Top Of Page

Copyright 1996, 1997, 1998 by LAWDOG.COM Publishing, Inc.