Section 1112 - Conversion or Dismissal
Title 11 of the United States Code - Bankruptcy
REORGANIZATION – CHAPTER 11
Conversion or Dismissal –Section 1112
11 USCS § 1112
(a) The debtor may convert a case under this chapter [11 USCS §§ 1101 et seq.] to a case under chapter 7 of this title [11 USCS §§ 701 et seq.] unless--
(1) the debtor is not a debtor in possession;
(2) the case originally was commenced as an involuntary case under this chapter [11 USCS §§ 1101 et seq.]; or
(3) the case was converted to a case under this chapter [11 USCS §§ 1101 et seq.] other than on the debtor's request.
(b) (1) Except as provided in paragraph (2) of this subsection, subsection (c) of this section, and section 1104(a)(3) [11 USCS § 1104(a)(3)], on request of a party in interest, and after notice and a hearing, absent unusual circumstances specifically identified by the court that establish that the requested conversion or dismissal is not in the best interests of creditors and the estate, the court shall convert a case under this chapter [11 USCS §§ 1101 et seq.] to a case under chapter 7 [11 USCS §§ 701 et seq.] or dismiss a case under this chapter [11 USCS §§ 1101 et seq.], whichever is in the best interests of creditors and the estate, if the movant establishes cause.
(2) The relief provided in paragraph (1) shall not be granted absent unusual circumstances specifically identified by the court that establish that such relief is not in the best interests of creditors and the estate, if the debtor or another party in interest objects and establishes that--
(A) there is a reasonable likelihood that a plan will be confirmed within the timeframes established in sections 1121(e) and 1129(e) of this title [11 USCS §§ 1121(e) and 1129(e)], or if such sections do not apply, within a reasonable period of time; and
(B) the grounds for granting such relief include an act or omission of the debtor other than under paragraph (4)(A)--
(i) for which there exists a reasonable justification for the act or omission; and
(ii) that will be cured within a reasonable period of time fixed by the court.
(3) The court shall commence the hearing on a motion under this subsection not later than 30 days after filing of the motion, and shall decide the motion not later than 15 days after commencement of such hearing, unless the movant expressly consents to a continuance for a specific period of time or compelling circumstances prevent the court from meeting the time limits established by this paragraph.
(4) For purposes of this subsection, the term "cause" includes--
(A) substantial or continuing loss to or diminution of the estate and the absence of a reasonable likelihood of rehabilitation;
(B) gross mismanagement of the estate;
(C) failure to maintain appropriate insurance that poses a risk to the estate or to the public;
(D) unauthorized use of cash collateral substantially harmful to 1 or more creditors;
(E) failure to comply with an order of the court;
(F) unexcused failure to satisfy timely any filing or reporting requirement established by this title or by any rule applicable to a case under this chapter [11 USCS §§ 1101 et seq.];
(G) failure to attend the meeting of creditors convened under section 341(a) [11 USCS § 341(a)] or an examination ordered under rule 2004 of the Federal Rules of Bankruptcy Procedure without good cause shown by the debtor;
(H) failure timely to provide information or attend meetings reasonably requested by the United States trustee (or the bankruptcy administrator, if any);
(I) failure timely to pay taxes owed after the date of the order for relief or to file tax returns due after the date of the order for relief;
(J) failure to file a disclosure statement, or to file or confirm a plan, within the time fixed by this title or by order of the court;
(K) failure to pay any fees or charges required under chapter 123 of title 28 [28 USCS §§ 1911 et seq.];
(L) revocation of an order of confirmation under section 1144 [11 USCS § 1144];
(M) inability to effectuate substantial consummation of a confirmed plan;
(N) material default by the debtor with respect to a confirmed plan;
(O) termination of a confirmed plan by reason of the occurrence of a condition specified in the plan; and
(P) failure of the debtor to pay any domestic support obligation that first becomes payable after the date of the filing of the petition.
(c) The court may not convert a case under this chapter [11 USCS §§ 1101 et seq.] to a case under chapter 7 of this title [11 USCS §§ 701 et seq.] if the debtor is a farmer or a corporation that is not a moneyed, business, or commercial corporation, unless the debtor requests such conversion.
(d) The court may convert a case under this chapter [11 USCS §§ 1101 et seq.] to a case under chapter 12 or 13 of this title [11 USCS §§ 1201 et seq. or 1301 et seq.] only if--
(1) the debtor requests such conversion;
(2) the debtor has not been discharged under section 1141(d) of this title [11 USCS § 1141(d)]; and
(3) if the debtor requests conversion to chapter 12 of this title [11 USCS §§ 1201 et seq.], such conversion is equitable.
(e) Except as provided in subsections (c) and (f), the court, on request of the United States trustee, may convert a case under this chapter to a case under chapter 7 of this title [11 USCS §§ 701 et seq.] or may dismiss a case under this chapter [11 USCS §§ 1101 et seq.], whichever is in the best interest of creditors and the estate if the debtor in a voluntary case fails to file, within fifteen days after the filing of the petition commencing such case or such additional time as the court may allow, the information required by paragraph (1) of section 521 [11 USCS § 521], including a list containing the names and addresses of the holders of the twenty largest unsecured claims (or of all unsecured claims if there are fewer than twenty unsecured claims), and the approximate dollar amounts of each of such claims.
(f) Notwithstanding any other provision of this section, a case may not be converted to a case under another chapter of this title unless the debtor may be a debtor under such chapter.
Sagaria Law is proud to announce the internet publishing of the United States Bankruptcy Code to this site. Title 11, as it is also known, has been provided here on our bankruptcy website for your convenience. We encourage all of our bankruptcy clients and website visitors to take advantage of being able to view it here, as no other bankruptcy sites offer this opportunity.
Our bankruptcy law firm in San Mateo deals with all types of bankruptcy questions, filings and issues. If at any time you would like to speak to our informed bankruptcy specialists or set up a consultation with one of our experienced bankruptcy attorneys in San Mateo, please contact us! We are here to serve you, San Mateo County!