Can I Convert from Chapter 11 to Subchapter V?
If your business filed for a traditional Chapter 11 bankruptcy, is it possible to convert to a Subchapter V case?
Or, vice versa, can a Subchapter V debtor convert to a traditional Chapter 11 bankruptcy? Our West Palm Beach business bankruptcy lawyers can discuss business bankruptcy conversion with you, and we can speak with you today about the particular details of your case if you want to find out about converting from one type of business bankruptcy to another.
Bankruptcy Code Does Not Address Subchapter V Conversion Specifically
The US Bankruptcy Code addresses conversion between Chapter 11 and Chapter 7 bankruptcy cases for businesses, but it does not specifically address Subchapter V conversion. Accordingly, the existing information about conversions to or from Subchapter V bankruptcy comes from bankruptcy case law since February 2020.
Conversion from Chapter 11 to Subchapter V May Be Possible
In the immediate time period following the SBRA taking effect, bankruptcy courts generally permitted business debtors that had filed for traditional Chapter 11 cases to convert to Subchapter V if the business met the eligibility requirements. Bankruptcy courts reasoned that the purpose of creating Subchapter V was to make it possible for smaller businesses to complete the terms of a reorganization bankruptcy and to remain in business, which a conversion to Subchapter V would assist with.
What if a current Chapter 11 business debtor wants to convert to Subchapter V? The debtor would have to be eligible — i.e., to meet the specific requirements — for Subchapter V. If a traditional Chapter 11 case was filed without a business’s knowledge of their eligibility for Subchapter V, or if circumstances changed and the business became eligible for Subchapter V, a conversion could potentially be possible. It will be critical to discuss details with a bankruptcy lawyer.
Contact Our West Palm Beach Bankruptcy Attorneys Today
If your business filed for a traditional Chapter 11 case but you may be eligible for Subchapter V, you may be eligible to convert your case. However, as we noted above, the question about converting from a traditional Chapter 11 case to Subchapter V is a relatively new phenomenon since Subchapter V bankruptcy has only been in existence for a short period of time. Accordingly, to find out about your eligibility, or other options for converting from a traditional Chapter 11 case to another form of bankruptcy. An experienced West Palm Beach bankruptcy lawyer at Kelley, Kaplan & Eller can discuss your circumstances with you today. Contact us for more information about converting business bankruptcy cases in South Florida.
Sources:
law.cornell.edu/uscode/text/11
justice.gov/ust/subchapter-v
