Conversion and Dismissal of a Chapter 12 Case

Chapter 12 specifically provides that a debtor may voluntarily convert a Chapter 12 bankruptcy case to a Chapter 7 bankruptcy or dismiss the case at any time. Creditors, however, may not seek the involuntary conversion of a debtor’s Chapter 12 bankruptcy to a Chapter 7 bankruptcy unless fraud is shown in connection with the case.

Creditors may seek the dismissal of the case. Chapter 12 provides that after notice and a hearing, the court may dismiss a case for cause. Any of the following are considered cause for dismissal:

* unreasonable delay or gross mismanagement,

* nonpayment of fees and charges required,

* failure to file a timely plan,

* failure to commence making timely payments under a confirmed plan,

* denial of confirmation of a plan and denial of a request for additional time for filing of another plan or modification,

* material default by the debtor with respect to a term of a confirmed plan,

* revocation of the order of confirmation and denial of confirmation of a modified plan,

* termination of a confirmed plan by reason of the occurrence of a condition specified in the plan,

* continuing loss to or diminution of the estate, absent a reasonable likelihood or rehabilitation, or

* fraud in connection with the case.

Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.