1. Chapter Eight. Conversion and Dismissal After reading this chapter, you will be able to: Define the concept of conversion Describe how a bankruptcy proceeding may be dismissed Describe the procedure to convert or dismiss a proceeding and to define the effect of the conversion or dismissal of a Bankruptcy proceeding upon the debtor’s financial affairs.

2. Conversion Conversion means that a Chapter 7 is changed to a Chapter 11 or vice versa. Commonly, a Chapter 13 or Chapter 11 reorganization that has failed is converted to a Chapter 7 liquidation.

3. Practice Pointer It is important to understand the distinction between a ‘‘discharge,’’ which relieves the debtor of his/her personal liability and a ‘‘dismissal,’’ which returns the debtor back in his/her prepetition position and reinstates all of his/her prepetition debts and obligations.

4. Rules on Conversion Type of Application ApplicantMotion Required Notice Required Code Section Convert 7 to 11, 12, or 13 DebtorYes, FRP 1017(F)(2); 9013 Service by debtor; conversion order served by clerk FRBP 2002(f) 700(a) Convert 7 to 11Any party in interest Yes, FRBP 901421 days notice by clerk FRBP 2002 (a)(4) 706(b) Convert 11 to 7DebtorYes, FRBP 1017(f)(2), 9013 21 days notice by clerk FRBP 2002(a)(4) 1112(a) Convert 11 to 7Any party in interest Yes, FRBP 901421 days notice by clerk FRBP 2002 (a)(4) 1112(b) Convert 11 to 7USTYes, FRBP 901421 days notice by clerk FRBP 2002 (a)(4) 1112(c)

5. Rules on Conversion Type of Application ApplicantMotion Required Notice Required Code Section Convert 11 to 12 or 13 DebtorYes, FRBP 901421 days notice by clerk FRBP 2002 (a)(4) 1112(d) Convert 13 to 7DebtorNo, FRBP 1017(f)(3) Conversion notice served by clerk on UST FRBP 1017 (f)(5) 1307(a) Convert 13 to 7Any party in interest or UST Yes, FRBP 9014No, conversion notice served by clerk on UST FRBP 1017(f)(3) 1307(c) or 1307(e) for failure to file tax returns Convert 13 to 11 or 12 Any party in interest or UST Yes, FRBP 901421 days notice by clerk FRBP 2002 (a)(4) 1307(d)

6. Dismissal A dismissal will terminate a bankruptcy proceeding and render the proceeding ineffective.

7. Rules on Dismissals Type of Application ApplicantMotion Required Notice RequiredCode Section Dismiss 7Any party in interest Yes, FRBP 901421 days notice by clerk FRBP 2002(a)(4), expect for failure to pay filing fee or file schedules or for substantial abuse 707(a) Dismiss 7 for abuse UST or courtYes. FRBP 9014 Within 60 days of 341 meeting FRBP 1017(e)(1) Service by UST or court on debtor, trustee & UST FRBP 1017(e); dismissal notice served by clerk FRBP 2002(f) 707(b) Dismiss 11Any party in interest Yes. FRBP 901421 days notice by clerk FRBP 2002(a)(4) 1112(b)

8. Rules on Dismissals Type of Application ApplicantMotion Required Notice RequiredCode Section Dismiss 13 if no prior conversion DebtorYes, FRBP 1017(f)(2); 9013 Service by debtor; dismissal notice served by clerk FRBP 2002(f) 1307(b) Dismiss 13 for failure to file tax return Any party in interest or UST Yes, FRBP 901421 days notice by clerk FRBP 2002(a)(4) 1307(e) Dismiss for failure to file schedules (all chapters) UST or courtYes, FRBP 9014UST to serve debtor & trustee in Ch. 7 & 13 FRBP 1017©; 21 days notice by clerk for Ch. 11 FRBP 2002(a)(4) 707(a)(3) 1112(e) 1307(c)(9) Dismiss for nonpayment of fees Court for filing fees/clerk’s fees Party in interest or UST for Ch. 11 & 13 No for court Yes for party in interest FRBP 9014 Court fees—notice goes to trustee & debtor FRBP 1017(b) Ch. 11 UST quarterly fees—21 days notice by clerk FRBP 2002 (a)(4) 707(a)(2) 1112(b)(4) 1307(c)(2)