Section 10.7 Conversion or Dismissal

• Library: Bankruptcy Practice (2007 Ed. + 2015 Cum Supp)

F. (§10.7) Conversion or Dismissal

The Chapter 12 debtor may voluntarily convert to a Chapter 7 proceeding at any time. 11 U.S.C. § 1208(a). Fraud in connection with the case is the only ground on which a creditor may pursue an involuntary conversion. Section 1208(d). Additionally, the Chapter 12 debtor may request and receive a dismissal of the Chapter 12 case, unless the case has been previously converted to a case under either Chapter 7 or Chapter 11.

Note: The Chapter 7 and Chapter 11 sections have been amended to permit voluntary conversion by the debtor to Chapter 12. 11 U.S.C. §§ 1112(d) and 706(c).

In some situations, a Chapter 12 creditor may make a case of debtor fraud under § 1208(d), but the debtor moves for dismissal under § 1208(b) before the court enters an order. Despite the apparent mandatory language of § 1208(b), In re Graven, 101 B.R. 109 (Bankr. W.D. Mo. 1989) (Koger, B.J.), aff’d, 936 F.2d 378 (8^th Cir. 1991), refused to allow a dishonest debtor to dismiss the Chapter 12 case and converted the proceeding to a Chapter 7 case over the debtor’s objection. The Gravens were equally unsuccessful in their second attempt. See In re Graven, 196 B.R. 506 (Bankr. W.D. Mo. 1996); see also In re Reed, No. 89-60427-S-12 (Bankr. W.D. Mo. July...