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[quote=Anonymous]I don’t practice in the bankruptcy field, but I have a friend who has some experience with it. I wrote to her “In Ch 11 bankruptcy proceedings, what does it mean when the Trustee has filed a motion to dismiss the case or convert to Ch 7? I understand the conversion to Ch 7 piece but not the motion to dismiss the case piece. How can it be one or the other? Seems like a big disconnect.”

She replied:

“Conversion means the intent is liquidation rather than reorganization. Control passes to chapter 7 trustee whose responsibility is to gather assets and then distribute them pro rata to creditors. If the trustee is moving to dismiss the case all together, then that means that the debtor was a bad boy, and if the case is dismissed then creditors can proceed against the debtor because the stay is lifted. It could be that the trustee is making a move against the debtor, because the debtor is not doing chapter 11 in good faith. It sounds like a tactic to force a resolution, and to let the judge select whether to kick the debtor out of bankruptcy all together or to convert it to chapter 7. Sounds like the trustee is onto him. Neither solution is particularly for you, because it means either suing the owner along with everyone else, or getting pennies on the dollar in chapter 7.”[/quote]

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