Daughtrey v. Rivera

The Eleventh Circuit affirmed the district court's decision affirming the bankruptcy court's denial of debtors' motion to convert their Chapter 7 case to a Chapter 11 proceeding and approving a compromise agreement between the trustee and a judgment creditor (72 Partners, LLC). The court held that the bankruptcy court properly denied the request to convert to Chapter 11 because cause existed to either dismiss the case or convert it back to a Chapter 7, based on substantial or continuing loss to or diminution of the estate and the absence of a reasonable likelihood of rehabilitation under 11 U.S.C. 1112(b)(4)(A). Furthermore, other section 1112(b)(4) causes for denying conversion to Chapter 11 existed, such as failure to comply with an order of the court, failure timely to provide information or attend meetings reasonably requested by the United States trustee, and inability to effectuate substantial consummation of a confirmed plan. Another cause not listed in the statute was debtors' lack of good faith. View "Daughtrey v. Rivera" on Justia Law