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Section 706 of the bankruptcy code

section 706 of the bankruptcy code

in the case of items described in section (d)(3) of such Code (as added by subsection (a)), to amounts paid or accrued by the other partnership after March 31, The explicit reference in title 11 forbidding the waiver of certain rights is not intended to imply that other rights, such as the right to file a voluntary bankruptcy case under section , may be waived. Section of the House amendment adopts a similar provision contained in H.R. as passed by the House. (h) “ Judgment debtor ” includes a person from whom the state is seeking to collect a tax liability under Article 4 (commencing with Section ), whether . section 706 of the bankruptcy code

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In In re Finney, the Fourth Circuit Court of Appeals reviewed on appeal the decisions of the bankruptcy court and district court below. See In re Finney, F. Thus, the Starkey court concluded that the phrase "at any time" does not mean "regardless of circumstances" but rather means "at any stage. Courts generally grant a debtor a one-time absolute right to convert, even when the debtor has been recalcitrant or acted fraudulently.

See In re Bowman, B. Citing In re Finney, F. Ohio See Stegall v. Likewise, in In re Porras, B. As the Fourth Circuit in In re Finney noted, although a debtor may have the right to convert his case from chapter 7, he does not necessarily have the subsequent right to remain in chapter See, also, In re McNallen, B.

In determining whether reconversion from chapter 11 to chapter 7 is proper, courts generally apply a two-pronged test. Specifically, the party moving for reconversion must show subjective bad faith on the part of the debtor as well as objective futility as to reorganization.

See 11 U. The only real difference is that in jurisdictions where the courts apply a literal interpretation, an injured party must wait until the case is converted and file a motion to reconvert unless the court reconverts the matter sua sponte. As one bankruptcy court has noted, "to permit a conversion from chapter 7 to chapter 11 in circumstances where cause existed to immediately reconvert to chapter 7 or dismiss would be a futile and wasted act. Reprint Request.

Skip to main content. The policy of the provision is that the debtor should always be given the opportunity to repay his debts, and a waiver of the right to convert a case is unenforceable. Subsection b permits the court, on request of a party in interest and after notice and a hearing, to convert the case to chapter 11 at any time.

The decision whether to convert is left in the sound discretion of the court, based on what will most inure to the benefit of all parties in interest. Subsection d reinforces section by prohibiting conversion to a chapter unless the debtor is eligible to be a debtor under that chapter.

Amendment by Pub. Please help us improve our site! No thank you. LII U. Code Title Code Notes prev next.

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