11 U.S.C. § 1111 — Claims and interests

Page 249 TITLE 11—BANKRUPTCY § 1112 ‘‘SEC. 2. TREATMENT OF AIRCRAFT EQUIPMENT SETTLEMENT LEASES WITH THE PENSION BENEFIT GUARANTY CORPORATION. ‘‘In the case of any settlement of liability under title IV of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1301 et seq.] entered into by the Pension Benefit Guaranty Corporation and one or more other parties, if— ‘‘(1) such settlement was entered into before, on, or after the date of the enactment of this Act [Mar. 17, 1993], ‘‘(2) at least one party to such settlement was a debtor under title 11 of the United States Code, and ‘‘(3) an agreement that is entered into as part of such settlement provides that such agreement is to be treated as a lease, then such agreement shall be treated as a lease for pur- poses of section 1110 of such title 11.’’ § 1111. Claims and interests (a) A proof of claim or interest is deemed filed under section 501 of this title for any claim or interest that appears in the schedules filed under section 521(a)(1) or 1106(a)(2) of this title, except a claim or interest that is scheduled as disputed, contingent, or unliquidated. (b)(1)(A) A claim secured by a lien on property of the estate shall be allowed or disallowed under section 502 of this title the same as if the holder of such claim had recourse against the debtor on account of such claim, whether or not such holder has such recourse, unless— (i) the class of which such claim is a part elects, by at least two-thirds in amount and more than half in number of allowed claims of such class, application of paragraph (2) of this subsection; or (ii) such holder does not have such recourse and such property is sold under section 363 of this title or is to be sold under the plan. (B) A class of claims may not elect application of paragraph (2) of this subsection if— (i) the interest on account of such claims of the holders of such claims in such property is of inconsequential value; or (ii) the holder of a claim of such class has re- course against the debtor on account of such claim and such property is sold under section 363 of this title or is to be sold under the plan. (2) If such an election is made, then notwith- standing section 506(a) of this title, such claim is a secured claim to the extent that such claim is allowed. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2630; Pub. L. 111–327, § 2(a)(32), Dec. 22, 2010, 124 Stat. 3561.) HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS A discussion of section 1111(b) of the House amend- ment is best considered in the context of confirmation and will therefore, be discussed in connection with sec- tion 1129. SENATE REPORT NO. 95–989 This section dispenses with the need for every cred- itor and equity security holder to file a proof of claim or interest in a reorganization case. Usually the debt- or’s schedules are accurate enough that they will suf- fice to determine the claims or interests allowable in the case. Thus, the section specifies that any claim or interest included on the debtor’s schedules is deemed filed under section 501. This does not apply to claims or interests that are scheduled as disputed, contingent, or unliquidated. Editorial Notes AMENDMENTS 2010—Subsec. (a). Pub. L. 111–327 substituted ‘‘521(a)(1)’’ for ‘‘521(1)’’. § 1112. Conversion or dismissal (a) The debtor may convert a case under this chapter to a case under chapter 7 of this title unless— (1) the debtor is not a debtor in possession; (2) the case originally was commenced as an involuntary case under this chapter; or (3) the case was converted to a case under this chapter other than on the debtor’s re- quest. (b)(1) Except as provided in paragraph (2) and subsection (c), on request of a party in interest, and after notice and a hearing, the court shall convert a case under this chapter to a case under chapter 7 or dismiss a case under this chapter, whichever is in the best interests of creditors and the estate, for cause unless the court determines that the appointment under section 1104(a) of a trustee or an examiner is in the best interests of creditors and the estate. (2) The court may not convert a case under this chapter to a case under chapter 7 or dismiss a case under this chapter if the court finds and specifically identifies unusual circumstances es- tablishing that converting or dismissing the case is not in the best interests of creditors and the estate, and the debtor or any other party in interest establishes that— (A) there is a reasonable likelihood that a plan will be confirmed within the timeframes established in sections 1121(e) and 1129(e) of this title, or if such sections do not apply, within a reasonable period of time; and (B) the grounds for converting or dismissing the case include an act or omission of the debtor other than under paragraph (4)(A)— (i) for which there exists a reasonable jus- tification for the act or omission; and (ii) that will be cured within a reasonable period of time fixed by the court. (3) The court shall commence the hearing on a motion under this subsection not later than 30 days after filing of the motion, and shall decide the motion not later than 15 days after com- mencement of such hearing, unless the movant expressly consents to a continuance for a spe- cific period of time or compelling circumstances prevent the court from meeting the time limits established by this paragraph. (4) For purposes of this subsection, the term ‘‘cause’’ includes— (A) substantial or continuing loss to or dimi- nution of the estate and the absence of a rea- sonable likelihood of rehabilitation; (B) gross mismanagement of the estate; (C) failure to maintain appropriate insur- ance that poses a risk to the estate or to the public; (D) unauthorized use of cash collateral sub- stantially harmful to 1 or more creditors; (E) failure to comply with an order of the court;