11 U.S.C. § 706 — Conversion

Page 194 TITLE 11—BANKRUPTCY § 706 trustee’s duties, and submit to the court or the United States trustee any question affecting the administration of the estate. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2605; Pub. L. 99–554, title II, § 218, Oct. 27, 1986, 100 Stat. 3100.) HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 705(a) of the House amendment adopts a pro- vision contained in the Senate amendment that limits a committee of creditors to not more than 11; the House bill contained no maximum limitation. SENATE REPORT NO. 95–989 This section is derived from section 44b of the Bank- ruptcy Act [section 72(b) of former title 11] without substantial change. It permits election by general unse- cured creditors of a committee of not fewer than 3 members and not more than 11 members to consult with the trustee in connection with the administration of the estate, to make recommendations to the trustee respecting the performance of his duties, and to submit to the court any question affecting the administration of the estate. There is no provision for compensation or reimbursement of its counsel. Editorial Notes AMENDMENTS 1986—Subsec. (b). Pub. L. 99–554 inserted ‘‘or the United States trustee’’ in three places. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1986 AMENDMENT Effective date and applicability of amendment by Pub. L. 99–554 dependent upon the judicial district in- volved, see section 302(d), (e) of Pub. L. 99–554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure. § 706. Conversion (a) The debtor may convert a case under this chapter to a case under chapter 11, 12, or 13 of this title at any time, if the case has not been converted under section 1112, 1208, or 1307 of this title. Any waiver of the right to convert a case under this subsection is unenforceable. (b) On request of a party in interest and after notice and a hearing, the court may convert a case under this chapter to a case under chapter 11 of this title at any time. (c) The court may not convert a case under this chapter to a case under chapter 12 or 13 of this title unless the debtor requests or consents to such conversion. (d) Notwithstanding any other provision of this section, a case may not be converted to a case under another chapter of this title unless the debtor may be a debtor under such chapter. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2606; Pub. L. 99–554, title II, § 257(q), Oct. 27, 1986, 100 Stat. 3115; Pub. L. 103–394, title V, § 501(d)(22), Oct. 22, 1994, 108 Stat. 4146; Pub. L. 109–8, title I, § 101, Apr. 20, 2005, 119 Stat. 27.) HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 706(a) of the House amendment adopts a pro- vision contained in the Senate amendment indicating that a waiver of the right to convert a case under sec- tion 706(a) is unenforceable. The explicit reference in title 11 forbidding the waiver of certain rights is not in- tended to imply that other rights, such as the right to file a voluntary bankruptcy case under section 301, may be waived. Section 706 of the House amendment adopts a similar provision contained in H.R. 8200 as passed by the House. Competing proposals contained in section 706(c) and section 706(d) of the Senate amendment are rejected. SENATE REPORT NO. 95–989 Subsection (a) of this section gives the debtor the one-time absolute right of conversion of a liquidation case to a reorganization or individual repayment plan case. If the case has already once been converted from chapter 11 or 13 to chapter 7, then the debtor does not have that right. 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 con- vert 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 (c) is part of the prohibition against in- voluntary chapter 13 cases, and prohibits the court from converting a case to chapter 13 without the debt- or’s consent. Subsection (d) reinforces section 109 by prohibiting conversion to a chapter unless the debtor is eligible to be a debtor under that chapter. Editorial Notes AMENDMENTS 2005—Subsec. (c). Pub. L. 109–8 inserted ‘‘or consents to’’ after ‘‘requests’’. 1994—Subsec. (a). Pub. L. 103–394 substituted ‘‘1208, or 1307’’ for ‘‘1307, or 1208’’. 1986—Subsec. (a). Pub. L. 99–554, § 257(q)(1), inserted references to chapter 12 and section 1208 of this title. Subsec. (c). Pub. L. 99–554, § 257(q)(2), inserted ref- erence to chapter 12. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109–8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109–8, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1994 AMENDMENT Amendment by Pub. L. 103–394 effective Oct. 22, 1994, and not applicable with respect to cases commenced under this title before Oct. 22, 1994, see section 702 of Pub. L. 103–394, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1986 AMENDMENT Amendment by Pub. L. 99–554 effective 30 days after Oct. 27, 1986, but not applicable to cases commenced under this title before that date, see section 302(a), (c)(1) of Pub. L. 99–554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure. § 707. Dismissal of a case or conversion to a case under chapter 11 or 13 (a) The court may dismiss a case under this chapter only after notice and a hearing and only for cause, including— (1) unreasonable delay by the debtor that is prejudicial to creditors; (2) nonpayment of any fees or charges re- quired under chapter 123 of title 28; and