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Can I withdraw or dismiss a chapter 11?

Tarrytown, NY |

I know that I can voluntarily withdraw or have dismissed a chapter 13. Can I do the same with a chapter 11? I am thinking of filing to prevent a foreclosure, but I am reasonably certain I will have enough money to settle down the road. Can I voluntarily discontinue a chapter 11 as I could with a 13? I am looking for a lawyer by the way, but like to do a lot of my own research on business matters. Thanks for any advice.

Attorney Answers 4


Yes and No. Unlike Chapter 13 which can be withdrawn or dismissed at any time, you need to make a motion and attend a hearing. The Judge will grant the request as long as there is not a pending investigation of your case by a creditor or the Unite States Trustee or as long as the creditors will not be harmed by the dismissal.

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I agree with Michael. Keep in mind that the lender may want you in bankruptcy because the process requires transparency into your financial life. If that's the case, you could have a more difficult time exiting.

As for a Chapter 13 v. Chapter 11, you're probably aware that a Chapter 11 is tremendously more expensive. If you don't have problems with the Chapter 13 debt limits, then make sure you consult with both a Chapter 13 and Chapter 11 lawyer before deciding on what chapter to file under. If Chapter 11 is the route, be prepared to pay a hefty retainer prior to the petition date.

Last thought is to try and negotiate with the bank pre-petition. If you file and force the lender to protect its position, it'll have to hire a lawyer and incur expenses, all of which will be tacked onto the loan balance post-dismissal.

This answer does not create an attorney-client relationship. This answer is not legal advice and must not be construed as such.

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I generally agree with Michael. Each jurisdiction has their own special nuances though, so you should retain a lawyer that can explain the process to you and advise you on whether you may be better suited to convert to another chapter.

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In a Chapter 11 you don't automatically have the right to voluntarily dismiss your case like you do in a Chapter 13. You can file a motion to dismiss but the Court will sua sponte (on it's own) do an analysis and decide if conversion to Chapter 7, keeping you in a Chapter 11, or dismissing your case is in the best interest of the creditor body. The applicable section of the bankruptcy code is 11 U.S.C. section 1112.

Recently, I had a case where we moved to dismiss an individual Chapter 11 Debtor on 2 different occasions. The Judge denied both of our motions because he felt that keeping the Debtor in a Chapter 11 was in the best interest of the creditor body - he thought that the oversight of the court and the creditors committee were necessary to protect creditors because he did not entirely trust my client and wanted to ensure that assets were not improperly transferred to the detriment of creditors.

I hope this perspective helps. Best of luck!

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