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The right of conversion may not be waived before or during a pending
case. Filing bankruptcy under Chapter 11 initiates many corporate cases,
yet for companies in Chapter 11, once collecting all available assets,
conversions to Chapter 7 often make more sense. For small business
companies in Chapter 11, the cost of attorney fees alone may require
subsequent conversion.
Most companies in Chapter 11 struggled for years before filing
bankruptcy. And inevitably, Chapter 11 seldom solves the real cause of
declining profits. Avoiding contracts, setting aside judgments, and the
ability to discharge debts all become moot when liquidating. In Chapter
7, the means testing requirement does not apply to corporations or
partnerships, while the administration of a Chapter 7 case may take as little
as 4 months.
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