A Chapter 11 debtor has a one-time absolute right to convert to Chapter 7 unless: the debtor is not a debtor in possession; the case originally was commenced as an involuntary Chapter 11; or the case was converted to a Chapter 11 at the request of a party other than the debtor. (11 USC 1112(a))
The debtor must file and serve a motion for conversion. (FRBP 1017(d); 9013) No hearing is required unless ordered by the court. (FRBP 1017) The court may convert a Chapter 11 to a Chapter 7 when it is in the best interest of creditors and the estate at the request of a party in interest or the United States trustee after a noticed hearing for cause. (11 USC 1112(b)) Additionally, the court may convert the case sua sponte by issuing an order to show cause against the debtor.
At the request of the U.S. trustee, a conversion or dismissal may occur upon failure of the debtor in a voluntary case to timely file a list containing the names, addresses and claim amounts of the holders of the 20 largest unsecured claims. (11 USC 1112(e))
The court may not convert a Chapter 11 to a Chapter 7 if the debtor is a corporation that is not a moneyed business or commercial corporation, unless requested by the debtor. (11 USC 1112(c)) The court may convert a Chapter 11 to Chapter 13 if requested by the debtor and the debtor has not been discharged. (11 USC 1112(d))