Case Summary:
The Court confirmed Schroeder Brothers Farms of Camp Douglas LLP's ("Debtor") Chapter 11 Plan. The Plan provided for appointment of a Liquidating Trustee in the event of the Debtor's failure to cure certain defaults. The Debtor defaulted and failed to cure. The Committee of Unsecured Creditors moved for appointment of a Liquidating Trustee. The Debtor objected and moved to convert to Chapter 12. The Debtor argued that absent conversion, sales of assets would give rise to substantial taxes and render the estate administratively insolvent. In addition, the Debtor stated it could elect to be taxed as a corporation to absolve the partnership of tax liability. The Court denied conversion because the Debtor was ineligible for Chapter 12 on the petition date. Postpetition events do not impact eligibility for Chapter 12. The Court granted the appointment of a Liquidating Trustee because the parties bargained for such rights during the confirmation process. Finally, the Court enjoined the Debtor from changing its tax treatment because doing so would benefit the Debtor's partners at the expense of the Debtor itself in violation of the absolute priority rule.

Statue/Rule References:
11 U.S.C. § 109(f) -- Eligibility for Chapter 12
11 U.S.C. § 1112 -- Conversion
11 U.S.C. § 1129(b)(2)(B) -- Absolute Priority Rule
26 U.S.C. § 701 -- Taxation of Partnership

Key Terms:
Absolute Priority Rule
Appointment of Trustee
Conversion
Partnership Taxation