Can a Chapter 11 case convert to Chapter 7?

Yes, if a Chapter 11 reorganization proves unworkable, the case can be converted to Chapter 7 liquidation. This conversion changes the debtor-in-possession to a trustee, terminates the debtor's control over assets, and accelerates the liquidation timeline. Buyers tracking a Chapter 11 commercial real estate case should monitor for conversion motions as a signal of accelerated disposition.

Are personal guarantees eliminated in bankruptcy?

Chapter 7 bankruptcy by an individual eliminates most personal guarantees through the discharge. Chapter 11 business bankruptcy does not automatically discharge personal guarantees, the guarantor must separately file or negotiate a release. This distinction is important for evaluating the true economic position of a commercial real estate borrower in bankruptcy.

What is a "prepackaged" Chapter 11 and how does it affect buyers?

A prepackaged Chapter 11 is a bankruptcy filed with a confirmed plan already negotiated with major creditors before filing. These cases are faster (sometimes resolving in 30-45 days) and more efficient because the debtor and creditors are aligned on the outcome before the court gets involved. For buyers, a prepackaged case may move too fast to identify and engage before the plan is confirmed, early sourcing and existing relationships are critical.

Can a Chapter 7 trustee sell a commercial property subject to existing tenant leases?

Generally yes, tenant leases survive the Chapter 7 filing as executory contracts that the trustee must assume or reject. If the trustee assumes the leases, they become obligations of the estate that pass to the buyer. If the trustee rejects the leases, tenants' damages become unsecured claims against the estate, but buyers acquire the property without those lease obligations (subject to residential tenant protections that vary by state).

How do I find Chapter 7 commercial real estate cases?

PACER (the federal courts' electronic filing system) provides access to all Chapter 7 cases filed in federal bankruptcy courts nationwide. Search by debtor type (commercial entities) and filter by case district and filing date. CourtLink also aggregates bankruptcy filings with commercial real estate asset connections. Active monitoring of your target markets' bankruptcy courts produces a consistent flow of Chapter 7 commercial opportunities.

Chapter 11 vs Chapter 7 Commercial Real Estate