In re Dobson (Case No. 23-60148) 05/17/2023
The debtors filed a joint chapter 11 petition and elected to proceed under subchapter V of chapter 11. An affiliate of one of the debtors filed a chapter 7 bankruptcy petition on the day after the debtors filed their chapter 11 petition. Subsequently, the U.S. Trustee objected to the subchapter V election. According to the U.S. Trustee, because the debts of the affiliate debtor when combined with the debtors’ debts exceeded the statutory maximum under section 1182, the debtors were made ineligible to proceed as subchapter V debtors due to the filing of the affiliate. The debtors disagreed, arguing that the eligibility determination is limited to the petition date. The Court overruled the U.S. Trustee’s objection, finding that the debtors had made a correct statement when they elected subchapter V on their petition and concluding that the debtors had established eligibility to proceed under subchapter V.