Winding Down a Business Is a Commercial or Business Activity for Purposes of Subchapter V Eligibility

Winding Down a Business Is a Commercial or Business Activity for Purposes of Subchapter V Eligibility

In In re Tracy Neal Robinson, Case No. 22-02414, the U.S. Trustee objected to the debtor’s eligibility for relief under Subchapter V of Chapter 11 of the Bankruptcy Code.

According to the trustee, the debtor did not comply with the requirement of being “engaged in commercial or business activities”, because the debtor’s poultry farm ceased operation more than a year before the petition was filed.

The U.S. Bankruptcy Court for the Southern District of Mississippi overruled the trustee’s objection. It concluded that the debtor’s winding down of the business, including management and maintenance of farm assets, as well as active sale of the farm, were commercial and business activities sufficient to establish eligibility under Subchapter V.