Can A Subchapter V Election Be Revoked Without Debtor’s Consent? (USA Cricket)

Question: Can a bankruptcy court revoke a debtor’s Subchapter V election without debtor’s consent when debtor is statutorily eligible for Subchapter V relief?

Two recent opinions on that question from a single bankruptcy case (In re USA Cricket, Case No. 25-16381, Colorado Bankruptcy Court) say, “Yes”:

opinion dated December 15, 2025 (Doc. 125); and
opinion dated January 12, 2026 (Doc. 148).

The first opinion declines to revoke debtor’s Subchapter V election but warns debtor that such result might change. The second opinion (issued less than a month later) effectuates the revocation.

What follows is a summary of each opinion.

In re USA Cricket—First opinion

Debtor files its voluntary petition on October 1, 2025, electing to proceed under Subchapter V of Chapter 11.

–Motion

Creditor moves to have Debtor’s Subchapter V election revoked and a Chapter 11 Trustee appointed, because of gross mismanagement that includes:

Debtor’s CEO “furloughed himself”;
Debtor’s Board of Directors is deadlocked; and
Debtor is incapable of proposing a confirmable plan.

All active creditors in the case oppose dismissal of the case and oppose conversion to Chapter 7. The remedy they want, instead, is what’s requested in Creditor’s Motion: revocation of Debtor’s Subchapter V election and appointment of a Chapter 11 Trustee.

–Two Oppositions

There are two oppositions to Creditor’s motion:

U.S. Trustee argues that (i) revocation is not authorized by the Bankruptcy Code, and (ii) the Subchapter V election choice belongs exclusively to the Debtor; and
five of Debtor’s nine directors claim to be, (i) a clear majority of Debtor’s board, (ii) capable of making decisions, (iii) in favor of Debtor’s Subchapter V election, and (iv) opposed to appointment of a Chapter 11 trustee.

The Bankruptcy Judge expresses doubts about the capability of the five directors to act, because of:

Debtor’s failure to file a required status report before the Initial Subchapter V Status Conference;
Debtor’s counsel acknowledging the validity of concerns about board membership and a voting majority; and
Debtor’s counsel (along with the Subchapter V Trustee) expressing doubt about the truth of assertions by the five board members.

–Legal Standards

A bankruptcy court may appoint a trustee in standard Chapter 11 under § 1104. And § 1106 confers on such trustee a variety of powers, including the authority to file a plan of reorganization. However, neither § 1104 nor § 1106 applies in Subchapter V cases (see § 1181(a)).

So, the Court in this Subchapter V case cannot appoint a Chapter 11 trustee unless and until the Debtor’s Subchapter V election is revoked.

Under § 103(i), Subchapter V applies only when a debtor elects Subchapter V in the Petition. Once such an election is made, “[t]he case must proceed in accordance with the debtor’s statement, unless and until the court issues an order finding that the statement is incorrect” (Fed.R.Bankr.P. 1020(a)).

No provision in the Bankruptcy Code provides for conversion from a standard Chapter 11 to Subchapter V and vice versa. Instead, courts have held:

a debtor who starts in standard Chapter 11 may elect Subchapter V by amending the petition under Fed.R.Bankr.P. 1009; and
the same is true when a debtor starts in Subchapter V but is then found ineligible.

Few courts have addressed the relief Creditor requests in this case.

–Supporting Revocation

At least one court has directed revocation of a debtor’s Subchapter V election (In re National Small Business Alliance, Inc., 642 B.R. 345 (Bankr. D.D.C. 2022)), based on debtor’s (i) failure to propose a confirmable plan by the statutory 90-day deadline, and (ii) then proposing five different unconfirmable plans.

Such court declared the revocation to be consistent with both (i) Bankruptcy Code language (pointing to § 105(a) and conversion rights in standard Chapter 11), and (ii) Congress’s goal of making Subchapter V a streamlined process.

Other courts have declined to rule one way or the other, while generally agreeing that revocation might be appropriate in “a few, narrow circumstances.”

–Rejecting Revocation

Another court, by contrast, identifies the following impediments to a forced revocation of debtor’s Subchapter V election:

§ 103(i) provides that the decision to proceed under Subchapter V rests within the exclusive discretion of the debtor;
Fed.R.Bankr.P. 1020 can be read to imply that the debtor’s Subchapter V election is controlling, unless and until the court determines that debtor is statutorily ineligible; and
using Fed.R.Bankr.P. 1009 to compel an unwilling debtor to revoke its Subchapter V election could enable creditors to circumvent the conversion standards in other chapters.[Fn. 1]

In such case, the court:

decides upon alternative relief of (i) removing debtor as debtor-in-possession, and (ii) expanding the powers of the Subchapter V trustee; and
notes that any authority to override a debtor’s Subchapter V election should be exercised only as “a last resort, where no other mechanism is available to achieve the objectives of chapter 11.”

–Ruling

In the first USA Cricket opinion, the Court rules:

the revocation question turns on whether Debtor might be able to reorganize under Subchapter V—which is a close call here;
since standards for revocation “are high,” the question will be deferred until a later time to see how debtor performs; and
the alternative relief of removing debtor from possession and expanding the Subchapter V trustee’s powers is problematic because (i) only the debtor may file a Subchapter V plan, and (ii) active creditors in this case oppose such relief.

So, the Bankruptcy Court orders Debtor to “file its Subchapter V plan of reorganization on or before December 30, 2025.”

In re USA Cricket—Second Opinion

The USA Cricket Debtor fails, of course, to file a plan by the December 30, 2025, deadline.

So, Creditor renews its motion for (i) revocation of Debtor’s Subchapter V election, and (ii) appointment of a trustee under § 1104. This time, such motion:

is supported by four of Debtor’s board members;
is not opposed by the other five board members; but
is still opposed by the U.S. Trustee on the same grounds as before—i.e., lack of authority to grant such relief.

The Bankruptcy Court conducts a non-evidentiary hearing, at which (i) no dispute arises over the inability of Debtor’s management to reorganize under Subchapter V, and (ii) all parties in attendance agree that a decision can be made without an evidentiary hearing because no fact dispute exists.

So, the Court grants both items of the requested relief: (i) revocation of the Subchapter V election, and (ii) appointment of a trustee under § 1104.

Conclusion

That’s fascinating!

But is it correct? Or should the U.S. Trustee’s lack-of-authority position prevail?

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Footnote 1: The opinion is In re ComedyMX, LLC, 647 B.R. 457 (Bankr. D. Del. 2022).

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