In re Sullivan, Case No. 20-11876 EEB

Individual debtor who had elected to proceed under subchapter V of chapter 11 sought confirmation of his proposed plan over the objections of his ex-wife and the U.S. Trustee. The Court held that the Debtor did not qualify for subchapter V because he did not demonstrate that at least half of his debts were business debts, as required by the definition for a “small business debtor” in 11 U.S.C. § 101(51D). The Court rejected the Debtor’s argument that a property settlement debt he owed to his ex-wife constituted a business debt because it compensated the ex-wife for the value of his business. The Court further held that the plan could not be confirmed and that the ex-wife’s request for conversion should be granted because the Debtor was not current on all his postpetition domestic support obligations. Although the Court recognized that the Debtor’s financial situation had changed significantly due the COVID-19 pandemic and that the Debtor had sought a modification of his support obligations in state court, those facts did not alter the Code’s clear mandate that a Debtor be current on all postpetition support obligations to avail himself of the protections of chapter 11.