Body Transit, Inc. D/B/A Rascals Fitness, 613 B.R. 400

Body Transit, Inc. (Debtor) filed a voluntary Chapter 11 petition on Jan. 2, 2020 and designated itself a "small business debtor." The SBRA (subchapter V) became effective Feb. 19, 2020.
Debtor amended its petition on Feb. 19, 2020 to elect subchapter V and filed a motion (Mar. 2) asking the court to permit the belated election.
Debtor had operational distress: two of three gym locations were closed or sold, stay relief granted at one location, stay-relief motion pending at the last location, and limited estate assets; First Bank claims >$1.1M secured.
First Bank objected, arguing the SBRA should not be applied retroactively to a case filed before the effective date and that subchapter V’s trustee (with limited powers) would prejudice creditors and interfere with First Bank’s request for a §1104 trustee.
The court held an expedited contested matter; factual disputes (e.g., Debtor’s post-petition conduct) were noted but the primary legal question was whether a pending case may amend its petition to elect subchapter V and what standard governs objections.

Issue	Debtor's Argument	First Bank's Argument	Held
May a Chapter 11 case pending on the SBRA effective date amend its petition to elect subchapter V?	Rule 1009 permits amendment of a petition; courts should apply the law in effect when deciding the issue.	Presumption against retroactive statutes; applying SBRA to pre-effective cases would impair creditor rights.	Yes. Court permits amendment under Rule 1009 and applies SBRA unless vested rights would be impaired.
What standard governs an objection to a belated subchapter V election?	No prejudice here; Debtor can comply with SBRA procedural requirements (IDI, status conference, plan deadline).	Objector need show prejudice from trustee-power limits and post-petition failures.	Adoption of a prejudice/bad-faith standard: amendment may be denied if made in bad faith or if it unduly prejudices parties (consider vested rights, investments, orders entered).
Has First Bank shown undue prejudice that requires denying the subchapter V election or appointing a §1104 trustee?	Debtor: appointment of a §1104 trustee is unlikely to help; subchapter V is appropriate given estate facts.	First Bank: Debtor’s post-petition failures and need for a fully empowered trustee justify denying subchapter V election.	No. First Bank did not meet its burden to show material prejudice; court overruled objection and allowed subchapter V election.

Landgraf v. USI Film Prods., 511 U.S. 244 (1994) (governs retroactivity analysis and framework).
United States v. Sec. Indus. Bank, 459 U.S. 70 (1982) (retroactivity and vested rights principle).
Law v. Siegel, 571 U.S. 415 (2014) (limits on equitable powers when statutory rights exist).
Wyatt v. Virgin Islands, 385 F.3d 801 (3d Cir. 2004) (no advisory opinion; live controversy requirement).
In re Romano, 378 B.R. 454 (Bankr. E.D. Pa. 2007) (Rule 1009 amendment may be limited for bad faith or prejudice).
In re Cudeyro, 213 B.R. 910 (Bankr. E.D. Pa. 1997) (same; precedent on limiting Rule 1009 amendments).