L1 to H1 conversion question

[happyanu]

I am currently on an L1-B visa in US. My visa expired in Nov 2011 but my I-94 is valid till 31 May 2012.

1. If I apply for L1 to H1 conversion in April 2012 in premium processing and if I get my H1 approved before May 2012, can i continue to stay in US till the H1 visa start date applies (Oct 2012) ?

2. If my H1 visa is not approved before May 2012 I will have to leave the country. In that case what happens to my H1 application?

[kabkaba]

Since your current status (I-94) does not extend up to Oct 1, it is highly unlikely that H1 petition will be approved with change of status (no new I-94). Therefore you cannot continuously stay in the US or work after your current L1 I-94 expires.
Your employer will either have to file L1 extension which will extend your I-94 beyond Oct 1 and then file H1 change of status, so that your status is continuous without gap or you will have to leave the US and return with an H1 Visa to work in H1 status from Oct 1.