Legal Memorandum: Chapter 11 Reorganization Plan

Issue: What are the necessary components to obtain judicial confirmation of a Chapter 11 reorganization plan?

Area of Law: Bankruptcy & Creditors Rights
Keywords: Chapter 11 reorganization plan; Judicial confirmation; Statutory requirements
Jurisdiction: Federal
Cited Cases: 7 F.3d 127; 968 F.2d 647
Cited Statutes: 11 U.S.C. §§ 301, 501-511, 1121; 11 U.S.C. § 1129(a); 11 U.S.C. § 1111(b)(2); 11 U.S.C. § 1122(b); 11 U.S.C. § 1114; 11 U.S.C. § 1325(b)(2); 11 U.S.C. § 1115; 11 U.S.C. § 1129(b)(2); 11 U.S.C. § 1126(c); 11 U.S.C. § 1122(a); 11 U.S.C. § 1129(a)(10)
Date: 04/01/2012

Generally, the details of a Chapter 11 case are considerably complex.  A rudimentary review of its procedural requirements involves the filing of a petition, the allowance of creditors’ claims, and the proposal of a reorganization plan to the court for confirmation.  See generally 11 U.S.C. §§ 301, 501-511, 1121.*FN1  The Bankruptcy Code allows for two mechanisms for confirmation of a Chapter 11 reorganization plan.  First, the plan may be confirmed if accepted by all classes of creditors and certain statutory conditions have been satisfied.  Id. § 1129(a).  If not accepted by all classes, the debtor may nonetheless obtain confirmation by Chapter 11’s cram down provisions.  Id. § 1129(b).

Under 11 U.S.C. § 1129(a), a party must meet numerous statutory requirements to obtain judicial confirmation of its plan.  Section 1129(a) allows a court to confirm a plan only if:

(1)        The plan complies with the applicable provisions of this title.

(2)        The proponent of the plan complies with the applicable provisions of this title.

(3)        The plan has been proposed in good faith and not by any means forbidden by law.

(4)        Any payment made or to be made by the proponent, by the debtor, or by a person issuing securities or acquiring property under the plan, for services or for costs and expenses in or in connection with the case, or in connection with the plan and incident to the case, has been approved by, or is […]


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