Legal Memorandum: Modification of a Reorganization Plan

Issue: Whether the proponent of a plan of reorganization may modify the plan after confirmation.

The proponent of a plan of reorganization may modify the plan at any time before confirmation, but may the plan as modified must still meet the requirements of 11 U.S.C. §§ 1122 (regarding classification of claims) and 1123 (regarding contents of plan) of Title 11.  11 U.S.C. § 1127(a).  The proponent of a plan (or the reorganized debtor) may also modify the plan at any time after confirmation but before substantial consummation of the plan, but again the plan must still meet the requirements of §§ 1122 and 1123.  11 U.S.C. § 1127(b).  The  plan as modified becomes the actual plan only if circumstances warrant the modification and the court, after notice and a hearing, confirms the plan as modified under § 1129, as discussed in the primer.  Id. 

The proponent of a modification must comply with § 1125, with respect to soliciting acceptances of the plan as modified. 11 U.S.C. § 1127(c).  In a small business case, acceptances and rejections of a plan may be solicited based on a conditionally approved disclosure statement, if the debtor provides adequate information to each holder of a claim or interest that is solicited, but a conditionally approved disclosure statement must be mailed not later than 25 days before the date of the hearing on confirmation of the plan.  11 U.S.C. § 1125(f)(3)(B).  The hearing on the disclosure statement may be combined with the hearing on the confirmation of a plan.   Id. 

Any holder of a claim or interest that has accepted […]