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Confirmation of Reorganization Plans In a bankruptcy case, the court confirms a Plan of Reorganization only if the following requirements are met: 1. The plan must comply with the applicable provisions of the Bankruptcy Code. 2. The proponent of the plan must comply with the requirements of the U.S. Bankruptcy Code relating to disclosure of relevant facts. 3. The plan must be proposed in good faith. 4. The payment or payments proposed to be made in connection with the Plan of Reorganization must be disclosed and deemed to be reasonable, appropriate and adequate. 5. The proponent of the Plan must disclose the identity and affiliation of those proposed to serve in an official capacity in the company after the Plan has been confirmed. 6. With respect to each class of pre petition claims in a reorganization bankruptcy, it is required that each class of creditor either (a) accept the Plan or (b) will receive payment of a value not less than they would have received if the debtor had liquidated. 7. Deferred cash payment with interest for certain priority claims (such as wages, salaries, and employee benefit plans) are permitted as long as the required number of participants in the class approves. 8. At least one class of creditors has accepted the Plan. This requirement is determined without including the claims of insiders. 9. Confirmation of the Plan is not likely to be followed by liquidation of the debtor company or the need for further reorganization of the debtor, unless specifically proposed in the plan. Effects of Confirmation A confirmed
plan binds the debtor and any pre petition creditor, regardless of whether
or not the creditor's claim is impaired or the creditor has accepted the
plan.
Reprinted with the permission of Credit Research Foundation. Edited
by Michael Dennis, author of "Credit and Collection Handbook"
available at the NACM
Bookstore. |
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