Chapter 11 plan of reorganization
A Sacramento bankruptcy lawyer answers a question on the specific components when filing a Chapter 11 bankruptcy plan of reorganization?
What are the specific components of a Chapter 11 plan of reorganization?
All bankruptcy law follows the same federal guidelines which are set forth in Title 11 of the United States Bankruptcy Code. A Chapter 11 bankruptcy is no different. The first and foremost requirement in a Chapter 11 plan of reorganization is what is known as ‘classification.’ All debts, secured and unsecured, must be given a label and all similar debts are clumped together to make the payments on secured and unsecured debts easier for the Trustee and the company.
A plan of reorganization must also identify those classes which are impaired. An impaired class is one which is adversely affected by the filing of the bankruptcy. An example of a class that is not impaired would be one where the terms of a contract between the creditor and debtor remain completely unaltered in the plan of reorganization. A class that is not impaired is presumed to have accepted the plan of reorganization.
Lastly, the plan of reorganization must provide a method in which the plan will be implemented, including prohibiting non-voting stock from being issued and a provision for office and director selection consistent with the interests of the creditors.
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