Chapter 11/13 Plan Objections

Objections to a Bankruptcy Plan

The success of a Chapter 11 or Chapter 13 reorganization depends upon the preparation of a feasible bankruptcy plan that will allow debtors to reorganize their business and financial affairs (partially) repay creditors before the U.S. Bankruptcy Court discharges the remaining unsecured debts. Creditors have the opportunity to lodge objections to bankruptcy plans during the plan disclosure and confirmation process, which is critical to asserting their rights to repayment and protection during the bankruptcy process. Upon confirmation by the court, the plan becomes final and definitive as to a creditor’s right of repayment of prepetition debts. Thomas H. Curran Associates’s lawyers have deep expertise and decades of experience analyzing and objecting to debtors’ reorganization plans.

In a Chapter 11 bankruptcy proceeding the business (and sometimes personal) debtor usually retains possession of the bankruptcy estate and draws up a plan that lays out the substantive rights of the debtor and its creditors. The bankruptcy plan often includes such things as more favorable financing terms, giving lenders priority in earnings, and the rejection or cancellation of pre-petition contracts, such as leases. The bankruptcy plan is sometimes drafted with the input of a committee of unsecured creditors formed by a bankruptcy trustee.

Any party with an interest in a Chapter 11 proceeding may object to the reorganization plan before the Bankruptcy Court judge has confirmed it. But, if the majority of one class of creditors representing two-thirds of the amount owed that class approves the bankruptcy plan, it will be confirmed over most objections. In certain limited circumstances, the court may modify the confirmed plan post-confirmation if the plan objection was filed prior to the plan’s implementation and the court finds it to be warranted after giving notice to the parties and conducting a hearing.

A Chapter 13 personal debtor must also file a plan with the Bankruptcy Court within 15 days of filing the bankruptcy petition. The plan should lay out his or her plan to repay creditors over the next three to five years. A bankruptcy trustee will organize a meeting of the creditors with the debtor that will be followed by a hearing before the Bankruptcy Court. At the hearing, the creditors will have the opportunity to ask questions and object to the plan.

Filing an objection to a plan in a Chapter 11 bankruptcy or Chapter 13 bankruptcy proceeding, or defending a plan from objecting creditors, involves satisfying a number of bankruptcy requirements during a short window of time. It requires of deep understanding of substantive and procedural provisions of the Code pertaining to disclosure and feasibility as well as long standing bankruptcy doctrines such as the “absolute priority rule.” The objection process is considered a “contested matter” under the Code, which implicates the discovery and evidentiary hearing processes that culminate in a bankruptcy “mini-trial.” Depending on the type of case, debtor, proposed plan and many other variables, objections can become highly adversarial and protracted. The skilled bankruptcy attorneys and bankruptcy litigators at Thomas H. Curran Associates have experience in both presenting and defending objections to Chapter 11 or Chapter 13 plans, including litigating the entire contested matter process. Our skilled attorneys will ensure the client’s interests are protected throughout the proceeding and that they achieve the best possible outcome.