Chapter Twenty-three. Chapter 13: Reorganization Proceeding After reading this chapter, you will be able to: Describe a reorganization proceeding Understand the rationale of Chapter 13 List the grounds for conversion or dismissal or reorganization proceedings Know the necessary documents and their filing deadlines in Chapter 13 proceedings Understand the elements of a Chapter 13 plan Describe the procedures for confirming and performing a Chapter 13 plan Understand the difference between Chapter 13 and Chapter 7 discharges

Documents and Deadlines in Chapter 13 DeadlineStatute PetitionAt filingBankruptcy Rule 1002 Credit CounselingCertificate at filing 11.U.S.C. §109(h) Statement of Financial Affairs, Schedules 15 daysBankruptcy Rule 1007(b)(2), (c) Chapter 13 Plan15 daysBankruptcy Rule 3015 Attorneys’ Fee StatementCreditors Meeting Bankruptcy Rule 2016 First Plan Payment30 days11 U.S.C. §1326 Adequate Protection Payments30 days11 U.S.C. §1326(a) Plan Performance: 1. Family Income < SMFI 2. Family Income => SMFI 3 years 5 years 11 U.S.C. §1322(d) File tax returns for last 4 yearsCreditor meeting11 U.S.C. §1308

Causes for Conversion or Dismissal Loss or Diminution—reorganization unlikely Failure to follow operating rules Unreasonable delay prejudicial to creditors Failure to propose a plan within court deadlines Failure to obtain confirmation of any plan Revocation of confirmation Inability to commence plan Material default in plan Occurrence of a condition state in plan Failure to pay court fees Failure to file Chapter 13 statement Failure to pay postpetition domestic support obligations Failure to file tax returns

Reorganization A reorganization is a bankruptcy proceeding where a debtor seeks confirmation of a plan that will repay creditors while permitting the debtor to retain assets or continue in business. The proceedings permitted by Chapters 9, 11, 12, and 13 of the Bankruptcy Code are reorganization proceedings.

Cramdown Cramdown is the act of obtaining confirmation of a reorganization plan over the objection of creditors. Different tests or procedures may be utilized to effectuate a cramdown on either secured or unsecured creditors.

Chapter Twenty-four. Chapter 11— Introduction and Administration After reading this chapter, you will be able to: Understand generally Chapter 11, the most complex type of bankruptcy proceeding Describe the basic documents filed in a Chapter 11 proceeding Identify the appropriate filing deadlines Understand the various activities which should or must be taken by a Chapter 11 debtor-in- possession within the first 60 days of filing List thhe operating report requirements of Chapter 11 proceedings

Chapter 11 Chapter 11 is the most complex, time- consuming, and expensive of all bankruptcy proceedings to prosecute. Although Chapter 11s constitute less than 1 percent of all bankruptcies filed, perhaps as much as 90 percent of all time expended by the Bankruptcy Court involves Chapter 11 proceedings.

D.I.P. Account/Cash Flow ALL INCOME Cash Collateral Account (if required) General Account Payroll Account Payroll Disbursements All Other DistributionsTax Account Tax Payments

Operating Reports A regular report of a Chapter 11 debtor-in- possession’s postpetition financial activity. Local rules will normally require the filing of monthly reports.

Chapter 11 Administration Documents and Deadlines Deadline—At Filing Petition and $ filing fee Corporate resolution of 1004 partnership authorization List of creditors, unless schedules filed at filing List of 20 largest unsecured claims Corporate debtor—Exhibit A to Voluntary Petition Individual debtor credit counseling certificate Small business debtor financial statements; tax returns

Chapter 11 Administration Documents and Deadlines Deadline—Within 15 Days of Filing List of equity security holders Statement of financial affairs Schedules of assets and liabilities Statement of executory contracts Debtor-in-possession bank accounts Attorney statement of compensation

Chapter 11 Administration Documents and Deadlines Deadline—Within 30 Days of Filing Applications to retain professionals Applications for insider compensation Commence operating reports File inventory if United States Trustee requires

Chapter 11 Administration Documents and Deadlines Deadline—Within 120 Days of Filing Assume nonresidential property leases

Operating Report Major Features Summary of receipts Itemization of disbursements Identification of bank accounts Reconciliation of bank balances List of accrued and unpaid postpetition debt List of accrued and uncollected postpetition accounts receivable

Chapter Twenty-five. Chapter 11: Elements of a Plan After reading this chapter, you will be able to: List the events and documents involved in the Chapter 11 plan confirmation process Describe the time limits relative to filing of a Chapter 11 plan, commonly known as the “exclusivity period” Understand the classification of claims within a Chapter 11 plan List the mandatory and permissive provisions which must or may be included in a Chapter 11 plan Understand the unique Chapter 11 concept of “impaired” claims

Plan of Reorganization Another name for reorganization plan A repayment plan prepared according to the requirements of Chapter 11 of the Bankruptcy Code

Exclusivity Period A period of time in a Chapter 11 proceeding when only the debtor-in-possession may file a reorganization plan. This period, as provided for in Section 1121 of the Bankruptcy Code, is the first 120 days from the entry of an order for relief. This period can be extended. The period terminates upon the appointment of a trustee.

Chapter 11 Confirmation Process ActionPrior Notice Required File a reorganization plan File a disclosure statement Disclosure statement hearing25 days Voting deadline setAt disclosure statement hearing Confirmation hearing25 days Report of BallotingPrior to confirmation hearing

Documents Submitted to Creditors for Confirmation Hearing Included in the confirmation packet: Plan or court-approved summary Disclosure statement and order approving same Notice of the balloting deadline Notice of confirmation hearing Ballot—Official Form 30

Mandatory Chapter 11 Plan Provisions Designate classes of claims and interests Specify unimpaired classes Specify treatment of impaired classes Provide equal treatment of claims in a given class Provide adequate means for the plan’s performance Corporate charter provision Disclose postconfirmation insiders Individual debtor earnings

Permissive Chapter 11 Plan Provisions Impair classes Assume or reject executory contracts not previously acted upon Provide for settlement of disputes Provide for liquidation of assets Modify creditor rights unless secured by principal residence Include any provision consistent with bankruptcy code

Chapter Twenty-six. Chapter 11: Plan Confirmation After reading this chapter, you will be able to: Identify and describe the disclosure statement requirement Understand the voting rules and procedures in Chapter 11 plan balloting List the conditions for confirmation of a Chapter 11 plan Describe the methodologies to cram down a Chapter 11 plan Describe how and when a Chapter 11 plan may be modified Define the Chapter 11 discharge

Disclosure Statement A document filed in a Chapter 11 proceeding that describes: a debtor-in-possession’s reorganization plan its effect upon the creditors the ability of the plan to be performed a comparison of the reorganization plan’s repayment proposal to the results likely to be obtained in a Chapter 7 proceeding for the same debtor. The creditors of a Chapter 11 debtor-in-possession may not vote for or against the reorganization plan until the court approves the contents of the disclosure statement in a disclosure statement hearing.

Cramdown The act of obtaining confirmation of a reorganization plan over the objection of creditors. Different tests or procedures may be utilized to effectuate a cramdown on either secured or unsecured creditors.

Disclosure Statement Contents Debtor’s prepetition history Disclosure of prepetition debt and assets Disclosure of future income projections Disclosure of any sale or refinancing details Disclosure of any other plan performance method Describe reorganization plan Disclose liquidation analysis Disclose postconfirmation management and compensation Disclose any pending litigation and evaluation of success Disclose insider transactions Disclose tax consequences of plan, if any

Chapter Twenty-seven. Reorganization Proceedings After reading this chapter, you will be able to: Describe Chapter 12 and the qualifications to become a Chapter 12 debtor Compare Chapter 12 to Chapters 13 and 11 Understand the unique features of Chapter 12 Describe the Chapter 12 plan and confirmation process

Chapter 12 Only a family farmer with regular income may be a Chapter 12 debtor. Chapter 12 seeks to provide a family farmer with the benefits of Chapter 13, the flexibility and control of Chapter 11, and a partial abrogation of the sometimes harsh effects of the “adequate protection” requirement in the special circumstances of a family farm. Chapter 12 gives a beleaguered family farmer a fighting chance to resolve economic problems and retain the family farm.

BAPCPA and Chapter 12 BAPCPA makes Chapter 12 permanent. Additionally, the legislation expands the scope of Chapter 12 to a family fisherman.

Unique Chapter 12 Features Existence of a trustee even thought he debtor is the equivalent of a debtor-in-possession. Special definition of adequate protection. Permits a sale free and clear of liens if the property sold is farmland, farm equipment or property used to carry out a commercial fishing operation

Chapter Twenty-eight. Introduction to Courts and Jurisdiction After reading this chapter, you will be able to: Describe bankruptcy jurisdiction Define the meaning of the terms “core” and “non-core” proceedings Define the meaning of the terms “arising under” or “related to” Understand how appeals are taken from a Bankruptcy Court decision to other courts

Bankruptcy Jurisdiction U.S. District Court 28 U.S.C §1334(a) U.S. Bankruptcy Court 28 U.S.C. §157(a) Core Proceedings “arising under” 28 U.S.C. §157(b) Noncore Proceedings “related to” 28 U.S.C. §157(c) Abstention 28 U.S.C. §1334(c) Withdrawal of reference 28 U.S.C. §157(d)

Core and Noncore Proceedings Core proceedings “arising under” the Bankruptcy Code are those matters that arise by way of motion or adversary proceeding and involve the specific application of one or more provisions of the Bankruptcy Code for their resolution. Noncore proceedings are matters “related to” a bankruptcy proceeding, arising for a debtor whether or not the particular bankruptcy proceeding exists.

Bankruptcy Appeals U.S. Supreme Court U.S. Court of Appeals District CourtBankruptcy Appellate Panel Bankruptcy Court

Chapter Twenty-nine. Statements and Schedules Tutorial After reading this chapter, you will be able to: Prepare the most important pleadings used in Bankruptcy practice rovide analysis on how to interpret the data contained in the Statements and Schedules

Chapter Thirty. Means Testing Tutorial After reading this chapter, you will be able to: Complete the means testing form

Chapter Thirty-one. Researching Bankruptcy Issues After reading this chapter, you will be able to: Identify basic bankruptcy research sources and suggest a methodology for their use

Bankruptcy Research Checklist Bankruptcy code Historical and revision notes Federal rules of bankruptcy procedure Local rules, including United States trustee guidelines Federal rules of civil procedure, federal rules of evidence Bankruptcy reporter systems Bankruptcy treatises