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There are many different ways to find out that someone or a business that owes you money filed for bankruptcy protection. The most common way is you open your mail and you receive a notice of bankruptcy filing and notice of the meeting of the creditors. What now? If the case is filed under Chapter 13 or Chapter 11 of the bankruptcy code the debtor is seeking to reorganize their debts and confirm/approve a plan of reorganization. Depending upon the circumstances the debtor may not be proposing a treatment of your claim or debt that is proper. To protect your interests you must file an objection to the confirmation of the plan of reorganization.
We will review the bankruptcy petition and plan filed by the debtor and discuss your options under the bankruptcy code. Mr. Wood was formerly employed as a staff attorney for the Chapter 13 trustee for the San Francisco and Santa Rosa Divisions of the Bankruptcy Court for the Northern District of California. Mr. Wood has filed, reviewed and administered thousands of bankruptcy cases.
You may have to object to confirmation of the plan because the plan fails to meet the necessary requirements pursuant to 11 U.S.C. §1325 for Chapter 13 cases or 11 U.S.C. §1129 for Chapter 11 cases. If the debtor’s plan of reorganization does not meet the requirements for confirmation it should be objected to by either the trustee in a Chapter 13 case, the United States Trustee in a Chapter 11 case or a creditor in either type of reorganization. You never know though. Plans of reorganization are and have been confirmed that not meet the requirements of the Bankruptcy Code.
If a party does not object to confirmation the terms of the plan timely the plan could be confirmed/approved and the terms arguably enforceable. This is a complicated are of bankruptcy law, but the moral to the story is a creditor needs to timely object to a plan that does not provide proper treatment for their claim or suffer the consequences.
Chapter 13 Plan Confirmation
In many Chapter 13 cases, at least in the Bankruptcy Court for the Northern District of California, appearance at the confirmation hearing is not necessary if there are no issues. Unlike in Chapter 11 cases creditors do not get to vote on acceptance or rejection of the plan of reorganization. A case will be placed on the Chapter 13 trustees’ confirmation list and then confirmed by the court. Only cases where there are issues go before a judge for discussion. Generally the first confirmation hearing, or a couple more, will be attempts to resolves disputes without escalating the issue to require an evidentiary hearing or mini-trial. Most objections to confirmation can be settled or worked out by the parties without court intervention. If a creditor and debtor cannot agree or settle their differences there will be no choice but to provide testimony and evidence for the court to determine who is right.
There are many requirements that at plan must meet to be confirmed. A distinction for Chapter 13 plans is they are not supposed to exceed 60 months or five years in length. Other common issues that arise are the amount of defaulted debt that must be paid back in the plan or amount of a vehicle loan that must be paid back in the plan. Whether the case or plan was filed in good faith based upon the totality of the circumstances. Is the plan feasible or possible given the debtors financial circumstances?
Chapter 11 Plan Confirmation
Confirming a Chapter 11 plan of reorganization is a much more complicated process than Chapter 13. In Chapter 11 creditors get to vote to accept or reject a plan of reorganization. Some of the same requirements that apply in Chapter 13 apply in
Chapter 11 like the plan must be filed in good faith, but after that the requirements are much more complicated and diverse to address issues that arise with multi-million dollar and billion dollar corporations that file for bankruptcy protection. Unlike the limitation in Chapter 13 of a 60 month plan, Chapter 11 plans of reorganization can last for many, many years to effectuate the reorganization of a major corporation.
For more information about your rights if someone that owes you money filed for bankruptcy protection under Chapter 7, Chapter 13 or Chapter 11 please give us a call at 1-877-963-9543 to schedule a consultation at one of our convenient Bay Area Office Locations.
