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Confirmation Criteria for Chapter 11 Plan

May 8, 2014 by  
Filed under Blog

Section 1129 of the Bankruptcy Code details the standards for confirmation of a plan
under chapter 11. 11 U.S.C. § 1129. See In re Sound Radio, Inc., 93 B.R. 849, 852 (Bankr.
D.N.J. 1988); In re Texaco, Inc., 84 B.R. 893, 905 (Bankr. S.D.N.Y. 1988). Section 1129(a)
lists thirteen (13) prerequisites for confirmation (Section 1129(a)(8), however, need not be
satisfied if the requirements of Section 1129(b) are met). 11 U.S.C. § 1129(a). See Kane v. Johns-Manville Corp. (In re Johns-Manville Corp.), 843 F.2d 636, 648 (2nd Cir. 1988). Section
1129(b) sets out the standard for “cramdown” on a non-consenting impaired class. 11 U.S.C. §
1129(b). See In re Johnson-Manville Corp., 843 F.2d at 650; Teamsters National Freight
Industry Negotiating Committee v. U.S. Truck Company, Inc. (In re U.S. Truck Company, Inc.),
800 Fd. 581, 583 (6th Cir. 1986); Acequia, Inc. v. Clinton (In re Acequia, Inc.), 787 Fd. 1352,
1363-64 (9th Cir. 1986); Section 1129(c) states the general rule that the court may only confirm
one plan. 11 U.S.C. § 1129(c). See In re Sound Radio, Inc., 93 B.R. 849, 858 (Bankr. D.N.J.
To obtain confirmation of the Amended Plan, the Debtor must demonstrate that the
Amended Plan satisfies the provision of 11 U.S.C. §§ 1129(a) or 1129(b) by a preponderance
of the evidence. See In re Monarch Beach Venture, Ltd., 166 B.R. 428, 432 (Bankr. S.D. Cal.
1993) (quoting Heartland Fed. Sav. & Loan Ass’n v. Briscoe Enters. Ltd., II (In re Briscoe
Enters. Ltd., II), 994 F. 2d 1160, 1165 (5th Cir. 1993) (holding the “preponderance of the
evidence is the debtor’s appropriate standard of proof under both § 1129(a) and in a
cramdown”) (citation omitted); 7 Collier on Bankruptcy, ¶ 1129.02[4], at 1129-22 (15th ed.
1997) (“[T]he proponent bears the burden of both introduction of evidence and persuasion that
each subsection of Section 1129(a) had been satisfied.”) The Debtor will demonstrate that all
of the subsections of 11 U.S.C. § 1129 are satisfied with respect to the Amended Plan by a
preponderance of the evidence at the hearing on confirmation.
When a plan of reorganization satisfies each of the requirements contained in 11 U.S.C.
§ 1129(a), the court shall confirm the plan without considering 11 U.S.C. § 1129(b). See 11
U.S.C. § 1129(a) and (b); In re Texaco, Inc., 84 B.R. at 910. Specifically, “section 1129(b)
only applies if a class whose claims or interests are impaired does not accept the plan as required by section 1129(a)(8).” 5 Collier on Bankruptcy, ¶ 1129.03 (Revised 15th ed.).
Moreover, a plan of reorganization need only satisfy the requirements of section 1129(b) with
respect to classes that vote against the plan. In re Johns-Manville Corp., 843 F.2d at 650.


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