Transcript Chapter Twenty-three. Chapter 13: Reorganization Proceeding  After reading this chapter, you will be able to:  Describe a reorganization proceeding  Understand the.

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
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.
Chapter 13
 Chapter 13 is a program for individuals (and their spouses) with
regular income who have unsecured debts of less than
$360,475 and secured debts of less tan $1,081,400.
 A qualified individual may attempt to repay his or her debts
through a Chapter 13 plan over a period of time not to exceed
five years.
 Debtors typically file a Chapter 13 case to protect their homes
from foreclosure or their cars from repossession because the
Chapter 13 process provides them with an opportunity to cure
the defaults on their secured debt in a manner that has a
potentially less onerous effect on their ability to obtain new
credit.
Documents and Deadlines in
Chapter 13
Deadline
Statute
Petition
At filing
Bankruptcy Rule 1002
Credit Counseling
Certificate at
filing
11.U.S.C. §109(h)
Statement of Financial Affairs,
Schedules
15 days
Bankruptcy Rule
1007(b)(2), (c)
Chapter 13 Plan
15 days
Bankruptcy Rule 3015
Attorneys’ Fee Statement
Creditors
Meeting
Bankruptcy Rule 2016
First Plan Payment
30 days
11 U.S.C. §1326
Adequate Protection Payments
30 days
11 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)
11 U.S.C. §1322(d)
File tax returns for last 4 years
Creditor meeting 11 U.S.C. §1308
Causes for Conversion or Dismissal
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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
Chapter 13 Plan Provisions
 The main component of a Chapter 13
proceeding is the plan.
 Section 1322 prescribes the contents of a
Chapter 13 plan.
 There are mandatory provisions that are
required to be in any plan, described in
Section 1322(a).
 There are also permissive provisions that
may be included in a plan, described in
Section 1322(b).
Strip Off/Strip Down
 The ability to avoid the unsecured portion of
an otherwise secured debt in some
circumstances in Chapter 13 cases.
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.
Confirmation
 A Chapter 13 plan is confirmed at a
confirmation hearing.
 The court must make nine findings to confirm
a plan. If one of the findings cannot be made
the plan must not be confirmed.
Findings to be Made for Chapter
13 Confirmation
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The plan must comply with the provisions of the Bankruptcy
Code.
Any filing fees must be paid
The plan must be proposed in good faith.
The creditors must receive a dividend not less than the
dividend that they would receive in a Chapter 7 proceeding.
With regard to secured creditors, the court must find either that
the creditor consents, they will be paid in full of its secured
claim, or that any collateral will be returned to the creditor.
The petition must have been filed in good faith.
All post-petition domestic support obligations must be current.
All post-petition tax returns must be filed.
The court must find that the plan is feasible.