How does plan exclusivity work in Chapter 11?
The Bankruptcy Code provides for a period called the “exclusivity period,” in which only the debtor may file a reorganization plan in the debtor’s Chapter 11 case. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) limits that exclusive filing period to 18 months, and sets a 20-month limit on the debtor’s exclusive right to solicit plans. Extensions for cause may not exceed those 18/20-month limits. The 18-month restriction potentially pressures the debtor to devise a working plan on short order, and likely gives creditors an advantage to implement their own vision for reorganizing the debtor. The Chapter 11 debtor easily can lose control of the reorganization process once the debtor’s creditors are able to submit competing plans. The time constraint, creditor pressure, and creditor reluctance to negotiate might be even greater in a liquidating Chapter 11 scenario than in a reorganization case. Although 18 months might appear to be ample time, the reality is t
