What is a Chapter 11 reorganization plan?
A Chapter 11 plan is usually filed by management of the debtor, although creditors sometimes are permitted to file a plan. The plan separates claims in separate classes, with similar claims having their own class. Generally, claims consist of administrative claims (claims incurred after the case is filed); certain priority claims, which are comprised of claims that Congress decided should have special treatment under the Bankruptcy Code; secured claims (claims for which property of the debtor serves as collateral); unsecured claims; and equity. The plan will classify each of these types of claims and propose treatment for them. Creditors are then given a chance to vote on the plan. If the requisite number of creditors vote in favor of the plan and the plan otherwise complies with the requirements of the Bankruptcy Code, the plan is “confirmed” by the Court and the confirmed plan serves to modify treatment of the various claims in the case. Once confirmed, the debtor is responsible for
