What is a Plan of Reorganization?
A Plan of Reorganization is a road map by which the debtor will reorganize itself and emerge from bankruptcy as a business entity that has rid itself of its unprofitable components and is prepared to emerge from bankruptcy in order to make a profit, put forth reasonable efforts to repay its debts, and continue in business. The Plan must contain certain technical elements. For example, claims must be separated into classes so that members of each class have claims or interests that are substantially similar to others in the class. The Plan must specify which claims are “impaired” and provide an opportunity for holders of impaired claims to vote on the Plan. In addition, a Plan may modify the rights of creditors, may provide for the assumption or rejection of contracts and leases, and contain other provisions consistent with the purposes and objectives of Chapter 11. How is a Plan of Reorganization approved? During the first 120 days of a Chapter 11 proceeding, the debtor has the exclusi
