California Bankruptcy Lawyer Blog

At least 50% of the carriers, lenders, suppliers, and unsecured creditors must support the plan. Votes representing a minimum of 2/3rds of the dollar value of claims must also be garnered by Delta for its plan. The stocks held by Delta’s current shareholders—who won’t get to vote on the plan—will lose their value completely.

The IRS offers valuable information regarding reorganization plans and the Chapter 11 bankruptcy process on its website, including the following:

5.17.10.9 (10-31-2000)
Plans in Chapter 11
Confirming a workable Plan for the debtor’s reorganization is the ideal procedural goal of a successful Chapter 11 case. The Bankruptcy Code does prescribe certain minimal requirements for the structure of and for confirmation of a Chapter 11 Plan, but the ultimate form of a Chapter 11 Plan in a particular case is ordinarily a matter for intense negotiations between a debtor, its significant creditors, and other interested parties (e.g., the debtor’s stockholders)…

5.17.10.9.1 (10-31-2000)
Classification in Chapter 11 Plans
For the purpose of determining the treatment of creditors in a Chapter 11 Plan, the Bankruptcy Code generally requires that claims be "classified" (placed in Class 1, Class 2, etc.) based on the nature of the claims. B.C. § 1123(a)(1). Claims or interests may be included in a particular class only if such claims or interests are substantially similar to the others in that class. B.C. § 1122(a).

In practice, each secured claim is commonly placed in its own class or subclass, due to a secured creditor’s often unique interest in certain property of the debtor’s bankruptcy estate, based upon the extent and priority of the creditor’s lien or the specific mutual debt subject to offset.

5.17.10.9.2 (10-31-2000)
Other General Provisions of a Chapter 11 Plan
A Chapter 11 Plan must specify any class of claims or interests that is not impaired under the Plan. B.C. § 1123(a)(2).

A class of claim or interest holders is impaired by a Chapter 11 Plan unless the Plan leaves the claim or interest holders’ non-bankruptcy legal, equitable, and contractual rights unaltered. B.C. § 1124(1).

A Chapter 11 Plan must provide the same treatment for each claim or interest in a particular class, unless the holder of a particular claim or interest agrees to a less favorable treatment of the holder’s particular claim or interest. B.C. § 1123(a)(4). This is one reason why general unsecured creditors may be placed in several different classes in a complex Chapter 11 case.

A Chapter 11 Plan must also provide adequate means for the implementation of the Plan. B.C. § 1123(a)(5).

Unless the Plan provides otherwise, all of the property of the bankruptcy estate will, by default, revest in the debtor after the Plan is confirmed and becomes effective. B.C. § 1141(b).

I5.17.10.9.3 (10-31-2000)
Acceptance and Voting on a Chapter 11 Plan
In Chapter 11 cases, most of a debtor’s creditors and interest holders may "vote" to accept or reject a proposed Plan, as well as file an objection to the proposed Plan. In the Bankruptcy Code, voting on acceptance or rejection of a Plan only occurs in Chapter 11 cases.

Holders of administrative expense claims, gap period claims, and priority tax claims should not be classified by a Chapter 11 Plan, so the IRS ordinarily may not vote with respect to these types of claims….

Sagaria Law, P.C. represents clients in bankruptcy cases throughout Monterey County, Santa Clara County, and Alameda County. We represent clients in Chapter 7, Chapter 11, and Chapter 13 filings. Many of our clients are individuals and businesses from the cities of San Jose, Fremont, Foster City, Carmel, Sunnyvale, and Oakland. To schedule your free consultation, contact Sagaria Law, P.C. today.

Delta Moves Forward With Plan to Exit Bankruptcy, CNBC.com, February 7, 2007

Delta's Bankruptcy Exit Plan Clears Hurdle, AMT Online.com, Feb 8, 2007

Chapter 11 Bankruptcy, IRS.gov

Related Web Resource:

US Code: Title 11 Bankruptcy, Cornell Law School