The Chapter 11 plan classifies claims against the debtor, specifies the action to be taken for each class of claim, and outlines the plan's implementation. The proposal must be approved by the court of bankruptcy.
For confirmation of a Chapter 11 plan:
The proposal must originate with the creditor
2. The debtor must have creditor approval of the proposal
3. The confirmation hearing must be conducted to confirm or reject the aforementioned plan.
For confirmation, however, at least one class of impaired claims must approve the plan. Essentially, these are claims from creditors that will not be paid in full or whose legal rights are modified by the plan. Most critically, the court must ensure the plan's feasibility.
Discharge
Upon confirmation of the plan by the court, all debts are discharged under Chapter 11. The debtor repurchases all of his assets, and both he and his creditors are obligated by the terms of the approved plan.
The Bankruptcy Code rules and legal issues associated with the confirmation of a Chapter 11 plan are exceedingly complex and technical. Therefore, no business administrators or partners should attempt Chapter 11 bankruptcy without competent legal and financial counsel.
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