General info needed in either 1129(a) or (b).
1. 1122-Classification of claims or interests.
a. Except as provided in subsection (b), a plan may place a claim or an interest in a particular class only if such claim or interest is substantially similar to other claims or interests of such claims.
b. A plan may designate a sep class of claims consisting only of every unsecured claim that is less than or reduced to an amount that the court approves as reasonable and necessary for admin convenience.
c. Possible ways to classify creditors:
(i) By legal rights: secured, unsecured, under-secured, priority, general, impaired, unimpaired, debt that was due immediately or over time. WON’T SEE SECURED AND UNSECURED IN THE SAME CLASS.
(ii) By dollar amounts
(iii) By the type of creditor you are and what relationship you will have w/ co going forward—that will have an effect on your interests. Ex. Lender v. Supplier. As a supplier you may want fast cash and then you will go away. As a lender, you may be willing to take less now, so you can it all later.
2. 1124—Impairment of claims of interest. A claim in impaired unless, the plan
a. (1) leaves unaltered the legal, equitable, and contractual rights to which such claim or interest entitled the holder of such claim or interest or
b. (2) notwithstanding any contractual provisions, or applicable law that entitled the holder of such a claim or interest to demand or receive accelerated payments of such claim or interest after the occurrence of default—(A)—(D).
3. 1125—Post pet disclosure and solicitation.
a. (b) Requirement of disclosure: An acceptance or rejection of a plan may not be solicited after the commencement of the case under this title from a holder of a claim or interest w/ respect to such claim or interest, unless, at the time of or b/4 such solicitation, there is transmitted to such holder the plan or summary of the plan, and a written disclosure statement approved, after notice and a hearing, by the court as containing adequate information. The court may approve a disclosure statement w/out a valuation of the debtor or an appraisal of the debtor’s assets.
b. 1125(a)(1)— adequate information in a disclosure statement
(i) need to give info sufficient to allow reasonable investor to make an informed decisions.
(ii) Disclosure just needs to be whatever is reasonably practicable considering the nature and history of the debtor. This means that there may be less of a disclosure requirement for small businesses as compared to what should be disclosed for big public held corporations.
c. Example of possible inadequate disclosure
(i) failure to disclose possible preference case against one of the creditors. Some will say they still made informed decision b/c they were satisfied w/ what they were getting. Others will say that wouldn’t have voted for the plan b/c it should have included more money to UC’s since the pot could get bigger if the pref case is won.
(ii) Debtor may misstate a fact—like say that he has more backorders than he actually has in order to make prospect look better. Note that isn’t a lie about projections b/c you know how many backorders you have.
d. 1125(e)—Safe harbor rule—No person connected w/ the solicitation of plan acceptances and rejection is liable for a violation of the securities laws, so long as that person acts in good faith and in compliance w/ Title 11. Extremely hard to win on claim that disclosure fails to comply w/ SEC unless you show things like intentional misrep.
e. Possible remedies for failing to give adequate disclosure:
(i) §1144—Revocation of an order of confirmation. These are very difficult to get. Have to show that the order was gotten by fraud. (Possible fraud—misstating backlog of orders—that is fraud on court who has to determine feasibility as well as on creditors.)
(ii) Estoppel: A party who made a misrep or failed to state something in a disclosure statement may now be estopped from asserting it. (Ex. Debtor might be estopped from pursuing pref action against creditor b/c he failed to disclose it.)
(iii) Res Judicata: A party who made a misrep or failed to state something in a disclosure statement may not be able to reopen issues that should have been addressed b/4 confirmation.
4. “Equitable mootness”: It is difficult to appeal confirmation of a plan. If you don’t get a stay (which is tough to get), the plan will move forward and by the time the appeal comes, it is too late. B/r has policy of speed and efficiency.
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