GENERAL OVERVIEW OF THE CHAPTER 11 PROCESS
A chapter 11 filing is a voluntary action taken by a company that allows a company to continue normal day to day operations while it attempts to "reorganize" its debts. The company, often with the participation of creditors, creates a reorganization plan under which to repay all or part of its debts.
An official committee of unsecured creditors may be formed by the Office of the United States Trustee and typically includes from 5 to 9 of the company's largest unsecured creditors. However, in these cases, the United States Trustee has not appointed a committee of unsecured creditors.
Parties who may have a claim against, or hold the company must submit a "proof of claim" by a specific date. In these cases, the bar date for non-governmental creditors and interest holders to file proofs of claim or proofs of interest passed on April 6, 2010. The deadline for governmental creditors to file a proof of claim is June 1, 2010.
A plan of reorganization is filed with the Bankruptcy Court along with a disclosure statement. The disclosure statement is a document that contains information concerning the assets, liabilities, and business affairs of the debtor company sufficient to enable a creditor to make an informed decision about the debtor's plan of reorganization. Once the disclosure statement is approved by the Bankruptcy Court, the company sends out the plan of reorganization along with the disclosure statement to all creditors who are entitled to vote on the plan of reorganization.
The Bankruptcy Code requires certain mandatory provisions for a plan of reorganization. The plan must have "classification" of all claims. For example, each secured claim may be treated as a separate class, with separate classes for general unsecured claims, and others. A plan may place a claim or an interest in a particular class only if such claim or interest is substantially similar to the other claims or interests of the same class. The plan must also note any class which is not impaired, and describe the treatment of each impaired class. It must identify treatment for each claim in a class. The plan must further provide a method of implementing the plan.
Impairment is such an important concept because a class that is not impaired under a plan, and each holder of a claim or interest of such class, is conclusively presumed to have accepted the plan, and solicitation of acceptances with respect to such class from the holders of claims or interests of such class is not required.
In addition to the mandatory provisions, a plan or reorganization (also known as a Chapter 11 plan) may have permissible provisions which impair any class of claims, assume, reject or assign contracts not yet fulfilled or unexpired leases, provide for the settlement or pursuit of claims held by the debtor, provide for the liquidation of all or most of the assets of the debtor and a distribution plan, provide for the modification of rights of secured or unsecured creditors, or provide for other appropriate measures which are consistent with the Bankruptcy Code.
In this case, the Debtors filed the Second Amended Plan on September 03, 2010 and the Second Amended Plan was confirmed on October 21, 2010. |