1. Chapter Twenty-three. Chapter 13: Reorganization Proceeding After reading this chapter, you will be able to: Describe a reorganization proceeding Understand the rationale of Chapter 13 List the grounds for conversion or dismissal or reorganization proceedings Know the necessary documents and their filing deadlines in Chapter 13 proceedings Understand the elements of a Chapter 13 plan Describe the procedures for confirming and performing a Chapter 13 plan Understand the difference between Chapter 13 and Chapter 7 discharges

2. Reorganization A reorganization is a bankruptcy proceeding where a debtor seeks confirmation of a plan that will repay creditors while permitting the debtor to retain assets or continue in business. The proceedings permitted by Chapters 9, 11, 12, and 13 of the Bankruptcy Code are reorganization proceedings.

3. Chapter 13 Chapter 13 is a program for individuals (and their spouses) with regular income who have unsecured debts of less than $360,475 and secured debts of less tan $1,081,400. A qualified individual may attempt to repay his or her debts through a Chapter 13 plan over a period of time not to exceed five years. Debtors typically file a Chapter 13 case to protect their homes from foreclosure or their cars from repossession because the Chapter 13 process provides them with an opportunity to cure the defaults on their secured debt in a manner that has a potentially less onerous effect on their ability to obtain new credit.

4. Documents and Deadlines in Chapter 13 DeadlineStatute PetitionAt filingBankruptcy Rule 1002 Credit CounselingCertificate at filing 11.U.S.C. §109(h) Statement of Financial Affairs, Schedules 15 daysBankruptcy Rule 1007(b)(2), (c) Chapter 13 Plan15 daysBankruptcy Rule 3015 Attorneys’ Fee StatementCreditors Meeting Bankruptcy Rule 2016 First Plan Payment30 days11 U.S.C. §1326 Adequate Protection Payments30 days11 U.S.C. §1326(a) Plan Performance: 1. Family Income < SMFI 2. Family Income => SMFI 3 years 5 years 11 U.S.C. §1322(d) File tax returns for last 4 yearsCreditor meeting11 U.S.C. §1308

5. Causes for Conversion or Dismissal Loss or Diminution—reorganization unlikely Failure to follow operating rules Unreasonable delay prejudicial to creditors Failure to propose a plan within court deadlines Failure to obtain confirmation of any plan Revocation of confirmation Inability to commence plan Material default in plan Occurrence of a condition state in plan Failure to pay court fees Failure to file Chapter 13 statement Failure to pay postpetition domestic support obligations Failure to file tax returns

6. Chapter 13 Plan Provisions The main component of a Chapter 13 proceeding is the plan. Section 1322 prescribes the contents of a Chapter 13 plan. There are mandatory provisions that are required to be in any plan, described in Section 1322(a). There are also permissive provisions that may be included in a plan, described in Section 1322(b).

7. Strip Off/Strip Down The ability to avoid the unsecured portion of an otherwise secured debt in some circumstances in Chapter 13 cases.

8. Cramdown Cramdown is the act of obtaining confirmation of a reorganization plan over the objection of creditors. Different tests or procedures may be utilized to effectuate a cramdown on either secured or unsecured creditors.

9. Confirmation A Chapter 13 plan is confirmed at a confirmation hearing. The court must make nine findings to confirm a plan. If one of the findings cannot be made the plan must not be confirmed.

10. Findings to be Made for Chapter 13 Confirmation  The plan must comply with the provisions of the Bankruptcy Code.  Any filing fees must be paid  The plan must be proposed in good faith.  The creditors must receive a dividend not less than the dividend that they would receive in a Chapter 7 proceeding.  With regard to secured creditors, the court must find either that the creditor consents, they will be paid in full of its secured claim, or that any collateral will be returned to the creditor.  The petition must have been filed in good faith.  All post-petition domestic support obligations must be current.  All post-petition tax returns must be filed.  The court must find that the plan is feasible.