Experienced Attorney Handles Objections to Plan Confirmation Under Chapter 11

Dependable representation for debtors and creditors throughout California

Chapter 11 bankruptcy can allow a financially troubled company to continue operations while reorganizing and restructuring debt to repay creditors on more lenient terms. From a creditor’s perspective, Chapter 11 is beneficial if it means recovering the full debt, even if it takes more time, or at least collecting more of the debt than would be possible in a Chapter 7 liquidation. The debtor business should present a plan that its creditors can reasonably expect to serve their purposes. However, sometimes plans fall short and creditors need to raise objections to protect their interests. At the Law Offices of Michael Jay Berger in Beverly Hills, I can skillfully pursue your objections to a reorganization plan in order to help you achieve your goals in the bankruptcy proceeding.

Filing objections to Chapter 11 reorganization plans in California

Under U.S. bankruptcy law, a creditor or another party of interest — that is, a person or entity that has a stake in the debt — can file an objection to the confirmation of a plan. The objection must also be served on the debtor, the trustee and other parties that the court may designate. The filing must be done within a time fixed by the court and generally must be transmitted to the trustee at least seven days before the date of the confirmation hearing.

Common reasons for objecting to a Chapter 11 plan

Parties of interest can object to Chapter 11 plans to protect their right to repayment. These parties might feel their rights are in jeopardy in any of these situations:

• The plan is submitted in bad faith — Debtors are required to be transparent and honest about the state of their finances. Any sort of questionable accounting could indicate an attempt to deceive the creditors and the court.
• The plan understates the debt — At times, debtors fail to include the full amount of their debt in the Chapter 11 filing, which can create an unrealistically optimistic impression of their affairs.
• The plan schedules inadequate payments — The plan could be weighted in the debtor’s favor if it does not attempt to pay down debt aggressively enough.
• The payment structure is unsustainable — Often debtors are too optimistic about the company’s chances of a rebound, so they forecast unrealistic revenues that promise to allow for aggressive payments. If the repayment plan looks too good to be true, it probably is.

Drawing on decades of experience in complex business bankruptcy cases, I can evaluate a debtor’s reorganization plan for any flaws that could negatively affect your interests.

Classifying impaired and unimpaired creditors

A creditor’s right to contest a reorganization plan depends largely on whether the court classifies the creditor as impaired or unimpaired. A creditor is deemed impaired if its claim for repayment is affected in a negative way, such as by reducing a loan’s interest rate or lengthening its repayment period. Unimpaired creditors are those unaffected by the plan. Only impaired creditors are allowed to vote to accept the plan. Yet, even impaired creditors don’t have veto power. Debtors can get the court to approve a plan over their objection in what is known as a “cram down.” To assert your rights as a creditor effectively, you need representation from an experienced attorney.

Contact an accomplished California attorney to discuss creditors’ rights in bankruptcy

Located in downtown Beverly Hills, the Law Offices of Michael Jay Berger represents creditors in business bankruptcy proceedings, making sure their interests are fully protected. If you have objections to a Chapter 11 plan, I can help you assert them. To schedule a free consultation, call 310-271-6223 or contact me online today.