Overview of US Bankruptcy Law Chapter 9 Plan of Adjustment Fall 2013 J. Robert Stoll Mayer Brown LLP Visiting Professor University of Belgrade Faculty

Overview of US Bankruptcy Law Chapter 9 Plan of Adjustment

Fall 2013J. Robert StollMayer Brown LLPVisiting ProfessorUniversity of Belgrade Faculty of Law

Aaron GavantMayer Brown LLP

U.S. Workout/Insolvency Law CourseUniversity of Belgrade Faculty of LawFALL 2014

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I. Statutory Framework / Key Players and ConceptsII. Overview of Asset Sales Under Section 363 of the

Bankruptcy CodeIII. DIP Lending and Cash Collateral FinancingsIV. Recovery of Vendor Claims: From Reclamation to

Critical Vendor ProgramsV. Avoidance Powers: Fraudulent Transfer and

PreferenceVI. Plan of Reorganization: Some Rules of the Road

Introduction

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Statutory/Judicial Framework: Bankruptcy System for Business Entities

• US Has a National System of Bankruptcy Laws– Provides a uniform set of laws (the Bankruptcy Code) and

procedures (the Bankruptcy Rules)– Even so, regional differences exist – e.g., critical vendor

• Who May be a Debtor under the Bankruptcy Code?– Almost all business entities qualify (e.g., corporations;

partnerships; individuals and sole proprietorships)– Excludes entities subject to specialized regulatory schemes:

• Banks and insurance companies have separate regimes

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Statutory/Judicial Framework: Bankruptcy System for Businesses

• Other Eligibility Requirements are Modest:– No requirement of insolvency: to encourage early resort to

bankruptcy when reorganization is possible – Good faith is required: Must suffer from financial problems

justifying resort to bankruptcy laws– Must have nexus to US – be a US entity; have assets or

principal offices in US

• Commencement of the Case– Voluntary: order for relief is automatic upon filing– Involuntary by creditors: order for relief is only after court

determines debtor is generally unable to pay its debts

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• Types of Bankruptcy Code Cases:– Chapter 7: Governs Liquidation Proceedings

• Trustee is always appointed to liquidate assets and distribute proceeds to creditors in accordance with statutory priorities

– Chapter 11: Governs Reorganization Proceedings• Goal is negotiation of a plan of reorganization• Flexible process designed to preserve “going concern” value• No automatic trustee appointment

– Chapter 9: Governs Reorganization Proceedings for Municipalities and other Governmental Entities

– Chapter 12: Governs Reorganization Proceedings for Farmers– Chapter 15: Governs Foreign and Cross-Border Insolvency

Cases

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• Federal Bankruptcy Court System– Bankruptcy judges: Appointed to handle only bankruptcy

matters; have special expertise– Expansive jurisdiction to consolidate all matters involving the

debtor and its property before the court – Appeals go through the federal court system

• Venue– Bankruptcy courts are in every state– Favored venues for large cases: NY and Delaware

Initiation of Cases

• Voluntary: Commenced by filing of petition with the bankruptcy court by the debtor

– There is no insolvency or other financial conditions requirement

• Involuntary: Commenced by filing of petition by creditors against the debtor

– If the debtor has <12 creditors overall, only one creditor is required to sign the petition, who must hold noncontingent, undisputed, and unsecured claims that aggregate at least $15,325

– If the debtor has >12 creditors, the petition must be signed by three creditors who hold noncontingent, undisputed, and unsecured claims that aggregate at least $15,325

– An involuntary case may only be commenced under chapter 7 or chapter 11; a municipality cannot be the object of an involuntary petition in a chapter 9 case

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Key Players

• Debtor in Possession: Curse or Blessing?– Pre-bankruptcy management remains in control in

Chapter 11 cases – philosophy is that they can best maximize values

– Trustees can be appointed in cases of fraud, gross mismanagement or other cause

– Trustees are rarely appointed in Chapter 11 – even in cases of spectacular failures (Lehman and Enron)

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Key Players

• Unsecured Creditors Committee – Chapter 11: Curse or Blessing II?– Selected from largest unsecured creditors, unless adverse

interest– Active player on all major issues – DIP financing; assets sales;

reorganization plans; litigation against other creditors – Acts to protect interests of unsecured creditors as a whole– Professionals of the UCC are paid by the estate

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Key Players

• Secured Creditors – Often the key constituency – control access to financing– Rarely have official committees for secureds

• Bankruptcy Judges– No direct managerial involvement in debtor; rule on matters

requiring court approval or adversary proceedings– Rules prohibit “ex parte” communications; still, often

perceived as having “pro-debtor” tendency

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Key Players

• US Trustee: Intended as a Watchdog– Governmental Appointees

– Acts to protect the integrity of the bankruptcy system, but sometimes seen as inflexible

– Handles administration: Select trustees; Appoints committees

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Key Concepts: Automatic Stay

• Upon filing, creditors are stayed from collecting claims, from taking possession or control of property, or from taking setoffs

• Purpose is to protect the estate from dismemberment and to give DIP/Trustee a breathing spell

• Stay can be lifted for cause – e.g., to allow setoff or if collateral is not “adequately protected”

• A number of actions are exempt from the stay– Swaps; repos; securities contracts can be closed out– Exercise of police power – e.g., environmental laws are

enforced

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Key Concepts: Who Trumps Whom – Priority Scheme in Bankruptcy – Claims and Interests• Secured Creditors (DIP lenders and pre-bankruptcy lenders)

– get highest priority but only to extent of the proceeds/value of collateral

• Administrative Expense Claims– First to DIP lender with superpriority– Second to post-bankruptcy claimants (vendors; professionals;

obligations under assumed contracts) and to some pre-bankruptcy vendor claims

– But, then give priority to subsequent Chapter 7 creditors

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Key Concepts: Who Trumps Whom – Priority Scheme in Bankruptcy

• Pre-bankruptcy claims– First, to priority claims (taxes; employees priority; deposits)– Second, to general unsecured claims (trade; deficiency claims

of secureds; rejection claims)– Third, to subordinated creditors– Fourth, to equity holders (together with any litigation claims

based on equity)

II. Claims and Interests (cont’d)

• Trading/Sale of Claims: Substantial market for trading of claims; particularly in large cases– Validity/Enforceability– Original Issue Discount– Setoffs/Preferences– Subordination Risks– Warranties/Reps in Assignment/Sale Documents– Disclosure Issues: Bankruptcy Rule 2019 may require certain

disclosure of information

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Key Concepts: Executory Contracts and Leases – a Brief Overview

• DIP/Trustee has right to assume or reject contracts– Decision is left to DIP/Trustee’s business judgment– Some exceptions: e.g., agreements to make loans

• Pending decision, non-debtor must generally perform if paid currently for its performance

• Assumption, requires DIP/Trustee to cure all defaults, and give adequate assurance; and then must perform going forward

• Can also assume and assign • Rejection relieves debtor from all obligation to perform, but

gives non-debtor a claim for damages; special rules cap damage claims for leases

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Key Concepts: Asset Sales Under Section 363 of the Bankruptcy Code

• Section 363(b) of the Bankruptcy Code authorizes a debtor to sell property of the estate outside of the ordinary course of the debtor’s business with the prior approval of the bankruptcy court– Sales or dispositions of property that are in the ordinary

course do not require court approval– 363 sales are increasingly common for various reasons,

including the speed and finality with which they enable a debtor to monetize its business assets on a going concern basis and the fact that there are increasingly fewer successful reorganizations in Chapter 11

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Overview of Asset Sales Under Section 363 of the Bankruptcy Code

• 363 sales provide important protections and related benefits to buyers that acquire assets – Assets sold under Section 363 of the Bankruptcy Code are

transferred “free and clear” of interests claimed by third parties

– Typically, claims or interests of third parties will attach to the proceeds of the sale, and the amount and relative priority of such claims and interests can be determined at a later date after the sale has closed

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• Ability to sell assets subject to third party claims and interests is not unlimited; sale must satisfy one or more of the following five requirements:– Applicable non-bankruptcy law permits sale of such property

free and clear of interests– Entity claiming an interest consents to the sale free and clear

of its interest or claim– The claimed interest is a lien and the price to be obtained

exceeds the aggregate of all liens against the property– The claimed interest is subject to a bona fide dispute– Entity claiming an interest can be compelled in a legal or

equitable proceeding to accept money satisfaction of its interest

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• Case law is mixed whether Section 363(f) of the Bankruptcy Code authorizes bankruptcy court to order that a sale is free and clear of successor liability

• Better view is that the order cannot provide such protection, especially when the asserted claim bears no relationship to the subject assets

• However, where it can be established that the party asserting successor liability received notice of the sale and did not timely object or preserve its rights, party may be barred from seeking to impose successor liability under principles of res judicata

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• One of the benefits of acquiring assets under a 363 sale is that it eliminates any fraudulent transfer risk since– Terms of the sale, including purchase price and other

considerations, will be “blessed” by the sale order entered by the court

– No issue whether value paid is reasonably equivalent since assets were sold pursuant to court-approved process

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• Party objecting to proposed 363 sale must obtain stay pending an appeal in order to prevent consummation of a sale to a “good faith” purchaser– Section 363(m) provides that reversal of sale order on appeal

does not affect transfer of assets to a good faith purchaser; sale order should contain specific finding that buyer is entitled to protection of 363(m)

– In such circumstances, objecting party will need to post a bond, typically an amount equal to purchase price, to prevent consummation of sale pending its appeal

– Sale agreement should provide buyer with discretion to decide whether to close in the face of such an appeal

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• Summary overview of 363 sale process– Absent extraordinary circumstances, proposed sale will be

subject to competitive bidding process• DIP/Trustee must demonstrate proposed sale is result of sound

business judgment and in best interests of estate

• DIP/Trustee must demonstrate assets were effectively marketed and that the sale process will yield the “highest and best” value obtainable for the assets under the circumstances

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• In connection with a competitive bidding process, there often is a “stalking horse” bidder– DIP/Trustee and its professionals typically will seek to

negotiate an initial purchase agreement with a stalking horse bidder and then seek approval of the sale to that party or to a higher bidder pursuant to proposed bidding procedures

• Process can take many different forms

• Much of the actual due diligence, marketing and negotiations to determine the stalking horse may take place before a 363 sale motion is even filed, particularly in larger cases with sophisticated debtors

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• Advantages to Being a Stalking Horse Bidder:– Provides timing advantage where extensive due diligence or

regulatory approval is necessary since stalking horse bidder likely to have advantage over other potential competing bidders; ability to demonstrate certainty and ability to close provides advantage over competing bids

– Can shape the sale contract and potentially require other competing bidders to use its form of agreement

– Ability to negotiate bid protections, including, at least, expense reimbursement and typically some amount of a break-up fee; bid protections require bankruptcy court approval

– Influence bidding procedures, including minimum overbids, closing contingencies, right to credit-bid break-up fee, mechanism for valuing non-cash consideration, criteria for qualifying competing bids, and process of identifying higher and better bids at auction

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• Potential Disadvantages to Being a Stalking Horse Bidder– Due diligence/negotiation expenses at risk until bid

procedures, including, inter alia, expense reimbursement, are approved

– May over-price assets

– Potentially allows other bidders to utilize your due diligence efforts at less expense

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• 363 Sales Usually Involve a Two-step Process– Motion to approve bid procedures, including bid protections,

• Typically, this will be heard on fairly expedited basis, some period of due diligence may follow and, if qualified bids submitted, a sale auction will be held to determine highest and best bid

– Motion also will seek to schedule a hearing to approve the sale

• Includes proposed form of sale order; minimum 20 days’ notice required before sale hearing, which usually is scheduled as close to completion of auction as court’s calendar allows

• Also includes process of identifying executory contracts and unexpired leases to be assumed and assigned to winning bidder, including notice and cure procedures

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DIP Financing / Cash Collateral Financings

Introduction

• “Offensive” DIP Lending

• “Defensive” DIP Lending– Adequate protection– “Bootstrapping”

• Cash Collateral Financings

• “Exit” Financing

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Timeline for DIP Financing

• Short Timeline to Finalize DIP Financing

• Limited Due Diligence

• Expense Agreement

• Documentation: Term Sheet; Credit Agreement and Order Approving DIP Financing

• Two-Step Court Approval Process

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Timeline for DIP Financing

• The Interim Hearing and Order– “First Day” Motion; limited opportunity to object– Capped Commitment – limit as necessary to prevent

irreparable harm until the final hearing– Finding of Good Faith: protects lender from reversal on

appeal

• The Final Hearing and Order– Schedule for the final hearing– Re-trading the deal with creditor committee, US

trustee/negotiating leverage– Good faith lender still protected against appeals

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Reasons to Engage in DIP Financing: Offensive

• Profitable: Interest rates and fees are often higher than traditional lending

• Business Opportunity: DIP Loans may lead to exit loans and other post-confirmation business

• Bankruptcy Protections

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Reasons to Engage in DIP Financing: Offensive

• Court Order Provides– Lien package

• Lien on free assets / junior lien on liened assets• Priming lien / if “adequate protection” to existing lienholder• Automatic perfection of collateral

– Given superpriority claim– Clearer path to exercise remedies upon default– Protection from appeals

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Reasons to Engage in DIP Financing: Defensive

• Leverage to Get “Adequate Protection” for Secured Loans• Cardinal Rule: Adequate Protection Required for Secureds

– No use of cash collateral permitted without adequate protection

– Debtor’s use of collateral conditioned upon provision of adequate protection

– Stay must be lifted if adequate protection is not provided

• What is Required: Protect from Diminution in Collateral Values – Numerous considerations taken into account (e.g., valuation;

debtor’s financial performance)

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• Typical Forms of Adequate Protection– Periodic cash payments– Junior replacement lien on DIP lenders’ collateral package– Junior superpriority claim – to extent protection is

inadequate

• Additional “Defensive” Benefits – Approval of budget process; financial reporting requirements– Other performance covenants, e.g., requiring assets sales– Secure waiver from debtor to challenge liens; limit time for

creditors committee to bring challenges

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• “Bootstrapping” Strategies– Bootstrapping – Cross-Collateralization

• Granting liens to “shore-up” existing loans is controversial• Almost never approved if lender is not fully collateralized• Purpose of adequate protection is protecting not improving position• Sometimes approved if lender is fully secured and financing not

otherwise available– Bootstrapping – “Roll-up”

• Using DIP loan to pay out existing loans• Also controversial: protects from “cramdown” and restructuring• Some courts will approve if loans are fully secured and if successful

reorganization is likely• “Roll-over” – using collections to first pay down existing debt raises

similar issues

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“Cash Collateral” Financings

• Form of Defensive Financing:– Similar to DIP lending, except:

• No “new” $$ lending• Recycles cash and collections

– Finances operations and preserves going concern values– Way to obtain adequate protection – similar to DIP lending

• Similar Short Timeline to Negotiate Cash Collateral Financing

• Similar Two-Step Approval Process• Avoids Litigation Risks in “Contested” Cash Collateral

Hearing

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Other DIP Lending / Cash Collateral Issues

• Carve-Out– Most courts require “carve-out” to pay professional fees – Typical arrangement – “carve out” $$ amount from collateral – Carve-out allows for wind-down – Restrictions on use of carve-out: not to litigate with lenders

• Termination of DIP Loan / Cash Collateral Order– Relief from stay; notice; bankruptcy court involvement

• Collateral Surcharge– Recover from collateral cost of its preservation and sale– Waiver provisions remain controversial

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Potential Risks Associated with DIP Lending / Cash Collateral Financing

• Limited Due Diligence

• Potential Creditor Challenges to Prepetition Claims and Liens

• Second Lien Disputes over Waivers of Adequate Protection and Related Rights

• Failure to Confirm Plan / Conversion to Chapter 7

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Exit Financing

• Purpose of Exit Financing: Funds Emergence fromChapter 11

• Benefits to Lenders– Debtor has “deleveraged” balance sheet– Defensive: releases and protections for existing lenders– Special findings and decrees– Potentially higher fees and interest rates

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Recovery of Vendor Claims: From Reclamation to Critical Vendor Programs• Bankruptcy Code provides sellers of goods with certain

additional protections that are not afforded to other creditors– Whether creditor is a “seller of goods” (e.g., as opposed to,

provider of services) may be subject to dispute– Courts look to various definitions (e.g., Bankruptcy Code,

Uniform Commercial Code, etc.)• Seller may “reclaim” goods it has sold to the debtor, if

goods were received by debtor within 45 days of petition date assuming debtor as already insolvent (subject to any priority rights of a secured creditor in same goods)

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Recovery of Vendor Claims: From Reclamation to Critical Vendor Programs • Seller may also seek to recover unpaid prepetition amounts

through “critical vendor” payment programs• Not expressly authorized by statute and may be contrary to

other payment/priority provisions of the Bankruptcy Code• Debtor’s ability to obtain approval of such program may

therefore depend on particular jurisdiction and particular judge

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Avoidance Powers: Preferences

• Elements of Preference, Bankruptcy Code § 547– Transfer made on account of preexisting debt– Made while debtor is insolvent– Made within 90 days of bankruptcy (1 year if insider)– Allows creditor to recover more than in liquidation

• Limitation period for suit – 2 years

• Typical Examples: – Grant of collateral to unsecured lenders; – Payments made to creditors – lenders and suppliers

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Avoidance Powers: Preferences

• Key Defenses to Preferences– Payment was made in the ordinary course of business– New value: value given by creditor to debtor after an

otherwise preferential payment – Payments to a “fully secured” creditor – so that not receiving

more than in a liquidation– Contemporaneous exchange for new value – no antecedent

debt

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Avoidance Powers: Fraudulent Transfer

• Fraudulent Transfers, Bankruptcy Code §§ 544, 548• DIP/Trustee Can Avoid Transfers and Obligations:

– If (1) debtor didn’t receive “reasonably equivalent” value, and (2) Debtor was insolvent or had unreasonably small capital

– Can also challenge based on debtor having had actual intent to defraud, delay or hinder creditors

• Highly Fact-Intensive Determinations – Determinations are made as of the date of the transaction– Battle of experts

• Limitations period for voiding transfers is 2 years under bankruptcy law, and extends to 4 to 6 years using state laws

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Avoidance Powers: Fraudulent Transfer

• Remedy for Fraudulent Transfer– Recovery of the property transferred or its value– Elimination of the obligation incurred– If party was in “good faith,” then protected from avoidance to

the extent of the value given

• Examples of Fraudulent Transfer Attacks– Sales of assets (e.g., Calpine; Asarco) – LBO transactions have also been subject to attack– Dividends

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Set Offs: An Overview

• Set off is Protected in Bankruptcy, except– It is subject to the Automatic Stay– Cannot set off if no “mutuality” (same parties; same

capacity) – Cannot set off if claim owed to Debtor was incurred or

acquired during the preference period for purpose of creating a setoff

– The pre-bankruptcy exercise of a setoff can be avoided to the extent the creditor got an improvement in its position during the 90-day preference period.

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Protected Contracts: Safe Harbor Provisions

• Swaps; Repos; Securities Contracts; and Forward and Commodity Contracts are Given Special Protections:– They are exempt from the automatic stay and can be freely

closed out based on the debtor’s bankruptcy– Protections include the right to net out and set off collateral

proceeds – Pre-bankruptcy transfers made in connection with protected

contracts are protected from avoidance – except when made with intent to defraud

Subordination

• Types of Subordination and Treatment in Bankruptcy– Contractual Subordination

• Where the subordinated creditors contractually agree to payment after the seniors

• Contractual subordination agreements are enforceable according to their terms in bankruptcy under section 510(a) of the Bankruptcy Code

– Structural Subordination• Where the holding company creditor’s claim comes out behind claims

based on debt extended to the operating company, to the extent the operating company has assets

• Generally, corporate formalities recognized in bankruptcy; however, risk of substantive consolidation (Owens Corning)

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Plan of Reorganization: Some Rules of the Road

• Ultimate Objective of a Chapter 11 Case is the Confirmation of a Plan of Reorganization– Plan is, in essence, a new contract that reshapes and governs

the prepetition debtor/creditor relationships and obligations– Bankruptcy Code imposes strict requirements that must be

met in order for the court to confirm a plan– The requirements attempt to balance the sometimes

competing goals of promoting successful reorganizations, assuring equality of treatment of similar claims, and protecting fundamental notions of due process

– Chapter 11 plan process does not always result in reorganization; case may also result in confirmation of a plan of liquidation

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• Only the debtor may file a plan within an exclusive period of time– In small business cases (i.e., undisputed debts of less than

$2 million), debtor has exclusive period to file that is 180 days from filing date; unless extended or decreased for cause, up to maximum extension of 20 months

– In any other business cases, period is 120 days from filing date, unless increased or decreased for cause, up to maximum exclusive period of 18 months

– Appointment of Chapter 11 trustee terminates exclusivity period

– At end of exclusivity period, any party in interest (e.g., banks, creditors’ committee, etc.) may file plan


• A plan of reorganization must:– classify all claims and interests– specify any class that is not impaired – describe the treatment to be accorded any impaired class;– treat every claim or interest within a particular class

identically– establish adequate ways to implement the plan (e.g., raise

new capital, sell assets, exit financing, selection of management)

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• A plan of reorganization may provide for:– any class of claims or interests to be impaired or unimpaired– the assumption, rejection, or assignment of executory

contracts or unexpired leases– the settlement of any claim or interest– the liquidation of all or substantially all of the estate’s

property– the modification of the rights of secured and unsecured

creditors– any other appropriate measure

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• Plan Typically Contains– Placement of creditors into various classes

• Administrative (e.g., expenses of the bankruptcy – post-petition trade credit, professional fees)

• Secured (debt secured by a perfected lien on assets)

• Priority unsecured (e.g., taxes, employee claims – up to $10,950)

• General unsecured claims (e.g., trade debt)

• Equity (e.g., common stock)

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• Treatment of Creditors (typically)– Bankruptcy Code requires plan to provide for payment in full

of administrative and non-tax priority claims– Certain unsecured tax claims paid out in installments up

to 5 years (with enough interest so deferred payments equals present value of tax claim)

– New note to secured lenders, secured by lien on same collateral

– Negotiate pro-rata distribution of cash and/or stock in reorganized entity to unsecured creditors

– No recovery for equity, existing shares cancelled

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• Implementation of Plan (typically)– Raise new capital (issue new stock; exempt from registration

under securities laws)– Sell certain assets to raise funds to pay creditors– Replace DIP financing with exit financing to provide

additional liquidity upon emergence from Chapter 11– Change management

• Select new board of directors• If plan provides for liquidation, appoint a plan administrator or

liquidating trustee of trust

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• Plan Approval Process– Typically a two step process in which plan proponents first

obtain approval by the bankruptcy court of a “disclosure statement”

– Following approval of disclosure statement, proponents can proceed with solicitation of votes to accept plan, and if enough votes are received, can then proceed with hearing to seek confirmation of plan by the bankruptcy court

– In rare circumstances, generally involving single asset real estate or simple capital structure, court may combine disclosure statement and plan confirmation hearings

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• Acceptance of a plan is determined through votes cast for or against confirmation of the plan– Some classes will be deemed to reject and, therefore, not be

entitled to vote, if plan provides for no recovery (e.g. equity)– Other classes will be deemed to accept and, therefore, not

solicited if plan provides for full recovery (e.g. administrative claimants)

– Holders of impaired claims are entitled to vote and will be solicited (creditor may hold claims in more than one class and have more than one ballot to submit)

• Confirmation requires acceptance by at least one impaired class of creditors based on holders representing at least 2/3 in amount and more than 50% in number of all claims in class voting in favor of confirmation

• Claims may be estimated for voting purposes

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• Even if approved by creditors, plan still must be confirmed by the bankruptcy court, which will consider 16 factors, including:– Feasibility; confirmation of plan will not be followed by

liquidation of company; standard does not require guaranty of success but cannot impose too much risk of failure

– Best interests test; does plan provide each creditor with at least as much recovery as it would on account of its claim as it would receive in a straight liquidation

– Has at least one impaired, non-insider class voted in favor of confirmation

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• Through “cram down,” bankruptcy court may confirm plan over the objection of one or more classes as long as:– All other confirmation requirements are satisfied AND

– Plan does not “discriminate unfairly” and is “fair and equitable” as to each such dissenting class of creditors

• Satisfaction of these cram down requirements differ depending on whether the dissenting class is comprised of secured, unsecured or equity interest holders

• “Unfair discrimination” means that similarly situated creditors must not receive substantially different treatment under the plan (e.g., court may find plan to be unfair if it provides payment in full of trade debt but no distribution to another class comprised of the Bank’s unsecured deficiency claim)

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• “Fair and equitable” treatment means different things for different classes of creditors– Secured creditors are entitled to receive the “indubitable

equivalent” value of their claim;

– With respect to the so-called “absolute priority rule,” unsecured creditors are entitled to be paid in full before equity receives any distributions on account of their prepetition equity interests, unless equity can successfully apply the “new value” exception to the absolute priority rule

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• Confirmation of Plan is Not the End of the Chapter 11 Case– Plan must still become “effective” and be substantially

consummated in order for debtor to emerge from Chapter 11 as a reorganized company

– Final determination of allowance of unsecured claims may not occur until long after plan has been confirmed; no statute of limitations for objecting to allowance of a claim

• May be many years before all distributions contemplated by a plan are finally made

– Effect of discharge, injunction and release under confirmed plan