11 U.S.C. § 941 — Filing of plan

Page 233 TITLE 11—BANKRUPTCY § 941 § 928. Post petition effect of security interest (a) Notwithstanding section 552(a) of this title and subject to subsection (b) of this section, spe- cial revenues acquired by the debtor after the commencement of the case shall remain subject to any lien resulting from any security agree- ment entered into by the debtor before the com- mencement of the case. (b) Any such lien on special revenues, other than municipal betterment assessments, derived from a project or system shall be subject to the necessary operating expenses of such project or system, as the case may be. (Added Pub. L. 100–597, § 8, Nov. 3, 1988, 102 Stat. 3029.) Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective Nov. 3, 1988, but not applicable to any case commenced under this title before that date, see section 12 of Pub. L. 100–597, set out as an Effective Date of 1988 Amendment note under section 101 of this title. § 929. Municipal leases A lease to a municipality shall not be treated as an executory contract or unexpired lease for the purposes of section 365 or 502(b)(6) of this title solely by reason of its being subject to ter- mination in the event the debtor fails to appro- priate rent. (Added Pub. L. 100–597, § 9, Nov. 3, 1988, 102 Stat. 3030.) Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective Nov. 3, 1988, but not applicable to any case commenced under this title before that date, see section 12 of Pub. L. 100–597, set out as an Effective Date of 1988 Amendment note under section 101 of this title. § 930. Dismissal (a) After notice and a hearing, the court may dismiss a case under this chapter for cause, in- cluding— (1) want of prosecution; (2) unreasonable delay by the debtor that is prejudicial to creditors; (3) failure to propose a plan within the time fixed under section 941 of this title; (4) if a plan is not accepted within any time fixed by the court; (5) denial of confirmation of a plan under section 943(b) of this title and denial of addi- tional time for filing another plan or a modi- fication of a plan; or (6) if the court has retained jurisdiction after confirmation of a plan— (A) material default by the debtor with re- spect to a term of such plan; or (B) termination of such plan by reason of the occurrence of a condition specified in such plan. (b) The court shall dismiss a case under this chapter if confirmation of a plan under this chapter is refused. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2623, § 927; Pub. L. 98–353, title III, § 496, July 10, 1984, 98 Stat. 384; renumbered § 930, Pub. L. 100–597, § 7(1), Nov. 3, 1988, 102 Stat. 3029.) HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 927(b) of the House amendment is derived from section 927(b) of the Senate bill. The provision re- quires mandatory dismissal if confirmation of a plan is refused. The House amendment deletes section 929 of the Sen- ate amendment as unnecessary since the bankruptcy court has original exclusive jurisdiction of all cases under chapter 9. The House amendment deletes section 930 of the Sen- ate amendment and incorporates section 507(a)(1) by reference. SENATE REPORT NO. 95–989 Section 927 conforms to section 98 of current law [sec- tion 418 of former title 11]. The Section permits dis- missal by the court for unreasonable delay by the debt- or, failure to propose a plan, failure of acceptance of a plan, or default by the debtor under a conformed plan. Mandatory dismissal is required if confirmation is re- fused. HOUSE REPORT NO. 95–595 Section 926 [enacted as section 927] generally con- forms to section 98(a) [section 418(a) of former title 11] of current law. Stylistic changes have been made to conform the language with that used in chapter 11, sec- tion 1112. The section permits dismissal by the court for unreasonable delay by the debtor that is prejudicial to creditors, failure to propose a plan, failure of con- firmation of a plan, or material default by the debtor under a confirmed plan. The only significant change from current law lies in the second ground. Currently, section 98(a)(2) provides for dismissal if a proposed plan is not accepted, and section 98(b) requires dismissal if an accepted plan is not confirmed. In order to provide greater flexibility to the court, the debtor, and credi- tors, the bill allows the court to permit the debtor to propose another plan if the first plan is not confirmed. In that event the debtor need not, as under current law, commence the case all over again. This could provide savings in time and administrative expenses if a plan is denied confirmation. Editorial Notes AMENDMENTS 1984—Subsec. (b). Pub. L. 98–353 substituted ‘‘con- firmation of a plan under this chapter’’ for ‘‘confirma- tion’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98–353, set out as a note under section 101 of this title. SUBCHAPTER III—THE PLAN § 941. Filing of plan The debtor shall file a plan for the adjustment of the debtor’s debts. If such a plan is not filed with the petition, the debtor shall file such a plan at such later time as the court fixes. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2624.) HISTORICAL AND REVISION NOTES SENATE REPORT NO. 95–989 Section 941 gives the debtor the exclusive right to propose a plan, and directs that the debtor propose one Page 234 TITLE 11—BANKRUPTCY § 942 1 See References in Text note below. either with the petition or within such time as the court directs. The section follows section 90(a) of cur- rent law [section 410(a) of former title 11]. § 942. Modification of plan The debtor may modify the plan at any time before confirmation, but may not modify the plan so that the plan as modified fails to meet the requirements of this chapter. After the debt- or files a modification, the plan as modified be- comes the plan. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2624.) HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS The House amendment deletes section 942 of the Sen- ate amendment in favor of incorporating section 1125 by cross-reference. Similarly, the House amendment does not incorporate section 944 or 945 of the Senate amendment since incorporation of several sections in chapter 11 in section 901 is sufficient. SENATE REPORT NO. 95–989 Section 942 permits the debtor to modify the plan at any time before confirmation, as does section 90(a) of current law [section 410(a) of former title 11]. § 943. Confirmation (a) A special tax payer may object to con- firmation of a plan. (b) The court shall confirm the plan if— (1) the plan complies with the provisions of this title made applicable by sections 103(e) 1 and 901 of this title; (2) the plan complies with the provisions of this chapter; (3) all amounts to be paid by the debtor or by any person for services or expenses in the case or incident to the plan have been fully disclosed and are reasonable; (4) the debtor is not prohibited by law from taking any action necessary to carry out the plan; (5) except to the extent that the holder of a particular claim has agreed to a different treatment of such claim, the plan provides that on the effective date of the plan each holder of a claim of a kind specified in section 507(a)(2) of this title will receive on account of such claim cash equal to the allowed amount of such claim; (6) any regulatory or electoral approval nec- essary under applicable nonbankruptcy law in order to carry out any provision of the plan has been obtained, or such provision is ex- pressly conditioned on such approval; and (7) the plan is in the best interests of credi- tors and is feasible. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2624; Pub. L. 98–353, title III, § 497, July 10, 1984, 98 Stat. 384; Pub. L. 100–597, § 10, Nov. 3, 1988, 102 Stat. 3030; Pub. L. 109–8, title XV, § 1502(a)(6), Apr. 20, 2005, 119 Stat. 216.) HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 943(a) of the House amendment makes clear that a special taxpayer may object to confirmation of a plan. Section 943(b) of the House amendment is de- rived from section 943 of the House bill respecting con- firmation of a plan under chapter 9. It must be empha- sized that these standards of confirmation are in addi- tion to standards in section 1129 that are made applica- ble to chapter 9 by section 901 of the House amendment. In particular, if the requirements of sections 1129(a)(8) are not complied with, then the proponent may request application of section 1129(b). The court will then be re- quired to confirm the plan if it complies with the ‘‘fair and equitable’’ test and is in the best interests of credi- tors. The best interests of creditors test does not mean liquidation value as under chapter XI of the Bank- ruptcy Act [chapter 11 of former title 11]. In making such a determination, it is expected that the court will be guided by standards set forth in Kelley v. Everglades Drainage District, 319 U.S. 415 (1943) [Fla.1943, 63 S.Ct. 1141, 87 L.Ed. 1485, rehearing denied 63 S.Ct. 1444, 320 U.S. 214, 87 L.Ed. 1851, motion denied 64 S.Ct 783, 321 U.S. 754, 88 L.Ed. 1054] and Fano v. Newport Heights Irri- gation Dist., 114 F.2d 563 (9th Cir. 1940), as under present law, the bankruptcy court should make findings as de- tailed as possible to support a conclusion that this test has been met. However, it must be emphasized that un- like current law, the fair and equitable test under sec- tion 1129(b) will not apply if section 1129(a)(8) has been satisfied in addition to the other confirmation stand- ards specified in section 943 and incorporated by ref- erence in section 901 of the House amendment. To the extent that American United Mutual Life Insurance Co. v. City of Avon Park, 311 U.S. 138 (1940) [Fla.1940, 61 S.Ct. 157, 85 L.Ed. 91, 136 A.L.R. 860, rehearing denied 61 S.Ct. 395, 311 U.S. 730, 85 L.Ed. 475] and other cases are to the contrary, such cases are overruled to that extent. SENATE REPORT NO. 95–989 Section 946 [enacted as section 943] is adopted from current section 94 [section 414 of former title 11]. The test for confirmation is whether or not the plan is fair and equitable and feasible. The fair and equitable test tracts current chapter X [chapter 10 of former title 11] and is known as the strict priority rule. Creditors must be provided, under the plan, the going concern value of their claims. The going concern value contemplates a ‘‘comparison of revenues and expenditures taking into account the taxing power and the extent to which tax increases are both necessary and feasible’’ Municipal Insolvency, supra, at p. 64, and is intended to provide more of a return to creditors than the liquidation value if the city’s assets could be liquidated like those of a private corporation. HOUSE REPORT NO. 95–595 In addition to the confirmation requirements incor- porated from section 1129 by section 901, this section specifies additional requirements. Paragraph (1) re- quires compliance with the provisions of the title made applicable in chapter 9 cases. This provision follows section 94(b)(2) [section 414(b)(2) of former title 11]. Paragraph (2) requires compliance with the provisions of chapter 9, as does section 94(b)(2). Paragraph (3) adopts section 94(b)(4), requiring disclosure and reason- ableness of all payments to be made in connection with the plan or the case. Paragraph (4), copied from section 92(b)(6) [probably should be ‘‘94(b)(6)’’ which was section 414(b)(6) of former title 11], requires that the debtor not be prohibited by law from taking any action necessary to carry out the plan. Paragraph (5) departs from cur- rent law by requiring that administrative expenses be paid in full, but not necessarily in cash. Finally, para- graph (6) requires that the plan be in the best interest of creditors and feasible. The best interest test was de- leted in section 94(b)(1) of current chapter IX from pre- vious chapter IX [chapter 9 of former title 11] because it was redundant with the fair and equitable rule. How- ever, this bill proposes a new confirmation standard generally for reorganization, one element of which is the best interest of creditors test; see section 1129(a)(7). In that section, the test is phrased in terms of liquida-