11 U.S.C. § 1141 — Effect of confirmation

Page 274 TITLE 11—BANKRUPTCY § 1141 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—POSTCONFIRMATION MATTERS § 1141. Effect of confirmation (a) Except as provided in subsections (d)(2) and (d)(3) of this section, the provisions of a con- firmed plan bind the debtor, any entity issuing securities under the plan, any entity acquiring property under the plan, and any creditor, eq- uity security holder, or general partner in the debtor, whether or not the claim or interest of such creditor, equity security holder, or general partner is impaired under the plan and whether or not such creditor, equity security holder, or general partner has accepted the plan. (b) Except as otherwise provided in the plan or the order confirming the plan, the confirmation of a plan vests all of the property of the estate in the debtor. (c) Except as provided in subsections (d)(2) and (d)(3) of this section and except as otherwise provided in the plan or in the order confirming the plan, after confirmation of a plan, the prop- erty dealt with by the plan is free and clear of all claims and interests of creditors, equity se- curity holders, and of general partners in the debtor. (d)(1) Except as otherwise provided in this sub- section, in the plan, or in the order confirming the plan, the confirmation of a plan— (A) discharges the debtor from any debt that arose before the date of such confirmation, and any debt of a kind specified in section 502(g), 502(h), or 502(i) of this title, whether or not— (i) a proof of the claim based on such debt is filed or deemed filed under section 501 of this title; (ii) such claim is allowed under section 502 of this title; or (iii) the holder of such claim has accepted the plan; and (B) terminates all rights and interests of eq- uity security holders and general partners pro- vided for by the plan. (2) A discharge under this chapter does not dis- charge a debtor who is an individual from any debt excepted from discharge under section 523 of this title. (3) The confirmation of a plan does not dis- charge a debtor if— (A) the plan provides for the liquidation of all or substantially all of the property of the estate; (B) the debtor does not engage in business after consummation of the plan; and (C) the debtor would be denied a discharge under section 727(a) of this title if the case were a case under chapter 7 of this title. (4) The court may approve a written waiver of discharge executed by the debtor after the order for relief under this chapter. (5) In a case in which the debtor is an indi- vidual— (A) unless after notice and a hearing the court orders otherwise for cause, confirmation of the plan does not discharge any debt pro- vided for in the plan until the court grants a discharge on completion of all payments under the plan; (B) at any time after the confirmation of the plan, and after notice and a hearing, the court may grant a discharge to the debtor who has not completed payments under the plan if— (i) the value, as of the effective date of the plan, of property actually distributed under the plan on account of each allowed unse- cured claim is not less than the amount that would have been paid on such claim if the es- tate of the debtor had been liquidated under chapter 7 on such date; (ii) modification of the plan under section 1127 is not practicable; and (iii) subparagraph (C) permits the court to grant a discharge; and (C) the court may grant a discharge if, after notice and a hearing held not more than 10 days before the date of the entry of the order granting the discharge, the court finds that there is no reasonable cause to believe that— (i) section 522(q)(1) may be applicable to the debtor; and (ii) there is pending any proceeding in which the debtor may be found guilty of a felony of the kind described in section 522(q)(1)(A) or liable for a debt of the kind described in section 522(q)(1)(B); and if the requirements of subparagraph (A) or (B) are met. (6) Notwithstanding paragraph (1), the con- firmation of a plan does not discharge a debtor that is a corporation from any debt— (A) of a kind specified in paragraph (2)(A) or (2)(B) of section 523(a) that is owed to a domestic governmental unit, or owed to a person as the result of an action filed under subchapter III of chapter 37 of title 31 or any similar State statute; or (B) for a tax or customs duty with respect to which the debtor— (i) made a fraudulent return; or (ii) willfully attempted in any manner to evade or to defeat such tax or such cus- toms duty. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2638; Pub. L. 98–353, title III, § 513, July 10, 1984, 98 Stat. 387; Pub. L. 109–8, title III, §§ 321(d), 330(b), title VII, § 708, Apr. 20, 2005, 119 Stat. 95, 101, 126; Pub. L. 111–327, § 2(a)(36), Dec. 22, 2010, 124 Stat. 3561.) HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 1141(d) of the House amendment is derived from a comparable provision contained in the Senate amendment. However, section 1141(d)(2) of the House amendment is derived from the House bill as preferable to the Senate amendment. It is necessary for a corpora- tion or partnership undergoing reorganization to be able to present its creditors with a fixed list of liabil- ities upon which the creditors or third parties can make intelligent decisions. Retaining an exception for discharge with respect to nondischargeable taxes would leave an undesirable uncertainty surrounding reorga- nizations that is unacceptable. Section 1141(d)(3) is de- Page 275 TITLE 11—BANKRUPTCY § 1142 rived from the Senate amendment. Section 1141(d)(4) is likewise derived from the Senate amendment. SENATE REPORT NO. 95–989 Subsection (a) of this section makes the provisions of a confirmed plan binding on the debtor, any entity issuing securities under the plan, any entity acquiring property under the plan, and any creditor, equity secu- rity holder, or general partner in the debtor, whether or not the claim or interest of the creditor, equity se- curity holder, or partner is impaired under the plan and whether or not he has accepted the plan. There are two exceptions, enumerated in paragraph (2) and (3) of sub- section (d). Unless the plan or the order confirming the plan pro- vides otherwise, the confirmation of a plan vests all of the property of the estate in the debtor and releases it from all claims and interests of creditors, equity secu- rity holders and general partners. Subsection (d) contains the discharge for a reorga- nized debtor. Paragraph (1) specifies that the confirma- tion of a plan discharges the debtor from any debt that arose before the date of the order for relief unless the plan or the order confirming the plan provides other- wise. The discharge is effective against those claims whether or not proof of the claim is filed (or deemed filed), and whether or not the claim is allowed. The dis- charge also terminates all rights and interests of eq- uity security holders and general partners provided for by the plan. The paragraph permits the plan or the order confirming the plan to provide otherwise, and excepts certain debts from the discharge as provided in paragraphs (2) and (3). Paragraph (2) of subsection (d) makes clear what taxes remain nondischargeable in the case of a cor- porate debtor emerging from a reorganization under chapter 11. Nondischargeable taxes in such a reorga- nization are the priority taxes (under section 507) and tax payments which come due during and after the pro- ceeding under a deferred or part-payment agreement which the debtor had entered into with the tax author- ity before the bankruptcy proceedings began. On the other hand, a corporation which is taken over by its creditors through a plan of reorganization will not con- tinue to be liable for nonpriority taxes arising from the corporation’s prepetition fraud, failure to file a return, or failure to file a timely return, since the creditors who take over the reorganized company should not bear the burden of acts for which the creditors were not at fault. Paragraph (3) specifies that the debtor is not dis- charged by the confirmation of a plan if the plan is a liquidating plan and if the debtor would be denied dis- charge in a liquidation case under section 727. Specifi- cally, if all or substantially all of the distribution under the plan is of all or substantially all of the prop- erty of the estate or the proceeds of it, if the business, if any, of the debtor does not continue, and if the debt- or would be denied a discharge under section 727 (such as if the debtor were not an individual or if he had com- mitted an act that would lead to a denial of discharge), the chapter 11 discharge is not granted. Paragraph (4) authorizes the court to approve a waiv- er of discharge by the debtor. HOUSE REPORT NO. 95–595 Paragraph (2) [of subsec. (d)] makes applicable to an individual debtor the general exceptions to discharge that are enumerated in section 523(a) of the bankruptcy code. Editorial Notes AMENDMENTS 2010—Subsec. (d)(5)(B)(iii). Pub. L. 111–327, § 2(a)(36)(A), added cl. (iii). Subsec. (d)(5)(C). Pub. L. 111–327, § 2(a)(36)(B), sub- stituted ‘‘the court may grant a discharge if,’’ for ‘‘un- less’’ in introductory provisions and inserted con- cluding provisions. 2005—Subsec. (d)(2). Pub. L. 109–8, § 321(d)(1), sub- stituted ‘‘A discharge under this chapter does not dis- charge a debtor who is an individual’’ for ‘‘The con- firmation of a plan does not discharge an individual debtor’’. Subsec. (d)(5). Pub. L. 109–8, § 321(d)(2), added par. (5). Subsec. (d)(5)(C). Pub. L. 109–8, § 330(b), added subpar. (C). Subsec. (d)(6). Pub. L. 109–8, § 708, added par. (6). 1984—Subsec. (a). Pub. L. 98–353, § 513(a), substituted ‘‘any creditor, equity security holder, or general part- ner in’’ for ‘‘any creditor or equity security holder of, or general partner in,’’. Subsec. (c). Pub. L. 98–353, § 513(b), amended subsec. (c) generally. Prior to amendment, subsec. (c) read as follows: ‘‘After confirmation of a plan, the property dealt with by the plan is free and clear of all claims and interests of creditors, of equity security holders, and of general partners in the debtor, except as otherwise pro- vided in the plan or in the order confirming the plan.’’ Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2005 AMENDMENT Amendments by Pub. L. 109–8 effective 180 days after Apr. 20, 2005, with amendments by sections 321(d) and 708 of Pub. L. 109–8 not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, and amendment by sec- tion 330(b) of Pub. L. 109–8 applicable with respect to cases commenced under this title on or after Apr. 20, 2005, see section 1501 of Pub. L. 109–8, set out as a note under section 101 of this title. 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. § 1142. Implementation of plan (a) Notwithstanding any otherwise applicable nonbankruptcy law, rule, or regulation relating to financial condition, the debtor and any entity organized or to be organized for the purpose of carrying out the plan shall carry out the plan and shall comply with any orders of the court. (b) The court may direct the debtor and any other necessary party to execute or deliver or to join in the execution or delivery of any instru- ment required to effect a transfer of property dealt with by a confirmed plan, and to perform any other act, including the satisfaction of any lien, that is necessary for the consummation of the plan. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2639; Pub. L. 98–353, title III, § 514(a), (c), (d), July 10, 1984, 98 Stat. 387.) Editorial Notes AMENDMENTS 1984—Pub. L. 98–353, § 514(a), substituted ‘‘Implemen- tation’’ for ‘‘Execution’’ in section catchline. Subsec. (a). Pub. L. 98–353, § 514(c), struck out the comma after ‘‘shall carry out the plan’’. Subsec. (b). Pub. L. 98–353, § 514(d), inserted ‘‘a’’ after ‘‘by’’. 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.