11 U.S.C. § 1127 — Modification of plan

Page 264 TITLE 11—BANKRUPTCY § 1127 552(a) of Pub. L. 98–353, set out as a note under section 101 of this title. § 1127. Modification of plan (a) The proponent of a plan may modify such plan at any time before confirmation, but may not modify such plan so that such plan as modi- fied fails to meet the requirements of sections 1122 and 1123 of this title. After the proponent of a plan files a modification of such plan with the court, the plan as modified becomes the plan. (b) The proponent of a plan or the reorganized debtor may modify such plan at any time after confirmation of such plan and before substantial consummation of such plan, but may not modify such plan so that such plan as modified fails to meet the requirements of sections 1122 and 1123 of this title. Such plan as modified under this subsection becomes the plan only if cir- cumstances warrant such modification and the court, after notice and a hearing, confirms such plan as modified, under section 1129 of this title. (c) The proponent of a modification shall com- ply with section 1125 of this title with respect to the plan as modified. (d) Any holder of a claim or interest that has accepted or rejected a plan is deemed to have ac- cepted or rejected, as the case may be, such plan as modified, unless, within the time fixed by the court, such holder changes such holder’s pre- vious acceptance or rejection. (e) If the debtor is an individual, the plan may be modified at any time after confirmation of the plan but before the completion of payments under the plan, whether or not the plan has been substantially consummated, upon request of the debtor, the trustee, the United States trustee, or the holder of an allowed unsecured claim, to— (1) increase or reduce the amount of pay- ments on claims of a particular class provided for by the plan; (2) extend or reduce the time period for such payments; or (3) alter the amount of the distribution to a creditor whose claim is provided for by the plan to the extent necessary to take account of any payment of such claim made other than under the plan. (f)(1) Sections 1121 through 1128 and the re- quirements of section 1129 apply to any modi- fication under subsection (e). (2) The plan, as modified, shall become the plan only after there has been disclosure under section 1125 as the court may direct, notice and a hearing, and such modification is approved. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2635; Pub. L. 98–353, title III, § 511, July 10, 1984, 98 Stat. 386; Pub. L. 109–8, title III, § 321(e), Apr. 20, 2005, 119 Stat. 96; Pub. L. 111–327, § 2(a)(34), Dec. 22, 2010, 124 Stat. 3561.) HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 1127(a) of the House amendment adopts a pro- vision contained in the House bill permitting only the proponent of a plan to modify the plan and rejecting the alternative of open modification contained in the Senate amendment. SENATE REPORT NO. 95–989 Under subsection (a) the proponent may file a pro- posal to modify a plan prior to confirmation. In the case of a public company the modifying proposal may be filed prior to approval. Subsection (b) provides that a party in interest eligi- ble to file a plan may file instead of a plan a proposal to modify a plan filed by another. Under subsection (c) a party in interest objecting to some feature of a plan may submit a proposal to modify the plan to meet the objection. After a plan has been confirmed, but before its sub- stantial consummation, a plan may be modified by leave of court, which subsection (d) provides shall be granted for good cause. Subsection (e) provides that a proposal to modify a plan is subject to the disclosure requirements of section 1125 and as provided in sub- section (f). It provides that a creditor or stockholder who voted for or against a plan is deemed to have ac- cepted or rejected the modifying proposal. But if the modification materially and adversely affects any of their interests, they must be afforded an opportunity to change their vote in accordance with the disclosure and solicitation requirements of section 1125. Under subsection (g) a plan, if modified prior to con- firmation, shall be confirmed if it meets the require- ments of section 1130. HOUSE REPORT NO. 95–595 Subsection (a) permits the proponent of a plan to modify it at any time before confirmation, subject, of course, to the requirements of sections 1122 and 1123, governing classification and contents of a plan. After the proponent of a plan files a modification with the court, the plan as modified becomes the plan, and is to be treated the same as an original plan. Subsection (b) permits modification of a plan after confirmation under certain circumstances. The modi- fication must be proposed before substantial con- summation of the plan. The requirements of sections 1122 and 1123 continue to apply. The plan as modified under this subsection becomes the plan only if the court confirms the plan as modified under section 1129 and the circumstances warrant the modification. Subsection (c) requires the proponent of a modifica- tion to comply with the disclosure provisions of section 1125. Of course, if the modification were sufficiently minor, the court might determine that additional dis- closure was not required under the circumstances. Subsection (d) simplifies modification procedure by deeming any creditor or equity security holder that has already accepted or rejected the plan to have accepted or rejected the modification, unless, within the time fixed by the court, the creditor or equity security hold- er changes this previous acceptance or rejection. Editorial Notes AMENDMENTS 2010—Subsec. (f)(1). Pub. L. 111–327 substituted ‘‘sub- section (e)’’ for ‘‘subsection (a)’’. 2005—Subsecs. (e), (f). Pub. L. 109–8 added subsecs. (e) and (f). 1984—Subsec. (a). Pub. L. 98–353, § 511(a), inserted ‘‘of a plan’’ after ‘‘After the proponent’’, and ‘‘of such plan’’ after ‘‘modification’’. Subsec. (b). Pub. L. 98–353, § 511(b), substituted ‘‘cir- cumstances warrant such modification and the court, after notice and a hearing, confirms such plan as modi- fied, under section 1129 of this title’’ for ‘‘the court, after notice and a hearing, confirms such plan, as modi- fied, under section 1129 of this title, and circumstances warrant such modification’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109–8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109–8, set out as a note under section 101 of this title. Page 265 TITLE 11—BANKRUPTCY § 1129 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. § 1128. Confirmation hearing (a) After notice, the court shall hold a hearing on confirmation of a plan. (b) A party in interest may object to confirma- tion of a plan. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2635.) HISTORICAL AND REVISION NOTES SENATE REPORT NO. 95–989 [Section 1129 (enacted as section 1128)] Subsection (a) requires that there be a hearing in every case on the confirmation of the plan. Notice is required. Subsection (b) permits any party in interest to object to the confirmation of the plan. The Securities and Ex- change Commission and indenture trustees, as parties in interest under section 1109, may object to confirma- tion of the plan. § 1129. Confirmation of plan (a) The court shall confirm a plan only if all of the following requirements are met: (1) The plan complies with the applicable provisions of this title. (2) The proponent of the plan complies with the applicable provisions of this title. (3) The plan has been proposed in good faith and not by any means forbidden by law. (4) Any payment made or to be made by the proponent, by the debtor, or by a person issuing securities or acquiring property under the plan, for services or for costs and expenses in or in connection with the case, or in con- nection with the plan and incident to the case, has been approved by, or is subject to the ap- proval of, the court as reasonable. (5)(A)(i) The proponent of the plan has dis- closed the identity and affiliations of any indi- vidual proposed to serve, after confirmation of the plan, as a director, officer, or voting trust- ee of the debtor, an affiliate of the debtor par- ticipating in a joint plan with the debtor, or a successor to the debtor under the plan; and (ii) the appointment to, or continuance in, such office of such individual, is consistent with the interests of creditors and equity secu- rity holders and with public policy; and (B) the proponent of the plan has disclosed the identity of any insider that will be em- ployed or retained by the reorganized debtor, and the nature of any compensation for such insider. (6) Any governmental regulatory commis- sion with jurisdiction, after confirmation of the plan, over the rates of the debtor has ap- proved any rate change provided for in the plan, or such rate change is expressly condi- tioned on such approval. (7) With respect to each impaired class of claims or interests— (A) each holder of a claim or interest of such class— (i) has accepted the plan; or (ii) will receive or retain under the plan on account of such claim or interest prop- erty of a value, as of the effective date of the plan, that is not less than the amount that such holder would so receive or retain if the debtor were liquidated under chapter 7 of this title on such date; or (B) if section 1111(b)(2) of this title applies to the claims of such class, each holder of a claim of such class will receive or retain under the plan on account of such claim property of a value, as of the effective date of the plan, that is not less than the value of such holder’s interest in the estate’s interest in the property that secures such claims. (8) With respect to each class of claims or in- terests— (A) such class has accepted the plan; or (B) such class is not impaired under the plan. (9) Except to the extent that the holder of a particular claim has agreed to a different treatment of such claim, the plan provides that— (A) with respect to a claim of a kind speci- fied in section 507(a)(2) or 507(a)(3) of this title, on the effective date of the plan, the holder of such claim will receive on account of such claim cash equal to the allowed amount of such claim; (B) with respect to a class of claims of a kind specified in section 507(a)(1), 507(a)(4), 507(a)(5), 507(a)(6), or 507(a)(7) of this title, each holder of a claim of such class will re- ceive— (i) if such class has accepted the plan, deferred cash payments of a value, as of the effective date of the plan, equal to the allowed amount of such claim; or (ii) if such class has not accepted the plan, cash on the effective date of the plan equal to the allowed amount of such claim; (C) with respect to a claim of a kind speci- fied in section 507(a)(8) of this title, the hold- er of such claim will receive on account of such claim regular installment payments in cash— (i) of a total value, as of the effective date of the plan, equal to the allowed amount of such claim; (ii) over a period ending not later than 5 years after the date of the order for relief under section 301, 302, or 303; and (iii) in a manner not less favorable than the most favored nonpriority unsecured claim provided for by the plan (other than cash payments made to a class of creditors under section 1122(b)); and (D) with respect to a secured claim which would otherwise meet the description of an unsecured claim of a governmental unit under section 507(a)(8), but for the secured status of that claim, the holder of that claim will receive on account of that claim, cash payments, in the same manner and over the same period, as prescribed in subpara- graph (C). (10) If a class of claims is impaired under the plan, at least one class of claims that is im- paired under the plan has accepted the plan,