Party-in-Interest Standing to File a Plan In a Chapter 11 Bankruptcy Case

Who May File a Plan in a Chapter 11 Bankruptcy Case

The debtor in a chapter 11 case always has standing to file a plan of reorganization.  In fact, during the “exclusivity period,” only the debtor has right to file a plan.  The exclusivity period starts out as the first 120 days after the filing of the chapter 11 bankruptcy case or, in a small business case, the first 180 days following the filing of a bankruptcy petition.  Often, debtors seek extensions of their exclusivity periods.  While the requirements and timing for such motions vary between small business cases and chapter 11 bankruptcy cases that are not designated small business cases, extensions are routinely granted when debtors are diligently working toward resolving matters in order to file a confirmable chapter 11 plan of reorganization.

Filing a Chapter 11 Bankruptcy Plan After Exclusivity Has Lapsed

When the debtor’s exclusive right to file a plan of reorganization lapses or is terminated, any “party-in-interest” can file a plan of reorganization.  The term “party-in-interest” is not defined in the Bankruptcy Code but so many courts have taken up the question that bankruptcy attorneys have a good concept of its boundaries.  As mentioned, the debtor is always a party-in-interest with standing to propose a chapter 11 plan of reorganization.  The Bankruptcy Code also confers standing upon creditors of the debtor thus, outside of the exclusivity period, creditors have standing to file chapter 11 plans of reorganization.  Interestingly, the term creditor is so broadly defined in the Bankruptcy Code that any party with a claim against a debtor is considered a creditor.  A claim includes rights to payment and equitable remedies that have not been filed or reduced to judgment.  In fact, a party remains a “creditor” of a debtor even if the debtor vigorously disputes any liability to that creditor.

But party-in-interest standing goes extends beyond the debtor and its creditors and extends to any party whose interest could conceivably be affected by the confirmation of a chapter 11 plan.  Many courts have noted that the intent of Congress was to encourage greater participation in chapter 11 cases.  Effectively, party-in-interest standing is not a limit at all but, rather, an invitation to participate–the only real limit is the bare limit imposed by Article III of the United States Constitution.

To begin with, the debtor has the right to file a plan.  If exclusivity terminates, then any party-in-interest may file a plan of reorganization in a chapter 11 bankruptcy case.  To determine whether you may propose a plan of reorganization in a chapter 11 bankruptcy case and whether becoming a plan proponent makes sense, you should consult an experienced Pittsburgh Bankruptcy Lawyer.

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