Individual Chapter 11 Cases and the Absolute Priority Rule: Latest Developments

Navigating Divergent Court Interpretations of the Rule and Impact on Filings by Individuals

Recording of a 90-minute CLE webinar with Q&A


Conducted on Tuesday, May 21, 2013

Recorded event now available

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Program Materials

This CLE webinar will provide bankruptcy counsel with an analysis of the latest case law developments on the absolute priority rule in individual Chapter 11 cases post BAPCPA, the varying court interpretations and applications of the rule, and best practices for both individual debtors and unsecured creditors.

Description

Prior to BAPCPA, the absolute priority rule posed a hurdle for individual Chapter 11 debtors to obtain plan confirmation under cramdown provisions. BAPCPA added Section 1115 defining property of the estate and amended the absolute priority rule to allow debtors to retain certain types of property.

The ambiguity of these amendments has resulted in a split among bankruptcy courts on the extent to which the absolute priority rule applies to individual Chapter 11 debtors.  Some courts find that the absolute priority rule is abolished, while other courts indicate it exists with limited exceptions.

As the application of these amendments varies among courts, counsel representing individual debtors as well as unsecured creditors must carefully navigate the statutory provisions applicable to these Chapter 11 cases.

Additionally, courts are wrestling with the standards to determine what is reasonable and appropriate for individual Chapter 11 debtors to spend during the case for living expenses.  The case law is developing daily.

Listen as our authoritative panel of bankruptcy practitioners guides you through the nuances of (1) the absolute priority rule’s application in individual Chapter 11 cases, analyzing recent case law; (2) issues to consider in drafting a Chapter 11 plan; and (3) the payment of personal expenses prior to the confirmation of a plan.

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Outline

  1. BAPCPA amendments impacting the absolute priority rule
    1. Section 1115 defining property of the estate
    2. Amendment to Chapter 1129(b)(2)(B) absolute priority rule
    3. Interplay with Section 522 exempt property
  2. Competing court interpretations of the absolute priority rule, including latest cases
    1. Absolute priority rule abolished
    2. Absolute priority rule survives
    3. New value exception
  3. Payment of personal expenses prior to confirmation of a plan
  4. Drafting a plan in individual Chapter 11 cases
  5. Best practices for debtors
  6. Best practices for unsecured creditors

Benefits

The panel will review these and other key questions:

  • How have the BAPCPA amendments changed the landscape for the application of the absolute priority rule in individual Chapter 11 cases?
  • How are courts interpreting and applying the absolute priority rule in reorganization plans for individual debtors?
  • If the absolute priority rule exempts the debtor from retaining exempt property, does the new value exception apply?
  • What living expenses can an individual debtor incur during the case?
  • What issues should be considered in the drafting of individual Chapter 11 plans?

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.

Faculty

William L. Norton
William L. Norton

Partner
Bradley Arant Boult Cummings

Mr. Norton focuses his practice in the business bankruptcy area, dealing in all aspects of bankruptcy cases, creditor...  |  Read More

Stanley E. Goldich
Stanley E. Goldich

Partner
Pachulski Stang Ziehl & Jones

Mr. Goldich’s legal practice primarily encompasses representation of debtors, creditors’ committees,...  |  Read More

Gwendolyn J. Godfrey
Gwendolyn J. Godfrey

Bryan Cave

Ms. Godfrey focuses her practice on bankruptcy and commercial litigation. She serves as counsel to institutional...  |  Read More

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