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socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 39146
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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How do you fight for more time when your in Chapter 11, cashing

Customer Question

How do you fight for more time when your in Chapter 11, cashing flowing positive, but can't get the secured creditor to refinance or extend loan out 5 years?
Submitted: 4 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 4 years ago.

You may not be able to file a second Chapter 11, because the note's maturity date was known in advance. If the plan was predicated on a reasonable probability that you could refinance the secured debt, then that could provide the necessary good faith to file a second Ch. 11. But, if it was unlikely that you could have refinanced the debt, then the original plan could be deemed a stall tactic and a subsequent Ch. 11 would simply prolong the inevitable foreclosure of the secured debt.

Since you have already apparently failed to negotiate with the secured creditor, and you cannot find a new lender willing to refinance the debt, this leaves the only other option as an attempted plan modification (other than to file/convert to Chapter 7, that is). A postconfirmation plan modification requires:


  • the original plan is not “substantially consummated” (11 USC § 1127(b));
  • the modified plan complies with all of the mandatory plan requirements (11 USC § 1127(b));
  • circumstances “warrant such modification” (11 USC § 1127(b));
  • the modification proponent complies with plan disclosure requirements (11 USC § 1127(c));
  • claimants affected by the modification are given notice and an opportunity to change their votes (11 USC § 1127(d); FRBP 2002(a)(5) & (d)(7));
  • claimants are given notice of the confirmation hearing for the modified plan (11 USC § 1127(b); FRBP 2002(b)); and
  • the court confirms the modified plan after notice and a hearing (11 USC §§ 1127(b), 1129).



In other words, you're looking to try to put together a consensus vote among the other creditors that will force the secured creditor to submit to the plan, and where the secured creditor retains its lien on the property (collateral) and receives deferred payments until paid in full (11 USC § 1129(b)(2)(A)(i).

Hope this helps.

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