This is the sixth in a series of alerts regarding the proposals made by the American Bankruptcy Institute Commission to Reform Chapter 11 Business Bankruptcies (the “Commission”). This alert covers the Commission’s recommendations regarding Chapter 11 plans of reorganization and Chapter 11 dismissal orders. It discusses the Commission’s proposed changes to plan confirmation and voting procedures, approving settlements contained in the plan, and releasing insiders from liability.

1. Recommended Changes to Confirmation and Voting Requirements.

This is the fifth in a series of Alerts regarding the proposals made by the American Bankruptcy Institute Commission to Reform Chapter 11 Business Bankruptcies. This alert covers the Commission’s recommendations regarding the now predominant practice of selling substantially all of the debtor’s assets as a going concern, free of all claims, at the outset of a bankruptcy case. The process, known as a “363 Sale” for the Bankruptcy Code section that applies, has been hailed as a job-saving measure and condemned for giving all value to lenders and none to other creditors.

A group of creditors learned the hard way that there may be no excuse for a late claim. U.S. Bankruptcy Judge James Peck of the Southern District of New York recently disallowed seven proofs of claim that had been filed late in the Lehman bankruptcies. Judge Peck held that the reasons cited by the parties for the late filing did not rise to the level of “excusable neglect” and he was thus disallowing their claims. This is of particular interest as it comes out of the Southern District of New York, which has one of the largest bankruptcy dockets in the country.