Bankruptcy
Client Alert
August
2, 2012
Chapter
11 Plan Ruled Unconfirmable Without a Confirmation
Hearing
Michael H.
Reed
|
[email protected]
Lesley S.
Welwarth
|
[email protected]
In In re Am. Capital Equip., LLC the Third Circuit addressed the issue of whether a bankruptcy court has the authority to determine at the disclosure statement stage that a Chapter 11 plan is unconfirmable without holding a confirmation hearing. The court held that when a plan is patently unconfirmable, so that no dispute of material fact remains and defects cannot be cured by creditor voting, a bankruptcy court is authorized to convert the case to Chapter 7 without holding a confirmation hearing. Am. Capital Equip. appears to be the first circuit court decision to expressly hold that a bankruptcy court can determine the confirmability of a Chapter 11 plan at the disclosure statement stage without holding a confirmation hearing.