What is a “confirmation hearing” in a Chapter 11 bankruptcy?

A confirmation hearing in a Chapter 11 bankruptcy is a hearing held before a bankruptcy judge to decide whether the debtors’ proposed reorganization plan should be accepted or rejected. This plan details how the debtor’s debts will be repaid and how creditors will be treated. During the confirmation hearing, the debtor and creditors will present evidence and arguments relating to the proposed plan. The judge will then make a determination to accept or reject the plan. The confirmation hearing serves two main purposes: to ensure that the plan meets the requirements of the Bankruptcy Code and to address any objections that creditors may have to the plan. In order for the plan to be accepted, it must meet the “best interests of the creditors” test, which requires that it provides for payment of at least as much as creditors would have received had the debtor liquidated instead of filing for Chapter 11 bankruptcy. At the confirmation hearing, creditors are given an opportunity to voice any objections they may have to the plan, including objections to how their claims are being treated. If the judge does not find the objections valid or the debtors are unwilling to address them, the plan may be rejected. A successful confirmation hearing is essential for the debtors to move forward with their reorganization. If the judge approves the plan, the debtor’s obligations will be restructured in accordance with the plan and the debtor will receive a fresh start financially.

Related FAQs

What is a “confirmation hearing” in a Chapter 11 bankruptcy?

Related FAQs

Related Blog Posts