§1111 — Title 11 Bankruptcy | U.S. Code

Summary

A claim or ownership interest that a debtor lists on their official bankruptcy schedules counts as if the creditor filed a claim, unless the schedule shows the claim is disputed, contingent, or unliquidated (meaning it is contested, depends on something happening first, or the amount is unknown). If a creditor has a lien on estate property, the claim is treated as if the creditor can go after the debtor personally, even if they actually cannot. A group of similar creditors can choose a different treatment if at least two-thirds in amount and more than half in number of the allowed claims in that group agree. The group cannot choose that option if the creditors’ interest in the property is of inconsequential value, or if the creditor can go after the debtor and the property is sold under section 363 or under the plan. If the group makes the choice, the claim is treated as a secured claim to the extent it is allowed, even if another rule would say otherwise.

Title 11, §1111

Bankruptcy — Source: USLM XML via OLRC

(a)A proof of claim or interest is deemed filed under section 501 of this title for any claim or interest that appears in the schedules filed under section 521(a)(1) or 1106(a)(2) of this title, except a claim or interest that is scheduled as disputed, contingent, or unliquidated.

(b)(1)(A)A claim secured by a lien on property of the estate shall be allowed or disallowed under section 502 of this title the same as if the holder of such claim had recourse against the debtor on account of such claim, whether or not such holder has such recourse, unless—

(i)the class of which such claim is a part elects, by at least two-thirds in amount and more than half in number of allowed claims of such class, application of paragraph (2) of this subsection; or

(ii)such holder does not have such recourse and such property is sold under section 363 of this title or is to be sold under the plan.

(B)A class of claims may not elect application of paragraph (2) of this subsection if—

(i)the interest on account of such claims of the holders of such claims in such property is of inconsequential value; or

(ii)the holder of a claim of such class has recourse against the debtor on account of such claim and such property is sold under section 363 of this title or is to be sold under the plan.

(2)If such an election is made, then notwithstanding section 506(a) of this title, such claim is a secured claim to the extent that such claim is allowed.

Notes & Related Subsidiaries

Historical and Revision Notes

Legislative Statements

A discussion of section 1111(b) of the House amendment is best considered in the context of confirmation and will therefore, be discussed in connection with section 1129.

senate report no. 95–989

This section dispenses with the need for every creditor and equity security holder to file a proof of claim or interest in a reorganization case. Usually the debtor’s schedules are accurate enough that they will suffice to determine the claims or interests allowable in the case. Thus, the section specifies that any claim or interest included on the debtor’s schedules is deemed filed under section 501. This does not apply to claims or interests that are scheduled as disputed, contingent, or unliquidated.

Editorial Notes

Amendments

2010—Subsec. (a). Pub. L. 111–327 substituted “521(a)(1)” for “521(1)”.

§1111 Claims and Interests