§1191 — Title 11 Bankruptcy | U.S. Code

Summary

A court must approve a repayment plan only if it meets all the rules in section 1129(a) except paragraph (15). If the plan meets the rules of 1129(a) except paragraphs (8), (10), and (15), the court must approve the plan at the debtor’s request so long as the plan is not unfairly discriminatory and is fair and equitable for every impaired class of claims or interests that did not accept the plan. “Fair and equitable” means: secured claims get the protections of 1129(b)(2)(A); the debtor will pay all projected disposable income for 3 years (or up to 5 years if the court orders) or the property paid in that period equals that income; and the debtor can make the payments, or is likely to and the plan includes remedies (for example, selling nonexempt assets) if payments fail. “Disposable income” is the money the debtor receives that is not reasonably needed for personal or dependent support, a domestic support obligation first due after filing, or necessary business expenses. A plan that pays certain priority claims under 507(a)(2) or (3) through the plan can be approved under the rules above despite 1129(a)(9)(A).

Title 11, §1191

Bankruptcy — Source: USLM XML via OLRC

(a)The court shall confirm a plan under this subchapter only if all of the requirements of section 1129(a), other than paragraph (15) of that section, of this title 11 So in original. The words “of this title” probably should follow “1129(a)”. are met.

(b)Notwithstanding section 510(a) of this title, if all of the applicable requirements of section 1129(a) of this title, other than paragraphs (8), (10), and (15) of that section, are met with respect to a plan, the court, on request of the debtor, shall confirm the plan notwithstanding the requirements of such paragraphs if the plan does not discriminate unfairly, and is fair and equitable, with respect to each class of claims or interests that is impaired under, and has not accepted, the plan.

(c)For purposes of this section, the condition that a plan be fair and equitable with respect to each class of claims or interests includes the following requirements:

(1)With respect to a class of secured claims, the plan meets the requirements of section 1129(b)(2)(A) of this title.

(2)As of the effective date of the plan—

(A)the plan provides that all of the projected disposable income of the debtor to be received in the 3-year period, or such longer period not to exceed 5 years as the court may fix, beginning on the date that the first payment is due under the plan will be applied to make payments under the plan; or

(B)the value of the property to be distributed under the plan in the 3-year period, or such longer period not to exceed 5 years as the court may fix, beginning on the date on which the first distribution is due under the plan is not less than the projected disposable income of the debtor.

(3)(A)The debtor will be able to make all payments under the plan; or

(B)(i)there is a reasonable likelihood that the debtor will be able to make all payments under the plan; and

(ii)the plan provides appropriate remedies, which may include the liquidation of nonexempt assets, to protect the holders of claims or interests in the event that the payments are not made.

(d)For purposes of this section, the term “disposable income” means the income that is received by the debtor and that is not reasonably necessary to be expended—

(1)for—

(A)the maintenance or support of the debtor or a dependent of the debtor; or

(B)a domestic support obligation that first becomes payable after the date of the filing of the petition; or

(2)for the payment of expenditures necessary for the continuation, preservation, or operation of the business of the debtor.

(e)Notwithstanding section 1129(a)(9)(A) of this title, a plan that provides for the payment through the plan of a claim of a kind specified in paragraph (2) or (3) of section 507(a) of this title may be confirmed under subsection (b) of this section.

Notes & Related Subsidiaries

Editorial Notes

Amendments

2022—Subsec. (c)(3). Pub. L. 117–151 added par. (3) and struck out former par. (3) which read as follows: “(3)(A)(i) The debtor will be able to make all payments under the plan; or “(ii) there is a reasonable likelihood that the debtor will be able to make all payments under the plan; and “(B) the plan provides appropriate remedies, which may include the liquidation of nonexempt assets, to protect the holders of claims or interests in the event that the payments are not made.” 2020—Subsec. (f). Pub. L. 116–260, § 320(f)(2)(A)(iii), contingent on its addition by Pub. L. 116–260, § 320(c), struck out subsec. (f). Text read as follows: “Notwithstanding section 1129(a)(9)(A) of this title and subsection (e) of this section, a plan that provides for payment of a claim of a kind specified in section 503(b)(10) of this title may be confirmed under subsection (b) of this section if the plan proposes to make payments on account of such claim when due under the terms of the loan giving rise to such claim.” Pub. L. 116–260, § 320(c), added subsec. (f).

Statutory Notes and Related Subsidiaries

Effective Date

of 2022 AmendmentAmendment by Pub. L. 117–151 applicable with respect to any case that is commenced under this title on or after Mar. 27, 2020, and with respect to a case that was commenced on or after Mar. 27, 2020, and before

June 21, 2022, that is pending on

June 21, 2022, see section 2(h)(2) of Pub. L. 117–151, set out as an

Effective Date

of 2022 Amendment; Retroactive Application note under section 101 of this title. Effective and Termination Dates of 2020 AmendmentAmendment by section 320(c) of div. N of Pub. L. 116–260 effective on the date on which the Administrator of the Small Business Administration submits to the Director of the Executive Office for United States Trustees a written determination relating to loan eligibility under pars. (36) and (37) of section 636(a) of Title 15, Commerce and Trade, and applicable to any case pending on or commenced on or after such date, and amendment by section 320(f)(2)(A)(iii) of div. N of Pub. L. 116–260, relating to repeal of such amendment if it became effective, effective two years after Dec. 27, 2020, see section 320(f) of Pub. L. 116–260, set out as a note under section 364 of this title. [Pursuant to 15 U.S.C. 636(a)(36)(A)(iii), the “covered period” for loans under the Paycheck Protection Program ended on June 30, 2021.]

Effective Date

Section effective 180 days after Aug. 23, 2019, see section 5 of Pub. L. 116–54, set out as an

Effective Date

of 2019 Amendment note under section 101 of this title.

§1191 Confirmation of Plan

Summary

Title 11, §1191

Notes & Related Subsidiaries

Editorial Notes

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Effective Date

Effective Date

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