§1191 Confirmation of Plan

Summary

The court must confirm a reorganization plan only if the plan meets all the rules in 1129(a) except paragraph (15). But if the plan meets all the applicable 1129(a) rules except paragraphs (8), (10), and (15), the court, at the debtor’s request, must still confirm the plan despite those paragraphs so long as the plan does not unfairly favor some creditors and is fair and equitable to every impaired class that has not accepted the plan. Being "fair and equitable" means: secured claims must meet the rule in 1129(b)(2)(A); the plan must use all projected disposable income for either 3 years (or a longer period up to 5 years the court sets) from the first payment, or the property paid out in that same period must equal that projected disposable income; and the debtor must be able to make all payments, or there must be a reasonable chance they will and the plan must include protections (which can include selling nonexempt assets) if payments stop. Disposable income means the debtor’s income that is not reasonably needed for personal support, new domestic support obligations that start after filing, or necessary business expenses. Also, a plan can pay certain priority claims listed in 507(a)(2) or (3) through the plan and still be confirmed under the exception above despite 1129(a)(9)(A).