Source: http://dm.epiq11.com/KDK/Project
Timestamp: 2013-05-25 03:48:06
Document Index: 363621744

Matched Legal Cases: ['§ 301', '§ 1101', '§ 1107', '§ 1121', '§ 1125', '§ 1123', '§ 1126', '§ 1128', '§ 1106', '§ 109', '§ 341', '§ 1930', '§ 1102', '§ 1103', '§ 1104', '§ 1104', '§ 1104', '§ 1106', '§ 1105', '§ 1106', '§ 321', '§ 362', '§ 362', '§ 362', '§ 1121', '§ 1121', '§ 307', '§ 363', '§ 363', '§ 363', '§ 361', '§ 364', '§ 101', '§ 1111', '§ 101', '§ 1111', '§ 1112', '§ 1112', '§ 1104', '§ 1125', '§ 1125', '§ 1125', '§ 1125', '§ 1121', '§ 1121', '§ 1106', '§ 1141', '§ 727', '§ 1127', '§ 1127', '§ 1144']

Eastman Kodak Company Creditors' Committee Information Website - Client Home
For inquiries to the Official Committee of Unsecured Creditors, please email:
info@kodakucc.com
Eastman Kodak Company Creditors' Committee Information Website
Main Debtor: Eastman Kodak Company - Case No. 12 - 10202 (ALG) (Click here to view the complete list of debtors and their voluntary petitions.)
12-10202 Related Debtors
Creo Manufacturing America LLCCase No.:12-10203
Eastman Kodak International Capital Company, Inc.Case No.:12-10204
Far East Development Ltd.Case No.:12-10205
FPC Inc.Case No.:12-10206
Kodak (Near East), Inc.Case No.:12-10207
Kodak America, Ltd.Case No.:12-10208
Kodak Aviation Leasing LLCCase No.:12-10209
Kodak Imaging Network, Inc.Case No.:12-10210
Kodak Philippines, Ltd.Case No.:12-10211
Kodak Portuguesa LimitedCase No.:12-10212
Kodak Realty, Inc.Case No.:12-10201
Laser-Pacifica Media CorporationCase No.:12-10213
NPEC Inc.Case No.:12-10214
Pakon, Inc.Case No.:12-10215
Qualex Inc.Case No.:12-10216
Filing Date: January 19, 2012
Judge: The Honorable Allan L. Gropper
Creditors Committee:
The Official Committee of Unsecured Creditors was appointed January 25, 2012, and is comprised of the following entities:
Altek Corporation Pension Benefit Guaranty Corporation
Claims Agent: Kurtzman Carson Consultants LLC
May 29, 2013 at 11:00 a.m. (Eastern Time)
June 13, 2013 at 11:00 a.m. (Eastern Time)
June 20, 2013 at 11:00 a.m. (Eastern Time)
July 17, 2013 at 11:00 a.m. (Eastern Time)
The initial meeting of creditors pursuant to section 341 of the Bankruptcy Code commenced on March 12, 2012. The continued meeting was held on May 7, 2012 at 3:30pm (Prevailing Eastern Time).
Deadline to File Proofs of Claims Against Debtor Entities – General and Governmental Claims:
The Bankruptcy Court has established July 17, 2012 at 5:00 p.m. (Prevailing Eastern Time) as the deadline for filing proofs of claim (the “Bar Date”). Proofs of claim will be deemed filed only when received by the official noticing and claims agent in the Debtors’ chapter 11 cases, Kurtzman Carson Consultants LLC, or the Clerk of the United States Bankruptcy Court for the Southern District of New York on or before the Bar Date.
The original and proof of claim form should be sent to the following address by first-class mail, hand delivery or overnight courier:
Eastman Kodak Claims Processing Center
or by hand delivery to:
Additional information about filing proofs of claim against the Debtors and a proof of claim form can be accessed through the Debtors’ claims agent’s website by clicking here. The bar date order can be viewed by clicking here.
An unofficial version of the Docket can be accessed through the Debtors’ claims agent’s website, Kurtzman Carson Consultants LLC, by selecting Court Documents on the left side of the page. From time to time, certain key documents filed in the Bankruptcy Case or otherwise made available by the Debtor or the Creditors' Committee will be available by selecting the "Key Documents" link above, or by clicking here. Should you have any questions relating to this website, please feel free to contact us at (646) 282-2400.
Debtors' Restructuring Website:www.kodaktransforms.com/
Bankruptcy Court's Website:www.nysb.uscourts.gov/
The following entities are members of the Official Committee of Unsecured Creditors in these cases:
Phone:(212) 530-5000
Email:ddunne@milbank.comtlomazow@milbank.combkinney@milbank.com
Attn:Dennis F. DunneTyson M. LomazowBrian Kinney
1 Penn Plaza, Suite 3335
Email:altogut@teamtogut.comfrankoswald@teamtogut.com
Attn:Albert TogutFrank A. Oswald
Investment Banker to the Official Committee of Unsecured Creditors
Phone:(212) 759-4433
Email:rdombrowski@alvarezandmarsal.comkstapleton@alvarezandmarsal.comjstegenga@alvarezandmarsal.com
Attn:Raymond E. DombrowskiKelly Beaudin StapletonJeffery Stegenga
Phone:(212) 284-2300
Email:Project.Kodak@jefferies.com
Attn:Steve StromLeon SzlezingerRob White
Intellectual Property Consultants to the Official Committee of Unsecured Creditors
Phone:(312) 241-1500
Email:ssteger@giplg.comdberten@giplg.com
Attn:Steven StegerDavid Berten
Phone:(212) 558-400
Fax:(212) 558-3588
Attn:Andrew G. DietderichJohn J. JeromeMichael H. TorkinMark U. Schneiderman
Phone:(212) 332-8840
Fax:(212) 332-8855
Attn:Pauline K. MorganJoseph M. Barry
Phone:(212) 688-2870
Fax:(212) 668-2255
Attn:Brian S. Masumoto
Click on the question for the answer to show:
What is the Official Committee of Unsecured Creditors?
The Official Committee of Unsecured Creditors is appointed by the United States Trustee to represent the interests of unsecured creditors in the chapter 11 bankruptcy cases.
What is the role of the Official Committee of Unsecured Creditors?
Pursuant to the Bankruptcy Code, the Committee may: (1) consult with the trustee or debtor in possession concerning the administration of the cases; (2) investigate the acts, conduct, assets, liabilities, and financial condition of the debtor, the operation or the debtor’s business and the desirability of the continuance of such business, and any other matter relevant to the case or to the formulation of a plan; (3) participate in the formulation of a plan, advise those represented by such committee of such committee’s determinations as to any plan formulated, and collect and file with the court acceptances or rejections of a plan; (4) request the appointment of a trustee or examiner under section 1104 of the Bankruptcy Code; and (5) perform such other services as are in the interest of those represented.
Who are the members of the Official Committee of Unsecured Creditors? The current members of the Official Committee of Unsecured Creditors are:
Who is the judge presiding over these Chapter 11 cases?
The Eastman Kodak Company bankruptcy cases are assigned to the Honorable Allan L. Gropper, United States Bankruptcy Judge for the Southern District of New York. The telephone number for the United States Bankruptcy Court for the Southern District of New York is (212) 668-2870. The mailing address is: United States Bankruptcy Court, Southern District of New York, One Bowling Green, New York, New York 10004-1408
The U.S. Trustee is Tracy Hope Davis and Brian Masumoto and Susan Golden are the Trial attorneys assigned to the case.
What role does the United States Trustee play in the Eastman Kodak Company Chapter 11 cases?
The United States Trustee Program is a component of the Department of Justice responsible for overseeing the administration of bankruptcy cases. For further details on the United States Trustee’s role, please visit the web page for the UST at www.usdoj.gov/ust/r03/index.htm
Why am I receiving information about the Eastman Kodak Company Chapter 11 cases?
Certain notices (the "Notices") have been sent to all potential creditors in the Eastman Kodak Company Chapter 11 cases. If you received a Notice, it is most likely because you have done business with one or more of the Debtors in the past. A complete list of all the Debtors can be found on this website, under the tab entitled "General Information." The purpose of the Notice is to inform you of the Debtors' bankruptcy filings, and to give you an opportunity to determine whether you wish to assert a claim against one or more of the Debtors. The fact that you received a Notice does not necessarily mean that you have a claim against the Debtors. You should consult with your attorney to determine whether or not you have a claim.
For further information, you may wish to contact the Debtors' claims agent Kurtzman Carson Consultants LLC., at (888) 249-2721 or via email at Kodakinfo@kccllc.com.
Do the Debtors conduct business under any other names? Who is the "et al." in "Eastman Kodak Company, et al."?
There are 16 separate debtor companies being jointly administered in these bankruptcy cases. The 16 debtors are: Eastman Kodak Company, Creo Manufacturing America LLC, Eastman Kodak International Capital Company, Inc., Far East Development Ltd., FPC Inc., Kodak (Near East), Inc., Kodak America, Ltd., Kodak Aviation Leasing LLC, Kodak Imaging Network, Inc., Kodak Philippines, Ltd., Kodak Portuguesa Limited, Kodak Realty, Inc., Laser-Pacific Media Corporation, NPEC Inc., Pakon, Inc., Qualex Inc.
If you believe that you or an entity that you represent has a claim arising prior to January 19, 2012, against one or more of the Debtors, you should consult your own counsel in deciding whether to file a proof of claim. This website does not provide legal advice.
The Bankruptcy Court has established July 17, 2012 at 5:00 p.m. (Prevailing Eastern Time) as the deadline for filing proofs of claim (the “Bar Date”).
Have the Debtors filed their Schedules of Assets and Liabilities and Statements of Financial Affairs?
Yes, the Debtors filed their Schedules of Assets and Liabilities and Statements of Financial Affairs on April 18, 2012. Electronic copies of these documents are available in the Key Documents section of this website, which is accessible here. In the Document Categories, select "Public" and then "Schedules of Assets and Liabilities and Statements of Financial Affairs". Alternatively, the documents are also on the Debtors' website located at http://www.kccllc.net/kodak.
Does the Committee represent individual creditors?
No. The Committee represents the interests of all unsecured creditors through oversight of and negotiations with the Debtors. Neither the Committee nor its counsel represent individual creditors who may have claims in the Debtors’ chapter 11 cases.
How long will the Debtors' chapter 11 cases take?
There is no specific time estimate for the Debtors' chapter 11 cases. Large bankruptcy cases, such as these, can take several months (and in some cases years) to complete.
How do I get responses to specific questions?
Please email the Committee at info@kodakucc.com
This section is adapted from the publication "Bankruptcy Basics" by the Bankruptcy Judges Division, Administrative Office of the United States Courts (Third Ed. November 2011), which is available at http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics.aspx
Article I, Section 8, of the United States Constitution authorizes Congress to enact “uniform Laws on the subject of Bankruptcies.” Under this grant of authority, Congress enacted the “Bankruptcy Code” in 1978. The Bankruptcy Code, which is codified as title 11 of the United States Code, has been amended several times since its enactment. It is the uniform federal law that governs all bankruptcy cases. The procedural aspects of the bankruptcy process are governed by the Federal Rules of Bankruptcy Procedure (often called the “Bankruptcy Rules”) and local rules of each bankruptcy court. The Bankruptcy Rules contain a set of official forms for use in bankruptcy cases. The Bankruptcy Code and Bankruptcy Rules (and local rules) set forth the formal legal procedures for dealing with the debt problems of individuals and businesses. There is a bankruptcy court for each judicial district in the country. Each state has one or more districts. There are 90 bankruptcy districts across the country. The bankruptcy courts generally have their own clerk’s offices. The court official with decision-making power over federal bankruptcy cases is the United States bankruptcy judge, a judicial officer of the United States district court. The bankruptcy judge may decide any matter connected with a bankruptcy case, such as eligibility to file or whether a debtor should receive a discharge of debts. Much of the bankruptcy process is administrative, however, and is conducted away from the courthouse. In cases under chapters 7, 12, or 13, and sometimes in chapter 11 cases, this administrative process is carried out by a trustee who is appointed to oversee the case. A debtor’s involvement with the bankruptcy judge is usually very limited. A typical chapter 7 debtor will not appear in court and will not see the bankruptcy judge unless an objection is raised in the case. A chapter 13 debtor may only have to appear before the bankruptcy judge at a plan confirmation hearing. Usually, the only formal proceeding at which a debtor must appear is the meeting of creditors, which is usually held at the offices of the U.S. trustee. This meeting is informally called a “341 meeting” because section 341 of the Bankruptcy Code requires that the debtor attend this meeting so that creditors can question the debtor about debts and property. A fundamental goal of the federal bankruptcy laws enacted by Congress is to give debtors a financial “fresh start” from burdensome debts. The Supreme Court made this point about the purpose of the bankruptcy law in a 1934 decision:
Chapter 7, entitled Liquidation, contemplates an orderly, court-supervised procedure by which a trustee takes over the assets of the debtor’s estate, reduces them to cash, and makes distributions to creditors, subject to the debtor’s right to retain certain exempt property and the rights of secured creditors. Chapter 11, entitled Reorganization, ordinarily is used by commercial enterprises that desire to continue operating a business and repay creditors concurrently through a court-approved plan of reorganization. The chapter 11 debtor usually has the exclusive right to file a plan of reorganization for the first 120 days (subject to certain limited extensions) after it files the case and must provide creditors with a disclosure statement containing information adequate to enable creditors to evaluate the plan. The court ultimately approves (confirms) or disapproves the plan of reorganization. Under the confirmed plan, the debtor can reduce its debts by repaying a portion of its obligations and discharging others. The debtor can also terminate burdensome contracts and leases, recover assets, and rescale its operations in order to return to profitability. Under chapter 11, the debtor normally goes through a period of consolidation and emerges with a reduced debt load and a reorganized business. CHAPTER 11
A chapter 11 case begins with the filing of a petition with the bankruptcy court serving the area where the debtor has a domicile or residence. A petition may be a voluntary petition, which is filed by the debtor, or it may be an involuntary petition, which is filed by creditors that meet certain requirements. 11 U.S.C. §§ 301, 303. A voluntary petition must adhere to the format of Form 1 of the Official Forms prescribed by the Judicial Conference of the United States. Unless the court orders otherwise, the debtor also must file with the court: (1) schedules of assets and liabilities; (2) a schedule of current income and expenditures; (3) a schedule of executory contracts and unexpired leases; and (4) a statement of financial affairs. Fed. R. Bankr. P. 1007(b). The voluntary petition will include standard information concerning the debtor’s name(s), social security number or tax identification number, residence, location of principal assets (if a business), the debtor’s plan or intention to file a plan, and a request for relief under the appropriate chapter of the Bankruptcy Code. Upon filing a voluntary petition for relief under chapter 11 or, in an involuntary case, the entry of an order for relief, the debtor automatically assumes an additional identity as the “debtor in possession.” 11 U.S.C. § 1101. The term refers to a debtor that keeps possession and control of its assets while undergoing a reorganization under chapter 11, without the appointment of a case trustee. A debtor will remain a debtor in possession until the debtor’s plan of reorganization is confirmed, the debtor’s case is dismissed or converted to chapter 7, or a chapter 11 trustee is appointed. The appointment or election of a trustee occurs only in a small number of cases. Generally, the debtor, as “debtor in possession,” operates the business and performs many of the functions that a trustee performs in cases under other chapters. 11 U.S.C. § 1107(a).
Generally, a written disclosure statement and a plan of reorganization must be filed with the court. 11 U.S.C. §§ 1121, 1125. The disclosure statement is a document that must contain information concerning the assets, liabilities, and business affairs of the debtor sufficient to enable a creditor to make an informed judgment about the debtor’s plan of reorganization. 11 U.S.C. § 1125. The information required is governed by judicial discretion and the circumstances of the case. The contents of the plan must include a classification of claims and must specify how each class of claims will be treated under the plan. 11 U.S.C. § 1123. Creditors whose claims are “impaired,” i.e., those whose contractual rights are to be modified or who will be paid less than the full value of their claims under the plan, vote on the plan by ballot. 11 U.S.C. § 1126. After the disclosure statement is approved by the court and the ballots are collected and tallied, the court will conduct a confirmation hearing to determine whether to confirm the plan. 11 U.S.C. § 1128. THE CHAPTER 11 DEBTOR IN POSSESSION
Chapter 11 is typically used to reorganize a business, which may be a corporation, sole proprietorship, or partnership. A corporation exists separate and apart from its owners, the stockholders. The chapter 11 bankruptcy case of a corporation (corporation as debtor) does not put the personal assets of the stockholders at risk other than the value of their investment in the company’s stock.
Section 1107 of the Bankruptcy Code places the debtor in possession in the position of a fiduciary, with the rights and powers of a chapter 11 trustee, and it requires the debtor to perform all but the investigative functions and duties of a trustee. These duties, set forth in the Bankruptcy Code and Federal Rules of Bankruptcy Procedure, include accounting for property, examining and objecting to claims, and filing informational reports as required by the court and the U.S. trustee or bankruptcy administrator (discussed below), such as monthly operating reports. 11 U.S.C. §§ 1106, 1107; Fed. R. Bankr. P. 2015(a). The debtor in possession also has many of the other powers and duties of a trustee, including the right, with the court's approval, to employ attorneys, accountants, appraisers, auctioneers, or other professional persons to assist the debtor during its bankruptcy case. Other responsibilities include filing tax returns and reports which are either necessary or ordered by the court after confirmation, such as a final accounting. The U.S. trustee is responsible for monitoring the compliance of the debtor in possession with the reporting requirements. In addition, stock and commodity brokers are prohibited from filing under chapter 11 and are restricted to chapter 7. 11 U.S.C. § 109(d). THE U.S. TRUSTEE OR BANKRUPTCY ADMINISTRATOR
The U.S. trustee plays a major role in monitoring the progress of a chapter 11 case and supervising its administration. The U.S. trustee is responsible for monitoring the debtor in possession’s operation of the business and the submission of operating reports and fees. Additionally, the U.S. trustee monitors applications for compensation and reimbursement by professionals, plans and disclosure statements filed with the court, and creditors’ committees. The U.S. trustee conducts a meeting of the creditors, often referred to as the “section 341 meeting,” in a chapter 11 case. 11 U.S.C. § 341. The U.S. trustee and creditors may question the debtor under oath at the section 341 meeting concerning the debtor’s acts, conduct, property, and the administration of the case. The U.S. trustee also imposes certain requirements on the debtor in possession concerning matters such as reporting its monthly income and operating expenses, establishing new bank accounts, and paying current employee withholding and other taxes. By law, the debtor in possession must pay a quarterly fee to the U.S. trustee for each quarter of a year until the case is converted or dismissed. 28 U.S.C. § 1930(a)(6). The amount of the fee, which may range from $250 to $10,000, depends on the amount of the debtor’s disbursements during each quarter. Should a debtor in possession fail to comply with the reporting requirements of the U.S. trustee or orders of the bankruptcy court, or fail to take the appropriate steps to bring the case to confirmation, the U.S. trustee may file a motion with the court to have the debtor’s chapter 11 case converted to another chapter of the Bankruptcy Code or to have the case dismissed. The U.S. trustee program is administered by the Department of Justice. CREDITORS’ COMMITTEES
The committee is appointed by the U.S. trustee and ordinarily consists of creditors that represent the interests of the overall pool of unsecured creditors. 11 U.S.C. § 1102. Among other things, the committee: consults with the debtor in possession on administration of the case; investigates the debtor’s conduct and operation of the business; and participates in formulating a plan. 11 U.S.C. § 1103. A creditors’ committee may, with the court’s approval, hire an attorney or other professionals to assist in the performance of the committee’s duties. A creditors’ committee can be an important safeguard to the proper management of the business by the debtor in possession. APPOINTMENT OR ELECTION OF A CASE TRUSTEE
Although the appointment of a case trustee is a rarity in a chapter 11 case, a party in interest or the U.S. trustee can request the appointment of a case trustee or examiner at any time prior to confirmation in a chapter 11 case. The court, on motion by a party in interest or the U.S. trustee and after notice and hearing, shall order the appointment of a case trustee for cause, including fraud, dishonesty, incompetence, or gross mismanagement, or if such an appointment is in the interest of creditors, any equity security holders, and other interests of the estate. 11 U.S.C. § 1104(a). Moreover, the U.S. trustee is required to move for appointment of a trustee if there are reasonable grounds to believe that any of the parties in control of the debtor “participated in actual fraud, dishonesty or criminal conduct in the management of the debtor or the debtor’s financial reporting.” 11 U.S.C. § 1104(e). The trustee is appointed by the U.S. trustee, after consultation with parties in interest and subject to the court’s approval. Fed. R. Bankr. P. 2007.1. Alternatively, a trustee in a case may be elected if a party in interest requests the election of a trustee within 30 days after the court orders the appointment of a trustee. In that instance, the U.S. trustee convenes a meeting of creditors for the purpose of electing a person to serve as trustee in the case. 11 U.S.C. § 1104(b). The case trustee is responsible for management of the property of the estate, operation of the debtor’s business, and, if appropriate, the filing of a plan of reorganization. Section 1106 of the Bankruptcy Code requires the trustee to file a plan “as soon as practicable” or, alternatively, to file a report explaining why a plan will not be filed or to recommend that the case be converted to another chapter or dismissed. 11 U.S.C. § 1106(a)(5). Upon the request of a party in interest or the U.S. trustee, the court may terminate the trustee’s appointment and restore the debtor in possession to management of bankruptcy estate at any time before confirmation. 11 U.S.C. § 1105. THE ROLE OF AN EXAMINER
The appointment of an examiner in a chapter 11 case is rare. The role of an examiner is generally more limited than that of a trustee. The examiner is authorized to perform the investigatory functions of the trustee and is required to file a statement of any investigation conducted. If ordered to do so by the court, however, an examiner may carry out any other duties of a trustee that the court orders the debtor in possession not to perform. 11 U.S.C. § 1106. Each court has the authority to determine the duties of an examiner in each particular case. In some cases, the examiner may file a plan of reorganization, negotiate or help the parties negotiate, or review the debtor’s schedules to determine whether some of the claims are improperly categorized. Sometimes, the examiner may be directed to determine if objections to any proofs of claim should be filed or whether causes of action have sufficient merit so that further legal action should be taken. The examiner may not subsequently serve as a trustee in the case. 11 U.S.C. § 321. THE AUTOMATIC STAY
The automatic stay provides a period of time in which all judgments, collection activities, foreclosures, and repossessions of estate property are suspended and may not be pursued by the creditors on any debt or claim that arose before the filing of the bankruptcy petition. As with cases under other chapters of the Bankruptcy Code, a stay of creditor actions against the chapter 11 debtor automatically goes into effect when the bankruptcy petition is filed. 11 U.S.C. § 362(a). The filing of a petition, however, does not operate as a stay for certain types of actions listed under 11 U.S.C. § 362(b). The stay provides a breathing spell for the debtor, during which negotiations can take place to try to resolve the difficulties in the debtor’s financial situation. Under specific circumstances, the secured creditor can obtain an order from the court granting relief from the automatic stay. For example, when the debtor has no equity in the property and the property is not necessary for an effective reorganization, the secured creditor can seek an order of the court lifting the stay to permit the creditor to foreclose on the property, sell it, and apply the proceeds to the debt. 11 U.S.C. § 362(d). WHO CAN FILE A PLAN
The debtor has a 120-day period during which it has an exclusive right to file a plan. 11 U.S.C. § 1121(b). This exclusivity period may be extended or reduced by the court. But, in no event, may the exclusivity period, including all extensions, be longer than 18 months. 11 U.S.C. § 1121(d). After the exclusivity period has expired, a creditor or the case trustee may file a competing plan. The U.S. trustee may not file a plan. 11 U.S.C. § 307. A chapter 11 case may continue for many years unless the court, the U.S. trustee, the committee, or another party in interest acts to ensure the case’s timely resolution. The creditors’ right to file a competing plan provides incentive for the debtor to file a plan within the exclusivity period and acts as a check on excessive delay in the case. CASH COLLATERAL, ADEQUATE PROTECTION, AND OPERATING CAPITAL
Although the preparation, confirmation, and implementation of a plan of reorganization is at the heart of a chapter 11 case, other issues may arise that must be addressed by the debtor in possession. The debtor in possession may use, sell, or lease property of the estate in the ordinary course of its business, without prior approval, unless the court orders otherwise. 11 U.S.C. § 363(c). If the intended sale or use is outside the ordinary course of its business, the debtor must obtain permission from the court. A debtor in possession may not use “cash collateral” without the consent of the secured party or authorization by the court, which must first examine whether the interest of the secured party is adequately protected. 11 U.S.C. § 363. Section 363 defines “cash collateral” as cash, negotiable instruments, documents of title, securities, deposit accounts, or other cash equivalents, whenever acquired, in which the estate and an entity other than the estate have an interest. It includes the proceeds, products, offspring, rents, or profits of property and the fees, charges, accounts or payments for the use or occupancy of rooms and other public facilities in hotels, motels, or other lodging properties subject to a creditor’s security interest. When “cash collateral” is used (spent), the secured creditors are entitled to receive additional protection under section 363 of the Bankruptcy Code. The debtor in possession must file a motion requesting an order from the court authorizing the use of the cash collateral. Pending consent of the secured creditor or court authorization for the debtor in possession’s use of cash collateral, the debtor in possession must segregate and account for all cash collateral in its possession. 11 U.S.C. § 363(c)(4). A party with an interest in property being used by the debtor may request that the court prohibit or condition this use to the extent necessary to provide “adequate protection” to the creditor. Adequate protection may be required to protect the value of the creditor’s interest in the property being used by the debtor in possession. This is especially important when there is a decrease in value of the property. The debtor may make periodic or lump sum cash payments, or provide an additional or replacement lien that will result in the creditor’s property interest being adequately protected. 11 U.S.C. § 361. When a chapter 11 debtor needs operating capital it may be able to obtain it from a lender by giving the lender a court-approved “superpriority” over other unsecured creditors or a lien on property of the estate. 11 U.S.C. § 364. MOTIONS
Frequently, the debtor in possession will institute a lawsuit, known as an adversary proceeding, to recover money or property for the estate. Adversary proceedings may take the form of lien avoidance actions, actions to avoid preferences, actions to avoid fraudulent transfers, or actions to avoid post-petition transfers. These proceedings are governed by Part VII of the Federal Rules of Bankruptcy Procedure. At times, a creditors’ committee may be authorized by the bankruptcy court to pursue these actions against insiders of the debtor if the plan provides for the committee to do so or if the debtor has refused a demand to do so. Creditors may also initiate adversary proceedings by filing complaints to determine the validity or priority of a lien, revoke an order confirming a plan, determine the dischargeability of a debt, obtain an injunction, or subordinate a claim of another creditor. CLAIMS
The Bankruptcy Code defines a claim as: (1) a right to payment; or (2) a right to an equitable remedy for a failure of performance if the breach gives rise to a right to payment. 11 U.S.C. § 101(5). Generally, any creditor whose claim is not scheduled (i.e., listed by the debtor on the debtor’s schedules) or is scheduled as disputed, contingent, or unliquidated must file a proof of claim (and attach evidence documenting the claim) in order to be treated as a creditor for purposes of voting on the plan and distribution under it. Fed. R. Bankr. P. 3003(c)(2). But filing a proof of claim is not necessary if the creditor’s claim is scheduled (but is not listed as disputed, contingent, or unliquidated by the debtor) because the debtor’s schedules are deemed to constitute evidence of the validity and amount of those claims. 11 U.S.C. § 1111. If a scheduled creditor chooses to file a claim, a properly filed proof of claim supersedes any scheduling of that claim. Fed. R. Bankr. P. 3003(c)(4). It is the responsibility of the creditor to determine whether the claim is accurately listed on the debtor’s schedules. The debtor must provide notification to those creditors whose names are added and whose claims are listed as a result of an amendment to the schedules. The notification also should advise such creditors of their right to file proofs of claim and that their failure to do so may prevent them from voting upon the debtor’s plan of reorganization or participating in any distribution under that plan. When a debtor amends the schedule of liabilities to add a creditor or change the status of any claims to disputed, contingent, or unliquidated, the debtor must provide notice of the amendment to any entity affected. Fed. R. Bankr. P. 1009(a).
An equity security holder is a holder of an equity security of the debtor. Examples of an equity security are a share in a corporation, an interest of a limited partner in a limited partnership, or a right to purchase, sell, or subscribe to a share, security, or interest of a share in a corporation or an interest in a limited partnership. 11 U.S.C. § 101(16), (17). An equity security holder may vote on the plan of reorganization and may file a proof of interest, rather than a proof of claim. A proof of interest is deemed filed for any interest that appears in the debtor’s schedules, unless it is scheduled as disputed, contingent, or unliquidated. 11 U.S.C. § 1111. An equity security holder whose interest is not scheduled or scheduled as disputed, contingent, or unliquidated must file a proof of interest in order to be treated as a creditor for purposes of voting on the plan and distribution under it. Fed. R. Bankr. P. 3003(c)(2). A properly filed proof of interest supersedes any scheduling of that interest. Fed. R. Bankr. P. 3003(c)(4). Generally, most of the provisions that apply to proofs of claim, as discussed above, are also applicable to proofs of interest. CONVERSION OR DISMISSAL
A debtor in a case under chapter 11 has a onetime absolute right to convert the chapter 11 case to a case under chapter 7 unless: (1) the debtor is not a debtor in possession; (2) the case originally was commenced as an involuntary case under chapter 11; or (3) the case was converted to a case under chapter 11 other than at the debtor’s request. 11 U.S.C. § 1112(a). A debtor in a chapter 11 case does not have an absolute right to have the case dismissed upon request.
A party in interest may file a motion to dismiss or convert a chapter 11 case to a chapter 7 case “for cause.” Generally, if cause is established after notice and hearing, the court must convert or dismiss the case (whichever is in the best interests of creditors and the estate) unless it specifically finds that the requested conversion or dismissal is not in the best interest of creditors and the estate. 11 U.S.C. § 1112(b). Alternatively, the court may decide that appointment of a chapter 11 trustee or an examiner is in the best interests of creditors and the estate. 11 U.S.C. § 1104(a)(3). Section 1112(b)(4) of the Bankruptcy Code sets forth numerous examples of cause that would support dismissal or conversion. For example, the moving party may establish cause by showing that there is substantial or continuing loss to the estate and the absence of a reasonable likelihood of rehabilitation; gross mismanagement of the estate; failure to maintain insurance that poses a risk to the estate or the public; or unauthorized use of cash collateral that is substantially harmful to a creditor. Cause for dismissal or conversion also includes an unexcused failure to timely comply with reporting and filing requirements; failure to attend the meeting of creditors or attend a Fed. R. Bankr. P. 2004 examination without good cause; failure to timely provide information to the U.S. trustee; and failure to timely pay post-petition taxes or timely file post-petition returns. Additionally, failure to file a disclosure statement or to file and confirm a plan within the time fixed by the Bankruptcy Code or order of the court; inability to effectuate a plan; denial or revocation of confirmation; and/or inability to consummate a confirmed plan represent “cause” for dismissal under the statute. THE DISCLOSURE STATEMENT
Generally, the debtor (or any plan proponent) must file and get court approval of a written disclosure statement before there can be a vote on the plan of reorganization. The disclosure statement must provide “adequate information” concerning the affairs of the debtor to enable the holder of a claim or interest to make an informed judgment about the plan. 11 U.S.C. § 1125. In a small business case, however, the court may determine that the plan itself contains adequate information and that a separate disclosure statement is unnecessary. 11 U.S.C. § 1125(f). After the disclosure statement is filed, the court must hold a hearing to determine whether the disclosure statement should be approved. Acceptance or rejection of a plan usually cannot be solicited until the court has first approved the written disclosure statement. 11 U.S.C. § 1125(b). An exception to this rule exists if the initial solicitation of the party occurred before the bankruptcy filing, as would be the case in so-called “prepackaged” bankruptcy plans (i.e., where the debtor negotiates a plan with significant creditor constituencies before filing for bankruptcy). Continued post-filing solicitation of such parties is not prohibited. After the court approves the disclosure statement, the debtor or proponent of a plan can begin to solicit acceptances of the plan, and creditors may also solicit rejections of the plan. Upon approval of a disclosure statement, the plan proponent must mail the following to the U.S. trustee and all creditors and equity security holders: (1) the plan, or a court approved summary of the plan; (2) the disclosure statement approved by the court; (3) notice of the time within which acceptances and rejections of the plan may be filed; and (4) such other information as the court may direct, including any opinion of the court approving the disclosure statement or a court-approved summary of the opinion. Fed. R. Bankr. P. 3017(d). In addition, the debtor must mail to the creditors and equity security holders entitled to vote on the plan or plans: (1) notice of the time fixed for filing objections; (2) notice of the date and time for the hearing on confirmation of the plan; and (3) a ballot for accepting or rejecting the plan and, if appropriate, a designation for the creditors to identify their preference among competing plans. Id. But in a small business case, the court may conditionally approve a disclosure statement subject to final approval after notice and a combined disclosure statement/plan confirmation hearing. 11 U.S.C. § 1125(f). ACCEPTANCE OF THE PLAN OF REORGANIZATION
As noted earlier, only the debtor may file a plan of reorganization during the first 120-day period after the petition is filed (or after entry of the order for relief, if an involuntary petition was filed). The court may grant extension of this exclusive period up to 18 months after the petition date. In addition, the debtor has 180 days after the petition date or entry of the order for relief to obtain acceptances of its plan. 11 U.S.C. § 1121. The court may extend (up to 20 months) or reduce this acceptance exclusive period for cause. 11 U.S.C. § 1121(d). In practice, debtors typically seek extensions of both the plan filing and plan acceptance deadlines at the same time so that any order sought from the court allows the debtor two months to seek acceptances after filing a plan before any competing plan can be filed. If the exclusive period expires before the debtor has filed and obtained acceptance of a plan, other parties in interest in a case, such as the creditors’ committee or a creditor, may file a plan. Such a plan may compete with a plan filed by another party in interest or by the debtor. If a trustee is appointed, the trustee must file a plan, a report explaining why the trustee will not file a plan, or a recommendation for conversion or dismissal of the case. 11 U.S.C. § 1106(a)(5). A proponent of a plan is subject to the same requirements as the debtor with respect to disclosure and solicitation. In a chapter 11 case, a liquidating plan is permissible. Such a plan often allows the debtor in possession to liquidate the business under more economically advantageous circumstances than a chapter 7 liquidation. It also permits the creditors to take a more active role in fashioning the liquidation of the assets and the distribution of the proceeds than in a chapter 7 case. Section 1123(a) of the Bankruptcy Code lists the mandatory provisions of a chapter 11 plan, and section 1123(b) lists the discretionary provisions. Section 1123(a)(1) provides that a chapter 11 plan must designate classes of claims and interests for treatment under the reorganization. Generally, a plan will classify claim holders as secured creditors, unsecured creditors entitled to priority, general unsecured creditors, and equity security holders. Under section 1126(c) of the Bankruptcy Code, an entire class of claims is deemed to accept a plan if the plan is accepted by creditors that hold at least two-thirds in amount and more than one-half in number of the allowed claims in the class. Under section 1129(a)(10), if there are impaired classes of claims, the court cannot confirm a plan unless it has been accepted by at least one class of non-insiders who hold impaired claims (i.e., claims that are not going to be paid completely or in which some legal, equitable, or contractual right is altered). Moreover, under section 1126(f), holders of unimpaired claims are deemed to have accepted the plan. Under section 1127(a) of the Bankruptcy Code, the plan proponent may modify the plan at any time before confirmation, but the plan as modified must meet all the requirements of chapter 11. When there is a proposed modification after balloting has been conducted, and the court finds after a hearing that the proposed modification does not adversely affect the treatment of any creditor who has not accepted the modification in writing, the modification is deemed to have been accepted by all creditors who previously accepted the plan. Fed. R. Bankr. P. 3019. If it is determined that the proposed modification does have an adverse effect on the claims of non-consenting creditors, then another balloting must take place. Because more than one plan may be submitted to the creditors for approval, every proposed plan and modification must be dated and identified with the name of the entity or entities submitting the plan or modification. Fed. R. Bankr. P. 3016(b). When competing plans are presented that meet the requirements for confirmation, the court must consider the preferences of the creditors and equity security holders in determining which plan to confirm. Any party in interest may file an objection to confirmation of a plan. The Bankruptcy Code requires the court, after notice, to hold a hearing on confirmation of a plan. If no objection to confirmation has been timely filed, the Bankruptcy Code allows the court to determine whether the plan has been proposed in good faith and according to law. Fed. R. Bankr. P. 3020(b)(2). Before confirmation can be granted, the court must be satisfied that there has been compliance with all the other requirements of confirmation set forth in section 1129 of the Bankruptcy Code, even in the absence of any objections. In order to confirm the plan, the court must find, among other things, that: (1) the plan is feasible; (2) it is proposed in good faith; and (3) the plan and the proponent of the plan are in compliance with the Bankruptcy Code. In order to satisfy the feasibility requirement, the court must find that confirmation of the plan is not likely to be followed by liquidation (unless the plan is a liquidating plan) or the need for further financial reorganization.
Section 1141(d)(1) generally provides that confirmation of a plan discharges a debtor from any debt that arose before the date of confirmation. After the plan is confirmed, the debtor is required to make plan payments and is bound by the provisions of the plan of reorganization. The confirmed plan creates new contractual rights, replacing or superseding pre-bankruptcy contracts. There are, of course, exceptions to the general rule that an order confirming a plan operates as a discharge. Confirmation of a plan of reorganization discharges any type of debtor – corporation, partnership, or individual – from most types of prepetition debts. It does not, however, discharge an individual debtor from any debt made nondischargeable by section 523 of the Bankruptcy Code. Moreover, except in limited circumstances, a discharge is not available to an individual debtor unless and until all payments have been made under the plan. 11 U.S.C. § 1141(d)(5). Confirmation does not discharge the debtor if the plan is a liquidation plan, as opposed to one of reorganization, unless the debtor is an individual. When the debtor is an individual, confirmation of a liquidation plan will result in a discharge (after plan payments are made) unless grounds would exist for denying the debtor a discharge if the case were proceeding under chapter 7 instead of chapter 11. 11 U.S.C. §§ 727(a), 1141(d). POSTCONFIRMATION MODIFICATION OF THE PLAN
At any time after confirmation and before “substantial consummation” of a plan, the proponent of a plan may modify the plan if the modified plan would meet certain Bankruptcy Code requirements. 11 U.S.C. § 1127(b). This should be distinguished from preconfirmation modification of the plan. A modified postconfirmation plan does not automatically become the plan. A modified postconfirmation plan in a chapter 11 case becomes the plan only “if circumstances warrant such modification” and the court, after notice and hearing, confirms the plan as modified. If the debtor is an individual, the plan may be modified postconfirmation upon the request of the debtor, the trustee, the U.S. trustee, or the holder of an allowed unsecured claim to make adjustments to payments due under the plan. 11 U.S.C. § 1127(e). POSTCONFIRMATION ADMINISTRATION
Notwithstanding the entry of the confirmation order, the court has the authority to issue any other order necessary to administer the estate. Fed. R. Bankr. P. 3020(d). This authority would include the postconfirmation determination of objections to claims or adversary proceedings, which must be resolved before a plan can be fully consummated. Sections 1106(a)(7) and 1107(a) of the Bankruptcy Code require a debtor in possession or a trustee to report on the progress made in implementing a plan after confirmation. A chapter 11 trustee or debtor in possession has a number of responsibilities to perform after confirmation, including consummating the plan, reporting on the status of consummation, and applying for a final decree. REVOCATION OF THE CONFIRMATION ORDER
Revocation of the confirmation order is an undoing or cancellation of the confirmation of a plan. A request for revocation of confirmation, if made at all, must be made by a party in interest within 180 days of confirmation. The court, after notice and hearing, may revoke a confirmation order “if and only if the [confirmation] order was procured by fraud.” 11 U.S.C. § 1144. THE FINAL DECREE
Commenced March 12, 2012 at 1:00 p.m. (Eastern Time) at 80 Broad Street, 4th Floor, New York, NY 10004
Adjourned to May 7, 2012 at 3:30 p.m. (Eastern Time) at 80 Broad Street, 4th Floor, New York, NY 10004
Debtors’ Exclusive Periods:
May 31, 2013 - Expiration of Debtors’ Initial Exclusive Period to File a Plan of Reorganization
July 31, 2013 - Expiration of Debtors’ Initial Exclusive Period to Solicit Acceptances of a Plan of Reorganization
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