Chapter 11 Plan Confirmation Process

Once eligible creditors have voted on the plan and any modifications are made, the court notices creditors and holds a confirmation hearing (11 USC 1128). The plan is finalized at the confirmation hearing.

Under procedures commonly referred to as "cram down" procedures, a plan can be confirmed over the dissenting vote of an impaired class. However, the plan cannot "discriminate unfairly." It must be "fair and equitable" with respect to each impaired, dissenting class. (11 USC 1129(b)) Thus, a plan can be "crammed down" over the vote of a dissenting class of creditors as long as one impaired class has voted to accept the plan.

The USBC describes how each classification a creditor may have against a Chapter 11 debtor should be treated for the plan to be confirmed. This includes the claims of the IRS. The IRS should ensure that its various claims are properly treated under a plan. The IRS should object to confirmation of the plan if it fails to provide for such treatment. Failure to object to a plan’s proposed treatment of a claim may be interpreted as consent to that treatment.

The IRS should attempt to ensure the Chapter 11 plan includes specific default provisions. The provisions should specify the manner in which the IRS notifies the debtor of the default. The provisions should clarify the opportunities the IRS affords the debtor to cure the default. The default provisions may clarify that the IRS can exercise administrative collection provisions of the IRC to collect amounts due under the plan.