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Chapter 11 Plan Process

Kevin Carey, a former Delaware bankruptcy judge and senior counsel with Hogan Lovells US LLP, discusses the chapter 11 plan process, emphasizing it as a negotiation between the debtor and stakeholders. The debtor has an exclusive 120-day period to file a plan, extendable up to 18 months, and 180 days to gain acceptances, extendable up to 20 months. He explains that plans must comply with § 1123, including class designation and treatment equality. They can include claim impairment, contract assumptions and settlements. Confirmation requires compliance with § 1129, including at least one impaired class voting in favor. The process can take anywhere from six to 18 months, or shorter with prearranged plans. Post-confirmation, plans may establish litigation trusts and address claims-resolution.

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Keywords:

chapter 11 plan, exclusive period, stakeholder consultation, plan requirements, impaired classes, voting rights, settlement provisions, cramdown process, absolute priority rule, disclosure statement, confirmation process, prearranged chapter 11

Duration:

13 minutes 46 seconds

Hon. Kevin J. Carey was senior counsel in Hogan Lovells US LLP’s Business Restructuring and Insolvency practice in Philadelphia and a retired bankruptcy judge. He passed away in 2024. Judge Carey also was a former ABI president, represented both companies and creditors in domestic and cross-border bankruptcy proceedings, and served as independent director, expert witness and mediator. He was first appointed to the U.S. Bankruptcy Court for the Eastern District of Pennsylvania in 2001, then in 2005 began service on the U.S. Bankruptcy Court for the District of Delaware (serving as chief judge from 2008-11). During that time, he authored more than 200 reported decisions, issued important rulings on key issues such as valuation, fiduciary duties and other complex chapter 11 and confirmation issues, and presided over such high-profile cases as Exide Technologies, Tribune Co. and New Century Financial. Judge Carey was the first judge to serve as global chair of the Turnaround Management Association, and he was an honorary member of the Turnaround, Restructuring and Distressed Investing Hall of Fame, as well as a Distinguished Fellow of the Association of Insolvency & Restructuring Advisors. In addition, he was a Fellow of the American College of Bankruptcy and a member of the International Insolvency Institute, as well as a contributing author to Collier on Bankruptcy. Judge Carey was the Dean’s Distinguished Fellow at Villanova University Charles Widger School of Law. He began his legal career in 1979 clerking for Bankruptcy Judge Thomas M. Twardowski, then served as clerk of court of the U.S. Bankruptcy Court for the Eastern District of Pennsylvania. Judge Carey received his B.A. in 1976 from Pennsylvania State University and his J.D. in 1979 from Villanova University School of Law.

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