Question 1

What is Section 1129 of the Bankruptcy Code?

Accepted Answer

Section 1129 (11 U.S.C. 1129) sets the requirements for court confirmation of a Chapter 11 reorganization plan. Key requirements: the plan must comply with the Bankruptcy Code, the plan must be proposed in good faith, the plan must be feasible (the debtor can make all payments and is not likely to need further reorganization), each class of claims must accept the plan or be treated fairly (the "best interests" test: each creditor receives at least what they would receive in a Chapter 7 liquidation), and all priority claims must be paid in full.

Question 2

What is the "cramdown" provision in Section 1129(b)?

Accepted Answer

Cramdown (Section 1129(b)): allows the court to confirm a plan over the objection of a class of creditors if: at least one impaired class has accepted the plan, the plan does not discriminate unfairly, and the plan is "fair and equitable." For secured creditors: the plan must provide the creditor with the present value of their allowed secured claim. For unsecured creditors: the plan must pay them in full or ensure that no junior class receives anything (the "absolute priority rule"). Cramdown is a powerful tool for debtors who cannot obtain unanimous creditor approval.

Question 3

How does Section 1129 affect Florida real estate bankruptcies?

Accepted Answer

FL RE impact: real estate developers and investors use Chapter 11 to: restructure mortgage debt (modify loan terms, interest rates, and repayment schedules), retain properties (the plan allows the debtor to keep properties while paying creditors over time), and cram down secured claims (reduce the secured claim to the property’s current value; pay the remainder as an unsecured claim). Feasibility is critical: the debtor must demonstrate sufficient rental income or sales proceeds to fund the plan.

Section 1129

Section 1129 (Chapter 11 Plan Confirmation)

Key Requirements

Cramdown

FL RE Impact

Related Terms

Barnes Walker Bankruptcy

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