Involuntary bankruptcy indicates that it is an effort to recover a portion of debts or reconstruction of debts. The debtor can initiate to file voluntarily i. e. voluntary bankruptcy and the bankrupt i. e. individual or organization may file the voluntary petition for bankruptcy. There is another option that Creditors may file bankruptcy petition against a debtor which is involuntary petition. The creditors are allowed to file an involuntary petition for Chapter 7 or Chapter 11 against any debtor subject to exceptions such as Non profit organization.
In the given case, the creditors not initiated to file bankruptcy which is involuntary bankruptcy. As far as bankrupt, the organization i. e. partnership firm not interested (as all partners are not interested) to file which is not conforming voluntary bankruptcy. The creditors should file involuntary petition or the partnership firm should file the voluntary bankruptcy. Since any option is not confirming with the situation, the involuntary bankruptcy cannot be granted. PLAN OF REORGANISATION The facts are as follows: 1.
Debtor filed voluntary petition under chapter 11 bankruptcy 2. Debtor also filed plan of reorganization during May, 1989 3. The plan indicates : First class – Administrative creditors (Full payment) Second Class – Unsecured creditors (50% on their claims) Third class – IRS ($20,000 on confirmation and balance in future Payments) 4. Creditors not accepted the plan. The unsecured creditors impaired since their legal, equitable and contractual rights are to be altered 5. Can the court confirm the bankruptcy debtors plan of regorganisation? Under Chapter 11 of U. S.
Federal Bankruptcy code, the debtor has exclusive right to file reorganization plan with 120 day period. If the said period expires, the creditor or trustee may file the plan. In the given case, the debtor filed reorganization plan which is not accepted by the creditors. Besides such plan should not be impaired the interests of any class of members under Sec. 1123 (a) (2). Before voting of the members on the said plan, the court must hold a hearing to determine whether disclosure statement is approved. After the approval disclosure statement and the plan of reorganization can be considered by the creditors.
Since there no confirmation of disclosure statement and no confirmation of creditors about the reorganization plan, the bankruptcy court cannot confirm the debtors plan of reorganization. . Instead, the court can ask the debtor to file written disclosure statement and after approval again creditors approval is required on the reorganization plan of debtors. REFERENCE: 1. http://www. alperlaw. com/involuntary_bankruptcy. html 2. http://www. credit-to-cash-advisor. com/Home/Articles/Bankruptcy/InvoluntaryBankruptcy 3. http://www. credit-to-cash-advisor. com/Home/Articles/Bankruptcy/BankruptcyChapter11