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Modified Plans of Reorganization and the Basic Chapter 13 Bargain


David Gray Carlson


Yeshiva University - Benjamin N. Cardozo School of Law

February 16, 2010

American Bankruptcy Law Journal, Vol. 83, pp. 585-662, 2009
Cardozo Legal Studies Research Paper No. 287

Abstract:     
A very large number of chapter 13 plans are confirmed each year. Unlike chapter 11 plans (for non-individuals), these plans may be revised after confirmation. The modification provisions of the Bankruptcy Code, however, give very little guidance as to what constitutes a permissible modification. In contrast, confirmation of the original plan is very carefully governed. This article theorizes that modification must honor the basic chapter 13 bargain. According to this bargain, the debtor is entitled to the bankruptcy estate and the creditors are entitled to net surplus income. The article assesses whether the diffuse and disorganized caselaw of modification adheres to this normative structure. It explains how some of the precedents permit creditors to raid the bankruptcy estate in violation of a debtor's rights. In particular, it argues that, in a modification, a court should not perform again the "best interest of the creditors" test of Bankruptcy Code 1325(a)(4), nor should bifurcation of secured claims be revisited.

Number of Pages in PDF File: 79

Keywords: Bankruptcy, Modification, Rebifurcation, Res Judicata, Creditor Standing, Confirmed Plans, Debtor, Creditor

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Date posted: February 17, 2010  

Suggested Citation

Carlson, David Gray, Modified Plans of Reorganization and the Basic Chapter 13 Bargain (February 16, 2010). American Bankruptcy Law Journal, Vol. 83, pp. 585-662, 2009; Cardozo Legal Studies Research Paper No. 287. Available at SSRN: http://ssrn.com/abstract=1554019 or http://dx.doi.org/10.2139/ssrn.1554019

Contact Information

David Gray Carlson (Contact Author)
Yeshiva University - Benjamin N. Cardozo School of Law ( email )
55 Fifth Ave.
New York, NY 10003
United States
212-790-0210 (Phone)
212-790-0205 (Fax)

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