Bankruptcy Forms: Filing Bankruptcy Chapter 7 Bankruptcy Software Chapter 13

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TITLE 11–BANKRUPTCY

CHAPTER 11– REORGANIZATION

Sub Chapter III – Postconfirmation Matters

Sec. 1141. Effect of confirmation

   (a) Except as provided in subsections (d)(2) and (d)(3) of this 
section, the provisions of a confirmed plan bind the debtor, any entity 
issuing securities under the plan, any entity acquiring property under 
the plan, and any creditor, equity security holder, or general partner 
in the debtor, whether or not the claim or interest of such creditor, 
equity security holder, or general partner is impaired under the plan 
and whether or not such creditor, equity security holder, or general 
partner has accepted the plan.
    (b) Except as otherwise provided in the plan or the order confirming 
the plan, the confirmation of a plan vests all of the property of the 
estate in the debtor.
    (c) Except as provided in subsections (d)(2) and (d)(3) of this 
section and except as otherwise provided in the plan or in the order 
confirming the plan, after confirmation of a plan, the property dealt 
with by the plan is free and clear of all claims and interests of 
creditors, equity security holders, and of general partners in the 
debtor.
    (d)(1) Except as otherwise provided in this subsection, in the plan, 
or in the order confirming the plan, the confirmation of a plan--
        (A) discharges the debtor from any debt that arose before the 
    date of such confirmation, and any debt of a kind specified in 
    section 502(g), 502(h), or 502(i) of this title, whether or not--
            (i) a proof of the claim based on such debt is filed or 
        deemed filed under section 501 of this title;
            (ii) such claim is allowed under section 502 of this title; 
        or
            (iii) the holder of such claim has accepted the plan; and

        (B) terminates all rights and interests of equity security 
    holders and general partners provided for by the plan.

    (2) The confirmation of a plan does not discharge an individual 
debtor from any debt excepted from discharge under section 523 of this 
title.
    (3) The confirmation of a plan does not discharge a debtor if--
        (A) the plan provides for the liquidation of all or 
    substantially all of the property of the estate;
        (B) the debtor does not engage in business after consummation of 
    the plan; and
        (C) the debtor would be denied a discharge under section 727(a) 
    of this title if the case were a case under chapter 7 of this title.

    (4) The court may approve a written waiver of discharge executed by 
the debtor after the order for relief under this chapter.

(Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2638; Pub. L. 98-353, title III, 
Sec. 513, July 10, 1984, 98 Stat. 387.)


                      Historical and Revision Notes

                         legislative statements

    Section 1141(d) of the House amendment is derived from a comparable 
provision contained in the Senate amendment. However, section 1141(d)(2) 
of the House amendment is derived from the House bill as preferable to 
the Senate amendment. It is necessary for a corporation or partnership 
undergoing reorganization to be able to present its creditors with a 
fixed list of liabilities upon which the creditors or third parties can 
make intelligent decisions. Retaining an exception for discharge with 
respect to nondischargeable taxes would leave an undesirable uncertainty 
surrounding reorganizations that is unacceptable. Section 1141(d)(3) is 
derived from the Senate amendment. Section 1141(d)(4) is likewise 
derived from the Senate amendment.


                        senate report no. 95-989

    Subsection (a) of this section makes the provisions of a confirmed 
plan binding on the debtor, any entity issuing securities under the 
plan, any entity acquiring property under the plan, and any creditor, 
equity security holder, or general partner in the debtor, whether or not 
the claim or interest of the creditor, equity security holder, or 
partner is impaired under the plan and whether or not he has accepted 
the plan. There are two exceptions, enumerated in paragraph (2) and (3) 
of subsection (d).
    Unless the plan or the order confirming the plan provides otherwise, 
the confirmation of a plan vests all of the property of the estate in 
the debtor and releases it from all claims and interests of creditors, 
equity security holders and general partners.
    Subsection (d) contains the discharge for a reorganized debtor. 
Paragraph (1) specifies that the confirmation of a plan discharges the 
debtor from any debt that arose before the date of the order for relief 
unless the plan or the order confirming the plan provides otherwise. The 
discharge is effective against those claims whether or not proof of the 
claim is filed (or deemed filed), and whether or not the claim is 
allowed. The discharge also terminates all rights and interests of 
equity security holders and general partners provided for by the plan. 
The paragraph permits the plan or the order confirming the plan to 
provide otherwise, and excepts certain debts from the discharge as 
provided in paragraphs (2) and (3).
    Paragraph (2) of subsection (d) makes clear what taxes remain 
nondischargeable in the case of a corporate debtor emerging from a 
reorganization under chapter 11. Nondischargeable taxes in such a 
reorganization are the priority taxes (under section 507) and tax 
payments which come due during and after the proceeding under a deferred 
or part-payment agreement which the debtor had entered into with the tax 
authority before the bankruptcy proceedings began. On the other hand, a 
corporation which is taken over by its creditors through a plan of 
reorganization will not continue to be liable for nonpriority taxes 
arising from the corporation's prepetition fraud, failure to file a 
return, or failure to file a timely return, since the creditors who take 
over the reorganized company should not bear the burden of acts for 
which the creditors were not at fault.
    Paragraph (3) specifies that the debtor is not discharged by the 
confirmation of a plan if the plan is a liquidating plan and if the 
debtor would be denied discharge in a liquidation case under section 
727. Specifically, if all or substantially all of the distribution under 
the plan is of all or substantially all of the property of the estate or 
the proceeds of it, if the business, if any, of the debtor does not 
continue, and if the debtor would be denied a discharge under section 
727 (such as if the debtor were not an individual or if he had committed 
an act that would lead to a denial of discharge), the chapter 11 
discharge is not granted.
    Paragraph (4) authorizes the court to approve a waiver of discharge 
by the debtor.


                         house report no. 95-595

    Paragraph (2) [of subsec. (d)] makes applicable to an individual 
debtor the general exceptions to discharge that are enumerated in 
section 523(a) of the bankruptcy code.


                               Amendments

    1984--Subsec. (a). Pub. L. 98-353, Sec. 513(a), substituted ``any 
creditor, equity security holder, or general partner in'' for ``any 
creditor or equity security holder of, or general partner in,''.
    Subsec. (c). Pub. L. 98-353, Sec. 513(b), amended subsec. (c) 
generally. Prior to amendment, subsec. (c) read as follows: ``After 
confirmation of a plan, the property dealt with by the plan is free and 
clear of all claims and interests of creditors, of equity security 
holders, and of general partners in the debtor, except as otherwise 
provided in the plan or in the order confirming the plan.''


                    Effective Date of 1984 Amendment

    Amendment by Pub. L. 98-353 effective with respect to cases filed 90 
days after July 10, 1984, see section 552(a) of Pub. L. 98-353, set out 
as a note under section 101 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 106, 348, 523, 524, 727, 
1112 of this title; title 12 section 1715z-1a.


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Legal Resource Center: United States Code TITLE 11 Filing Bankruptcy Forms Software