involuntary Chapter 11

IV. The Constitutional Problem With A § 706(b) Motion

I thank Daniel Press, an attorney practicing in Virginia, Washington, DC, and Maryland, for giving me his notes, which served as an afflatus for some of today’s post.

A. Historical Background

 1. The Chapter 13 Context

When Chapter 13 was enacted in 1978, it provided that only an individual could be a Chapter 13 debtor (11 U.S.C. § 109(e)), imposed limitations on the amount of debt a Chapter 13 debtor could have (11 U.S.C. § 109(e)), and — most important for today’s discussion — included postpetition earnings in the bankruptcy estate (11 U.S.C. § 1306(a)(2)) from which the debtor made Chapter 13 plan payments (11 U.S.C. § 1325(b)(1)(B)).

For a Chapter 13 Plan to succeed, the debtor must be a willing and active participant in the reorganization. Congress explicitly stated that an involuntary Chapter 13 would create a thirteenth amendment problem:
Continue Reading The Fight Against An Alarming Trend: Section 706(b) Motions – Part 4