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Although the Code does not use the word "feasible" it requires that "[c]onfirmation of the plan is not likely to be followed by the liquidation, or the need for further financial reorganization, of the debtor or any successor to the debtor under the plan, unless such liquidation or reorganization is proposed in the plan." § 1129(a)(11). The Code excepts from this standard a liquidating plan, because a liquidating plan can be an appropriate form of reorganization. The Fifth Circuit rejected a bankruptcy court's implication that a liquidating Chapter 11 plan cannot be in good faith, correctly concluding that a liquidating plan is permissible.89 Like the Fourth Circuit in FCX,90 the Fifth Circuit relied on § 1123(b)(4) as providing authority for either sale of all of the property of the estate or distribution of all or part of it to creditors. One novel approach to satisfying the Code's feasibility standard, in a single asset case, was simply to provide that if the debtor could not make its secured debt payments it would deed the property back to the secured creditor. The Seventh Circuit upheld the bankruptcy court's conclusion that this satisfies feasibility because it avoids "liquidation, or the need for further financial reorganization,"91 but the Eighth Circuit found such a "drop dead" provision alone insufficient to establish feasibility.92 The Fifth Circuit agrees that feasibility is satisfied if one of various plan alternatives is feasible, even if one of them is returning the collateral to the secured creditor.93
Case law holds the feasibility requirement is satisfied if "the plan offers a reasonable assurance of success. Success need not be guaranteed."94 One court concluded that "The purpose of section 1129(a)(11) is to prevent confirmation of visionary schemes which promise creditors and equity security holders more under a proposed plan than the debtor can
FINAL REPORt, Proposal B-1, at 276-77 (1994).
89
In re Sandy Ridge Development Corp., 881 F.2d 1346 (5th Cir. 1989).
90
In FCX, Inc., 853 F.2d 1149, 1158-59 (4th Cir. 1988). 91 In re 203 N. LaSalle Street Partnership, 126 F.3d 955 (7th Cir. 1997). 92 Danny Thomas Properties II Limited Partnership v. Beal Bank S.S.B., 241 F.3d 959 (8th Cir. 2001). 93 In re T-H New Orleans Ltd. Ptshp., 116 F.3d 790 (5th Cir. 1997).
94
In re T-H New Orleans Ltd. Ptshp., 116 F.3d 790 (5th Cir. 1997); Kane v. Johns-Manville Corp. (In re Johns-Manville Corp.), 843 F.2d 636, 649 (2d Cir. 1988); Acequia Inc. v. Clinton (In re Acequia), 787 F.2d 1352, 1364 (9th Cir. 1986) ("reasonable probability of success"); Prudential Insurance Co. v. Monnier (In re Monnier Bros.), 755 F.2d 1336, 1341 (8th Cir. 1985); accord, Travelers Ins. Co. v. Pikes Peak Water Co. (In re Pikes Peak Water Co.), 779 F.2d 1456, 1460 (10th Cir. 1985).
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