THE IMPACT OF BAPCPA ON INDIVIDUAL
CHAPTER 11s

the projected disposable income of the debtor, as defined under § 1325(b)(2), during a fiveyear period beginning on the date the first payment is due under the plan or during the period for which the plan provides payments, whichever is longer. The effect of this modification is to incorporate part of the Chapter 13 disposable income concept into Chapter 11 cases filed by individuals.

The absolute priority requirements imposed by § 1129(b)(2)(B)(ii) were waived by permitting a debtor to retain property included in the estate under § 1115. Although § 1115 was added by the 2005 Amendments to include post-petition property and earnings, it also incorporates property of the estate under § 541, and accordingly it is assumed that the debtor shall be entitled to retain property under § 541 as well. A more narrow interpretation would cause this amendment to have little effect.

Section 1141(d)(5) was added to delay the granting of a discharge for an individual until the completion of all payments under the plan, provided after notice and a hearing, the court may grant a discharge to a debtor who has not completed plan payments as long as modification under § 1127 is not practicable and the value of payments that have been provided under the plan to allowed unsecured claims is equal to or exceeds the amount that such claims would have been paid if the debtor had been liquidated under Chapter 7.

Finally, § 1127(e) was added to permit an individual debtor to modify the plan at any time after confirmation of the plan but before the completion of payments under the plan, notwithstanding that the plan has been substantially consummated. This can be accomplished upon the request of the debtor, the trustee, the U.S. Trustee, or the holder of an allowed unsecured claim to increase or reduce the amount of payments of claims to a particular class, extend or reduce the time period for payments under the plan, or alter the amount of the distribution to a creditor to the extent necessary to take account of any payment of such claim made outside of the plan. Otherwise, §§ 1121 through 1128 and the requirements of § 1129 apply to any such modification, including the requirement of appropriate disclosure under § 1125. See 11 U.S.C. § 1127(f).

The big picture here is that individual Chapter 11 cases will have important similarities to Chapter 13 cases after BAPCPA. For example, post-petition income is property of the estate and the amount that must be paid to creditors is determined by the debtor's disposable income. Nevertheless there remain differences that should be evaluated by counsel prior to advising a client to file one chapter over the other.