Pub. 2 2021 Issue 4

9 ISSUE 4 | 2021 Camber Jones is an associate at Spencer Fane’s Springfield, Missouri office. She is a member of the firm’s Banking and Financial Services Group. 1 This article does not address bankruptcies commenced under Chapters 9 (municipality bankruptcy) and 15 (ancillary and cross-border bankruptcy) of the Bankruptcy Code. In a Chapter 11 bankruptcy, creditors have the opportunity to vote on and object to confirmation of a debtor’s proposed plan of reorganization. Because a debtor is highly motivated to confirm and effect such a plan, creditors often have substantial power to negotiate their claims. Specific debtors may elect to proceed under subchapter V of Chapter 11, which simplifies and condenses the bankruptcy process to make reorganization less expensive for smaller debtors. After a Chapter 11 plan is confirmed (approved by the court), payments will be made to creditors according to plan terms. Chapter 12 Defined as a hybrid of Chapters 11 and 13, Chapter 12 provides a more streamlined bankruptcy process for “family farmers” or “family fishermen” who have regular annual income. Qualifying debtors can propose and implement a plan to pay all or part of their debts over three to five years. Creditors do not vote on a Chapter 12 plan but may object to its confirmation. After a plan is confirmed, the Chapter 12 trustee will distribute funds per the plan’s terms. Chapter 13 Chapter 13 provides a way for individuals with regular income to propose and implement a plan to pay all or part of their debts over three to five years. Creditors do not vote on a Chapter 13 plan but may object to its confirmation. After a plan is confirmed, the Chapter 13 trustee will distribute funds per the plan’s terms. Proofs of Claim In most bankruptcy cases, a creditor must file a proof of claim, including supporting documentation. The treatment of a creditor’s claim depends on whether it is secured or unsecured. Creditors should determine whether their debt is secured, confirm the status and location of any related collateral, and file a timely and complete proof of claim. Discharge The result of a successful bankruptcy is an entry of an order discharging the debtor from liability for certain debts. Call me at 480.259.8280 Tracy Peterson Based in Ariz. covering Arizona, Colorado, Kansas and Missouri Together, let ’s make it happen. Leverage our large lending capacity, up to $20 million on correspondent loans. Our lending limits are high enough to accommodate what you need, when you need it. We do not reparticipate any loans. Member FDIC 31518 Commercial & ag participation loans Bank stock & ownership loans Bank building financing Business & personal loans for bankers Why choose Bell as your bank’s lending partner? While the discharge timing varies based on the type of case filed, in all cases, the discharge permanently bars creditors from taking any action to enforce or collect discharged debts. Regardless of the type of case filed, creditors should protect their interests by participating meaningfully in the bankruptcy process. This participation should include communicating early and often with the debtor and other parties in interest, promptly filing a proof of claim, carefully reviewing a debtor’s proposed treatment of claims, and exercising the right to vote or object to a debtor’s proposed bankruptcy plan when appropriate. * On March 27, 2021, President Biden signed the COVID-19 Bankruptcy Relief Extension Act. A bankruptcy professional can help creditors navigate the Act’s effect on their rights and obligations in a bankruptcy case. 