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Bankruptcy Law/Re--Exclusive right to file bankruptcy plan


QUESTION: A company is seeking a third extension of its exclusive right to file a bankruptcy plan and solicit creditor votes.  " A reasonable plan to permit debtors to further this process, determine if a liquidating plan is possible and develop the terms of such a plan is warranted."  Would this be to determine if creditors would agree to said plan based on what they would actually receive and, or, to prevent a hostile take over or perhaps prevent others from submitting plans of their own? I'm also interested in what the above quote might actually mean....

ANSWER: Reb-- this sounds like a homework question which I don't answer.  If this is actually an active bankruptcy case you're involved with please send a follow up question with the debtor's name, the court the case is pending in and the case number and we'll go from there.  

[an error occurred while processing this directive]---------- FOLLOW-UP ----------

QUESTION: The Company in question is Hostess Brands

Judge Robert D. Drain of the Southern District of New York  Not sure if this is the case # or not
Case No. 12-22052

My husband lost is job after almost 30 years.  I'm just trying to understand what may or may not happen next, if anything at all.

Thank you!

Thanks for the follow up.  I get a lot of homework questions that start off like yours did so I'm a bit suspicious sometimes.  Here's the deal about exclusivity.  The debtor (hostess) has 180 days to file a plan of reorganization and they are the only entity that can do so in that period.  After the exclusivity period expires (it may be extended by the judge on request), then ANYONE can propose a plan or competing plans -- the union for example coudl propose a plan and solicit votes;  the bond holders could do so;  major creditors and the like --- in Arizona for example the Fulton Homes case had competing plans and the judge has an opportunity to determine what's in the best interests of all creditors when that happens.  

So what does it mean?  Hard to say in a complex case -- when the exclusivity period is up then other persons or entities can propose plans and solicit votes.  Confusing for sure but not sure how else to explain.   Hope that helps.  Sorry about the job loss -- that was a good company a lot of us were sorry to see go down the drain.

Lee Horner

Bankruptcy Law

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Consumer bankruptcy questions invited. I've been filing Chapter 7, 11 and 13 cases since 1985 in Calif and Arizona. I do NOT do homework questions. Let me know what state you're located in when you write. My bankruptcy practice is limited to California and Arizona but inquiries from other states are welcome. Your local jurisdiction determines exemptions. Find more background information at our website, Individual Chapter 11 and small business chapter 11 questions invited. We can also advise on the creditor's side if for example you have a fraud case, money judgment etc against someone who has filed (or is threatening) bankruptcy. We have filed and defended numerous adversary complaints in bankruptcy court and opposed trustees' demands for turnover of assets from time to time.


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