Bankruptcy, Regulation, Estate, Creditors
Section 1123(b)(3)(B) of the Bankruptcy Code permits chapter 11 debtors to retain claims and interests post-confirmation through the plan of reorganization. This section promotes the maximization of the bankruptcy estate, which in turn increases distributions to creditors. While plan confirmation under § 1141 typically has a res judicata effect, binding all parties and blocking potential causes of action, § 1123(b)(3)(B) provides an exception. The broad language of § 1123(b)(3)(B), however, provides minimal guidance as to how specific reservations must be in order to successfully retain causes of action. Courts fluctuate between allowing extremely broad claims reservations and requiring either categorical reservations or the explicit reservation of individual claims. Courts have even considered the sufficiency of claims reservations contained in disclosure statements, including when the reservations are not necessarily addressed in the plan. This Note analyzes the various methods courts employ in the application of § 1123(b)(3)(B), and it proposes a compromise that promotes both the finality of plan confirmation as well as the maximization of the bankruptcy estate.
Broadening the Estate by Avoiding Specificity of Retained Claims- § 1123(b)(3)(B),
19 Fordham J. Corp. & Fin. L. 231
Available at: https://ir.lawnet.fordham.edu/jcfl/vol19/iss1/5