April 01, 2014 Articles

Preserving Causes of Action Post-Confirmation

Four circuits have addressed this question, each with different outcomes.

By Cory D. Kandestin

Bankruptcy Code § 1123(b)(3)(B) allows a debtor to preserve its prepetition claims beyond confirmation by including language to that effect in its plan. What § 1123 does not say, however, is how specifically the debtor must describe the claims that it wants to preserve. And to make matters more confusing, the courts appear to be split.  This article surveys this apparent split and suggests that it can be reconciled, and that most courts ought to accept categorical descriptions of claim types (e.g., “this plan preserves all avoidance actions”).

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