11 USC 1191 - Subchapter V Plan Confirmation

What Is Section 1191?

Section 1191, added by the Small Business Reorganization Act of 2019, governs plan confirmation in Subchapter V cases. Two paths: consensual (1191(a)) and cramdown (1191(b)).

1191(a) - Consensual Confirmation

All impaired classes accept. The absolute priority rule does not apply - the debtor retains equity even if unsecured creditors are not paid in full.

1191(b) - Cramdown

If impaired classes reject, the court confirms if the plan commits all projected disposable income for 3-5 years and does not discriminate unfairly.

Detailed cramdown guide at section1192.org →

Who Qualifies?

• Aggregate noncontingent liquidated debts not exceeding $7,500,000
• At least 50% from commercial or business activities
• Must be engaged in commercial or business activities

1191(a) vs 1191(b) - Key Differences

The distinction between 1191(a) and 1191(b) is the most consequential decisión point in a Subchapter V case. It affects discharge timing, creditor treatment, and post-confirmation obligations.

Consent Integrity Under 1191(a)

Section 1191(a) requires that all impaired classes accept the plan. Acceptance is meaningful only on an adequate informational predicate. When post-confirmation conduct surfaces material pre-confirmation nondisclosure, the consent foundation of a 1191(a) confirmation is open to challenge.

The Disclosure Predicate

Subchapter V relaxes the formal disclosure statement requirement under Section 1181(b), but the substance of the disclosure obligation persists. Section 1187(b) directs the debtor to comply with the requirements of Section 1125(a) (the "adequate information" standard) in the plan itself. A 1191(a) acceptance obtained without that adequate-information predicate is structurally defective even if the ballot count is unanimous.

The Revocation Gateway

Section 1144 permits the court, on motion of a party in interest within 180 days after confirmation, to revoke a confirmation order procured by fraud. This is the procedural vehicle when post-confirmation discovery surfaces material pre-confirmation nondisclosure. The 180-day window is strict; missed deadlines extinguish the revocation path even where the underlying fraud is later established.

Post-Confirmation Conduct as Evidence of Pre-Confirmation Consent Defect

Conduct that emerges after confirmation can illuminate the integrity of the pre-confirmation consent record. Four analytical categories arise:

• Undisclosed creditor conduct during the case: automatic stay violations under Section 362(k) that occurred during the pendency but were not disclosed in solicitation materials and would have changed the creditor-recovery calculus.
• Undisclosed professional fee structures: post-confirmation fee arrangements not disclosed at confirmation that materially change net plan economics for unsecured creditors.
• Information asymmetry between debtor's professionals and the creditor class: material facts known to debtor's counsel that were not surfaced in the disclosure record.
• Post-confirmation discovery of pre-confirmation conduct: a creditor learning after confirmation that the debtor's representations about contingent liabilities or operational facts were materially incomplete.

Each category is independently a basis for a Section 1144 motion if the procurement-by-fraud standard is met and the 180-day window has not closed.

Subchapter V Trustee Duties at the Consent Layer

Section 1183(b)(7) imposes a duty on the Subchapter V trustee to appear and be heard at any hearing that concerns confirmation of a plan. Section 1183(b)(2) requires the trustee to facilitate the development of a consensual plan of reorganization. Read together, these provisions place the SVT in a position to flag consent-integrity concerns at confirmation even where the debtor's counsel does not. SVT silence at confirmation is not consent; it is a record fact relevant to subsequent revocation analysis.

Why 1191(a) vs 1191(b) Matters: A Real-World Example

Consider a small business debtor whose plan proposes to pay unsecured creditors 10% over 3 years. If all creditor classes vote to accept, the plan is confirmed under 1191(a) and the debtor receives an immediate discharge. The debtor continues operating the business free of pre-petition debt from day one of confirmation.

If even one impaired class rejects, the debtor must confirm under 1191(b). This requires committing all projected disposable income for 3-5 years - and the discharge is deferred until those payments are complete. The debtor operates under court supervision for the entire plan period.

The ballot outcome can be the difference between immediate freedom and years of monitored payments. In practice, many Subchapter V cases are confirmed under 1191(b) because creditor engagement is often low.

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Section 1191 by Federal Circuit

Subchapter V is five years old - its confirmation doctrine is still being built, and case law varies meaningfully by circuit. The Fourth Circuit's Trepetin, the Eleventh's Seven Stars, the Fifth's Pearl Resources, and the Ninth's Bonert/Walker are the anchors most commonly cited in the absence of circuit-court precedent. Each page below covers the leading in-circuit Subchapter V decisions, Chapter 11 filing volume, and practice tips.

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