Companies seeking relief under Chapter 11 often have complex and intriguing issues to address. Sometimes, there is a failure to give proper attention and planning to the end goal: distribution. Term definitions and crafting efficient provisions are critical to all aspects of every plan. From a disbursing agent’s perspective, some of these are important for establishing a structure to easily administer distribution, and these are the focus of this article.
The basis for distributions to creditors is, of course, confirmation of a plan of reorganization, or as permitted (and recently quite prevalent), a plan of liquidation. One particular difference of note when dealing with a reorganizing debtor or a liquidating debtor is the provision concerning unclaimed funds. For example, with respect to liquidating Chapter 11 plans, there is no point in using common boilerplate language that effectively contemplates unclaimed property will go to a defunct entity or the asset buyer.
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