In In re Indianapolis Downs, Case No. 11-11046 (BLS), 2013 Bankr. Lexis 384 (Bankr. D. Del. Jan. 31, 2013), the U.S. Bankruptcy Court for the District of Delaware issued a ruling that has important implications for the use of post-petition restructuring support agreements in Chapter 11 bankruptcy proceedings. In that case, Bankruptcy Judge Brendan L. Shannon held that the votes to accept a Chapter 11 plan that were cast by signatory parties to a post-petition restructuring support agreement should not "be designated," and thus, should be counted as acceptances under Section 1126 of the Bankruptcy Code. In doing so, Shannon confirmed the validity of a useful method of shortening the bankruptcy process.
Chapter 11 Process
A restructuring support agreement (also referred to as a plan support agreement or a lock-up agreement) is a contract between a debtor and certain of its major creditors in support of a proposed Chapter 11 plan of reorganization. A Chapter 11 plan of reorganization is the mechanism by which a debtor restructures its relationships with creditors and provides for treatment and payment of claims filed against the debtor. A Chapter 11 plan may propose that the debtor reorganize and continue to operate, liquidate by selling the assets of the debtor, or implement a combination of both.
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