THE PLAN OF REORGANIZATION (Page
In a chapter 11 case, a liquidating plan is
permissible. Such a plan often allows the debtor in possession to
liquidate the business under more economically advantageous
circumstances than a chapter 7 liquidation. It also permits the
creditors to take a more active role in fashioning the liquidation
of the assets and the distribution of the proceeds than in a
chapter 7 case.
Section 1123(a) of the Bankruptcy Code lists
the mandatory provisions of a chapter 11 plan, and section 1123(b)
lists the discretionary provisions. Section 1123(a)(1) provides
that a chapter 11 plan must designate classes of claims and
interests for treatment under the reorganization. Generally, a
plan will classify claim holders as secured creditors, unsecured
creditors entitled to priority, general unsecured creditors, and
equity security holders.