uaranties of commercial debt, which greatly exceed the debt limits in §109(e), these particular individuals often are ineligible for chapter 13 in any event.
2 An excellent examination of core constitutional issues regarding individual chapter 11’s and post-petition earnings can be found in a recent ABI Law Review article by Robert J. Keach. See Keach, Robert J., Dead Man Filing Redux: Is the New Individual Chapter Eleven Unconstitutional?, 13 Am. Bankr. Inst. L. Rev. 483 (2005).
3 §1115(a)(1). §541(a)(6) specifically excludes post-petition “earnings from services performed by an individual debtor after the commencement of the case.”
4 §1115(a)(2).
5 §1123(a)(8).
6 Id.
7 §1129(a)(15).
8 §1129(a)(15)(B).
9 §1129(b)(2)(B)(ii).
10 §1141(d)(5)(A).
11 §1141(d)(5)(B)(i).
12 §1141(d)(5)(B)(ii).
13 Notably, §1115(a)(2) refers not to disposable income but rather to earnings from services rendered. Unlike §1129, §1115 does not specifically adopt any other provision’s relevant definition, and earnings from services rendered is not defined in §101.
14 While this hypothetical is based on a cross section of numerous actual cases, this hypothetical is not intended to identify any individual chapter 11 debtor.
15 Although relevant, the duties of debtor’s counsel in this situation are beyond the scope of this article.
16 See §1325(b)(2)(B).
17 Given that the “election” to proceed as a small business is no longer an election under §101(51C) and (51D) in many cases, the truly cash-strapped creditor ought to ensure that the U.S. Trustee is treating the case as a small business case. The U.S. Trustee may be able to force greater disclosure from the debtor through §1116.
18 Section 1129(a)(15) specifically adopts only the definition of disposable income provided in §1325(b)(2). On its face, though, §1325(b)(3) indicates that those amounts “reasonably necessary” to be expended for purposes of §1325(b)(2) might be determined in accordance with §707(b)(2)(A) and (B) depending on the debtor’s household income.
19 If timely raised as an objection to the proposed plan, creditors should have a much better chance of convincing a bankruptcy judge that the more expansive requirement under §1123 trumps §1129, which can be far more favorable to a clever debtor.