SUBCHAPTER V OF CHAPTER 11 | 2023–2024
Served as debtor’s counsel for a restaurant operating business in a Subchapter V Chapter 11 case (Case No. 23-30430) in the U.S. Bankruptcy Court for the Northern District of California. The debtor entered Chapter 11 facing simultaneous pre-petition litigation on multiple fronts: an employee class action, related wage-and-hour claims, and commercial litigation brought by a banking lender. Debtor’s schedules listed over 2.3 million of debt, including $1,146,259.40 of secured debt. Each of these matters, standing alone, would have been capable of ending the business; together, they made reorganization outside of bankruptcy effectively impossible. Debtor successfully “crammed down” the secured UCC-1 lien of the commercial banking lender, making the reorganization possible.
The firm used the Chapter 11 process to resolve all three strings of litigation in parallel and negotiated a plan that secured the consent of each affected constituency. The plan was confirmed consensually under 11 U.S.C. § 1191(a) on May 16, 2024, which — unlike a nonconsensual cramdown confirmation under § 1191(b) — entitled the debtor to an automatic discharge upon entry of the confirmation order, rather than having to wait until completion of plan payments.
Result: Consensual Sub V plan confirmed (May 16, 2024); automatic discharge on confirmation; class action, wage-and-hour, and lender litigation all resolved.
U.S. Bankruptcy Court, Northern District of California
