Official Form 425A - Plan of Reorganization for Small Business Under Chapter 11

OFFICIAL FORM 425A — PLAN OF REORGANIZATION FOR SMALL BUSINESS UNDER CHAPTER 11

Worksheet and Practice Template

This is a comprehensive worksheet to assist practitioners in preparing a Plan of Reorganization that substantially conforms to Official Form 425A (effective February 19, 2020). Transfer all finalized content to the Official Form or e-filing software before submission. This form must be used under Bankruptcy Rule 9009.

COURT HEADER

UNITED STATES BANKRUPTCY COURT
FOR THE [________________________________] DISTRICT OF [________________________________]

In re:

Debtor(s): [________________________________]

EIN/SSN (last 4 digits): [____]

Case No.: [________________________________]

Chapter 11

☐ Small Business Case (Non-Subchapter V)
☐ Subchapter V Small Business Case

PLAN PROPONENT INFORMATION

Name of Plan Proponent: [________________________________]

Address: [________________________________]

City: [________________________________] State: [____] Zip: [__________]

Telephone: [________________________________]

Email: [________________________________]

Attorney for Plan Proponent (if any): [________________________________]

Bar No.: [________________________________]

Firm: [________________________________]

Address: [________________________________]

City: [________________________________] State: [____] Zip: [__________]

Telephone: [________________________________]

Email: [________________________________]

Date Plan Filed: [__/__/____]

☐ Original Plan
☐ Amended Plan (Amendment No. [____])
☐ Modified Plan (Modification No. [____])

ARTICLE 1: SUMMARY OF THE PLAN

1.1 Introduction

This Plan of Reorganization under Chapter 11 of the Bankruptcy Code proposes to pay creditors of [________________________________] ("Debtor") from the following sources:

☐ Continued business operations and future earnings
☐ Sale of substantially all assets
☐ Sale of specific assets (describe): [________________________________]
☐ New capital contributions (describe source): [________________________________]
☐ Refinancing of existing obligations
☐ Combination of the above (explain): [________________________________]
☐ Other (describe): [________________________________]

1.2 Brief History of Business Operations

(Required for Subchapter V cases under 11 U.S.C. § 1190(1)(A))

Date business established: [__/__/____]

Nature of business: [________________________________]

Principal products or services: [________________________________]

Number of employees (current): [____]

Number of employees (at filing): [____]

Events leading to bankruptcy filing: [________________________________]

[________________________________]

[________________________________]

Summary of operations during the bankruptcy case: [________________________________]

[________________________________]

[________________________________]

1.3 Plan Summary

This Plan provides for [____] classes of claims and interests. Unsecured creditors holding allowed claims will receive distributions of approximately [____] cents on the dollar under the Plan, to be distributed over a period of [____] months/years. This Plan also provides for the payment of administrative and priority claims in full as required by the Bankruptcy Code.

ARTICLE 2: CLASSIFICATION OF CLAIMS AND INTERESTS

2.1 Unclassified Claims

The following claims are not classified and are treated separately under the Plan as required by the Bankruptcy Code:

Administrative Expense Claims (11 U.S.C. § 503):
Description: [________________________________]
Estimated amount: $[________________________________]

United States Trustee Quarterly Fees (28 U.S.C. § 1930(a)(6)):
Description: All fees required under 28 U.S.C. § 1930 shall be paid in full.
Estimated amount: $[________________________________]

Priority Tax Claims (11 U.S.C. § 507(a)(8)):
Description: [________________________________]
Estimated amount: $[________________________________]

2.2 Classified Claims and Interests

(Add additional classes as needed. Unimpaired classes are deemed to accept the plan and do not vote. Classes that receive nothing under the plan are deemed to reject the plan.)

ARTICLE 3: TREATMENT OF ADMINISTRATIVE EXPENSE CLAIMS, PRIORITY TAX CLAIMS, AND UNITED STATES TRUSTEE FEES

3.1 Administrative Expense Claims

Each holder of an administrative expense claim allowed under 11 U.S.C. § 503 shall receive payment in full on the Effective Date of the Plan, or as soon as practicable thereafter, unless the holder agrees to different treatment.

Professional fee claims (attorneys, accountants, other professionals):

3.2 Priority Tax Claims

Priority tax claims shall be paid in full through deferred cash payments over a period not exceeding 5 years from the date of assessment, with interest at the rate of [____]% per annum.

3.3 United States Trustee Fees

All fees payable under 28 U.S.C. § 1930 that are owed on or before the Effective Date shall be paid on the Effective Date. Quarterly fees accruing after the Effective Date shall be paid as they become due until the case is closed, converted, or dismissed.

ARTICLE 4: TREATMENT OF CLAIMS AND INTERESTS UNDER THE PLAN

Class 1: [________________________________]

Type of Claim: ☐ Secured ☐ Priority Unsecured ☐ General Unsecured ☐ Equity Interest

Treatment:
- Total amount of allowed claims in class: $[________________________________]
- Payment amount: $[________________________________] per ☐ month ☐ quarter ☐ year
- Interest rate (if applicable): [____]%
- Duration of payments: [____] months/years
- First payment date: [__/__/____]
- Last payment date: [__/__/____]
- Collateral description (if secured): [________________________________]
- Collateral value: $[________________________________]
- Cure amount (if applicable): $[________________________________]
- Is this class impaired? ☐ Yes ☐ No

Class 2: [________________________________]

Type of Claim: ☐ Secured ☐ Priority Unsecured ☐ General Unsecured ☐ Equity Interest

Treatment:
- Total amount of allowed claims in class: $[________________________________]
- Payment amount: $[________________________________] per ☐ month ☐ quarter ☐ year
- Interest rate (if applicable): [____]%
- Duration of payments: [____] months/years
- First payment date: [__/__/____]
- Last payment date: [__/__/____]
- Collateral description (if secured): [________________________________]
- Collateral value: $[________________________________]
- Cure amount (if applicable): $[________________________________]
- Is this class impaired? ☐ Yes ☐ No

Class 3: [________________________________]

Type of Claim: ☐ Secured ☐ Priority Unsecured ☐ General Unsecured ☐ Equity Interest

Treatment:
- Total amount of allowed claims in class: $[________________________________]
- Payment amount: $[________________________________] per ☐ month ☐ quarter ☐ year
- Interest rate (if applicable): [____]%
- Duration of payments: [____] months/years
- First payment date: [__/__/____]
- Last payment date: [__/__/____]
- Collateral description (if secured): [________________________________]
- Collateral value: $[________________________________]
- Cure amount (if applicable): $[________________________________]
- Is this class impaired? ☐ Yes ☐ No

Class 4: [________________________________]

Type of Claim: ☐ Secured ☐ Priority Unsecured ☐ General Unsecured ☐ Equity Interest

Treatment:
- Total amount of allowed claims in class: $[________________________________]
- Payment amount: $[________________________________] per ☐ month ☐ quarter ☐ year
- Interest rate (if applicable): [____]%
- Duration of payments: [____] months/years
- First payment date: [__/__/____]
- Last payment date: [__/__/____]
- Collateral description (if secured): [________________________________]
- Collateral value: $[________________________________]
- Cure amount (if applicable): $[________________________________]
- Is this class impaired? ☐ Yes ☐ No

(Replicate this section for each additional class.)

ARTICLE 5: MEANS FOR IMPLEMENTATION OF THE PLAN

5.1 Funding Sources

The Plan will be funded from the following sources:

☐ Cash on hand: $[________________________________] currently available
☐ Future business operations: Projected monthly net income of $[________________________________]
☐ New capital contribution: $[________________________________] from [________________________________]
☐ Sale of assets: Description of asset: [________________________________]; estimated sale price: $[________________________________]
☐ Refinancing: Description: [________________________________]; estimated proceeds: $[________________________________]
☐ Litigation recoveries: Description: [________________________________]; estimated recovery: $[________________________________]
☐ Other: [________________________________]

5.2 Post-Confirmation Management

The Debtor's business will be managed after confirmation by:

Name: [________________________________]
Title: [________________________________]
Compensation: $[________________________________] per [____]

Name: [________________________________]
Title: [________________________________]
Compensation: $[________________________________] per [____]

☐ No change in management from pre-confirmation
☐ Changes in management (describe): [________________________________]

5.3 Executory Contracts and Unexpired Leases

The Debtor proposes the following treatment for executory contracts and unexpired leases:

All executory contracts and unexpired leases not expressly assumed shall be deemed rejected as of the Effective Date.

5.4 Vesting of Property

On the Effective Date, all property of the estate shall vest in:
☐ The reorganized Debtor, free and clear of all claims and interests except as provided in the Plan
☐ Other (describe): [________________________________]

5.5 Avoidance Actions

The Debtor ☐ retains ☐ does not retain the right to pursue avoidance actions under 11 U.S.C. §§ 544, 545, 547, 548, 549, and 553.

Known or potential avoidance actions: [________________________________]
Estimated recovery from avoidance actions: $[________________________________]

ARTICLE 6: DISTRIBUTIONS UNDER THE PLAN

6.1 Disbursing Agent

Distributions under the Plan shall be made by:
☐ The Debtor
☐ The Subchapter V Trustee
☐ Other (identify): [________________________________]

6.2 Distribution Schedule

Distributions shall commence on: [__/__/____] (no later than the first business day of the month following the Effective Date or as specified)

Frequency: ☐ Monthly ☐ Quarterly ☐ Semi-annually ☐ Annually ☐ Other: [________________________________]

6.3 Disputed Claims

A reserve of $[________________________________] shall be established for disputed claims. Distributions on account of disputed claims shall be made within [____] days after such claims are allowed by Final Order.

6.4 Unclaimed Distributions

Unclaimed distributions shall be:
☐ Redistributed pro rata among claimants in the same class
☐ Returned to the Debtor
☐ Other: [________________________________]

ARTICLE 7: LIQUIDATION ANALYSIS

(Required for Subchapter V cases under 11 U.S.C. § 1190(1)(B); recommended for all small business cases to establish the "best interest of creditors" test under 11 U.S.C. § 1129(a)(7).)

7.1 Estimated Liquidation Values

7.2 Estimated Costs of Liquidation

7.3 Estimated Distribution in Liquidation

Net amount available for unsecured creditors: $[________________________________]
Total general unsecured claims: $[________________________________]
Estimated distribution per dollar of allowed claim: $[________________________________]

Plan distribution comparison: Under this Plan, unsecured creditors will receive $[____] per dollar, compared to an estimated $[____] per dollar in a Chapter 7 liquidation.

ARTICLE 8: FINANCIAL PROJECTIONS

(Required for Subchapter V cases under 11 U.S.C. § 1190(1)(C). Projections should cover the duration of the Plan.)

8.1 Projected Income and Expenses

8.2 Key Assumptions

[________________________________]

[________________________________]

[________________________________]

ARTICLE 9: MODIFICATION OF THE PLAN

9.1 Pre-Confirmation Modifications

The Plan Proponent reserves the right to modify this Plan at any time before confirmation, subject to the requirements of 11 U.S.C. § 1127 and Fed. R. Bankr. P. 3019. If the modification materially and adversely affects any class, additional solicitation and disclosure will be provided.

9.2 Post-Confirmation Modifications

The Plan Proponent may modify this Plan after confirmation but before substantial consummation, in accordance with 11 U.S.C. § 1127(b), subject to court approval following notice and a hearing.

9.3 Subchapter V Modifications

If this is a Subchapter V case, the Plan may be modified at any time after confirmation but before the completion of payments under the Plan under 11 U.S.C. § 1193, subject to the requirements thereof.

ARTICLE 10: DISCHARGE AND INJUNCTION

10.1 Discharge

☐ Non-Subchapter V Small Business Case: Upon confirmation of the Plan, the Debtor shall be discharged from any debt that arose before the date of confirmation, except as provided in 11 U.S.C. § 1141(d).

☐ Subchapter V — Consensual Plan (§ 1191(a)): Upon confirmation of the Plan, the Debtor shall be discharged from debts as provided in 11 U.S.C. § 1141(d)(1)(A), except as otherwise provided in the Plan, the confirmation order, or 11 U.S.C. § 1141(d).

☐ Subchapter V — Cramdown Plan (§ 1191(b)): The Debtor shall not receive a discharge until completion of all payments under the Plan, as provided in 11 U.S.C. § 1192.

10.2 Injunction

Upon the Effective Date, all entities that hold claims or interests treated by this Plan are permanently enjoined from commencing or continuing any action to collect, recover, or offset any claim or interest treated under this Plan, except as provided in the Plan or confirmation order.

ARTICLE 11: OTHER PROVISIONS

11.1 Tax Consequences

The Debtor makes no representations regarding tax consequences of the Plan to creditors or interest holders. Each creditor and interest holder should consult its own tax advisor.

11.2 Releases and Exculpation

☐ No releases or exculpation provisions are included
☐ The following releases are proposed: [________________________________]
☐ Exculpation is proposed for: [________________________________]

(Note: Releases and third-party releases in small business cases may face heightened scrutiny. Check applicable circuit law.)

11.3 Retention of Jurisdiction

The Court shall retain jurisdiction over the case for purposes including but not limited to:
- Resolving disputed claims
- Enforcing the Plan and confirmation order
- Modifying the Plan under applicable provisions
- Closing the case

11.4 Severability

If any provision of this Plan is determined to be unenforceable, the remaining provisions shall remain in full force and effect.

11.5 Binding Effect

This Plan shall be binding on all creditors, interest holders, and their successors and assigns, whether or not they accept the Plan.

ARTICLE 12: EFFECTIVE DATE AND CONDITIONS PRECEDENT

12.1 Effective Date

The Effective Date of this Plan shall be the first business day that is at least [____] days after the entry of the Confirmation Order, provided that all conditions precedent have been satisfied or waived.

12.2 Conditions Precedent to the Effective Date

The following conditions must be satisfied or waived before the Effective Date:

☐ The Confirmation Order has become a Final Order (i.e., not subject to stay or appeal)
☐ All documents and agreements necessary to implement the Plan have been executed
☐ [________________________________]
☐ [________________________________]

ARTICLE 13: ATTACHMENTS AND EXHIBITS

The following documents are attached to and made part of this Plan:

☐ Exhibit A — Liquidation Analysis
☐ Exhibit B — Financial Projections (5-Year)
☐ Exhibit C — List of Executory Contracts and Unexpired Leases
☐ Exhibit D — Plan Supplement Documents
☐ Exhibit E — [________________________________]
☐ Exhibit F — [________________________________]

SIGNATURES

Debtor / Plan Proponent:

Signature: _________________________________ Date: [__/__/____]

Printed Name: [________________________________]

Title: [________________________________]

Attorney for Debtor / Plan Proponent:

Signature: _________________________________ Date: [__/__/____]

Printed Name: [________________________________]

Bar No.: [________________________________]

Firm: [________________________________]

Address: [________________________________]

Telephone: [________________________________]

Email: [________________________________]

PRACTITIONER NOTES AND PRACTICE TIPS

Key Filing Considerations

1. Small Business Debtor Qualification: Under 11 U.S.C. § 101(51D), a small business debtor must have aggregate noncontingent, liquidated secured and unsecured debts of not more than $7,500,000 (as adjusted) excluding debts owed to affiliates or insiders. For Subchapter V eligibility, the debt limit is $7,500,000 (as adjusted; originally $2,725,625 but increased by the CARES Act and subsequent legislation).

2. Plan Filing Deadline: In a standard small business case, the debtor has 300 days after the order for relief to file a plan (11 U.S.C. § 1121(e)). In a Subchapter V case, the debtor must file a plan within 90 days of the order for relief (11 U.S.C. § 1189(b)), unless the court extends the deadline.

3. Disclosure Statement: In a small business case, the court may conditionally approve a disclosure statement subject to final approval at the confirmation hearing (11 U.S.C. § 1125(f)). In a Subchapter V case, a disclosure statement is not required unless the court orders otherwise (11 U.S.C. § 1181(b)).

4. Subchapter V Additional Requirements: Under 11 U.S.C. § 1190, a Subchapter V plan must include: (A) a brief history of business operations; (B) a liquidation analysis; and (C) financial projections demonstrating ability to make plan payments.

5. Absolute Priority Rule: The absolute priority rule does not apply in Subchapter V cases confirmed under 11 U.S.C. § 1191(b) ("cramdown"). Instead, the plan must be "fair and equitable" as defined in § 1191(c), which requires submission of all or a portion of future earnings for plan execution.

6. Notice of Substantial Consummation: After plan confirmation, the debtor must file and serve a Notice of Substantial Consummation within 14 days of substantial consummation of the confirmed plan.

Confirmation Requirements Checklist

☐ Plan complies with applicable provisions of the Bankruptcy Code (§ 1129(a)(1))
☐ Plan proponent has complied with applicable provisions of the Code (§ 1129(a)(2))
☐ Plan proposed in good faith (§ 1129(a)(3))
☐ Payments for professional services approved (§ 1129(a)(4))
☐ Identity and compensation of post-confirmation management disclosed (§ 1129(a)(5))
☐ No rate change requiring regulatory approval (§ 1129(a)(6))
☐ Best interest of creditors test satisfied (§ 1129(a)(7))
☐ Each impaired class has accepted the plan or cramdown applies (§ 1129(a)(8) / § 1129(b))
☐ Priority claims treatment satisfies § 1129(a)(9)
☐ At least one impaired class accepted (without counting insiders) (§ 1129(a)(10))
☐ Plan is feasible (§ 1129(a)(11))
☐ All fees paid (§ 1129(a)(12))
☐ Domestic support obligations current (§ 1129(a)(14))
☐ Individual debtor projected income requirements met (§ 1129(a)(15))
☐ Tax return filing requirements met (§ 1129(a)(16))

COMMON PITFALLS

1. Failing to include Subchapter V mandatory content. Plans filed under Subchapter V that omit the business history, liquidation analysis, or financial projections face denial at confirmation.

2. Inadequate feasibility showing. Courts will deny confirmation if financial projections are speculative or fail to show the debtor can make all plan payments. Include realistic, conservative projections.

3. Omitting U.S. Trustee quarterly fees. Failure to account for ongoing quarterly fees under 28 U.S.C. § 1930(a)(6) is a frequent basis for objection.

4. Overlooking the best interest test. Creditors must receive at least as much under the plan as they would in a Chapter 7 liquidation. The liquidation analysis is critical to meeting this test.

5. Improper classification of claims. Classifying substantially similar claims differently without a legitimate business justification may constitute gerrymandering and result in denial of confirmation.

6. Missing the plan filing deadline. In Subchapter V cases, the 90-day deadline is strictly enforced. Request extensions early and for cause.

7. Failing to address executory contracts. Any executory contract or unexpired lease not expressly assumed is deemed rejected. Review all contracts before plan filing.

8. Ignoring post-confirmation reporting requirements. Most districts require periodic post-confirmation financial reports until the case is closed.

STATE-SPECIFIC VARIATION NOTES

While Official Form 425A is a federal form used uniformly in all United States Bankruptcy Courts, local rules and practices vary significantly:

California (C.D. Cal., N.D. Cal., S.D. Cal., E.D. Cal.):
- Local Bankruptcy Rule 3017 may require additional disclosures in the plan or disclosure statement.
- The Central District requires a Chapter 11 Case Management Summary (LBR 3017-2).
- California state tax liens require specific treatment addressing the California Franchise Tax Board.

Texas (N.D. Tex., S.D. Tex., E.D. Tex., W.D. Tex.):
- The Southern District requires the Plan to be accompanied by a ballot summary and tabulation (Local Rule 3018-1).
- Texas property exemptions (Tex. Prop. Code § 41.001 et seq.) may affect liquidation analysis calculations.
- Practitioners should be aware of the Texas franchise tax treatment in financial projections.

Florida (S.D. Fla., M.D. Fla., N.D. Fla.):
- The Southern District has specific local form requirements for Plan confirmation orders.
- Florida's unlimited homestead exemption (Fla. Const. Art. X, § 4) significantly affects liquidation analyses.
- Local Rule 3020-1 may require service of the confirmation order on specific parties.

New York (S.D.N.Y., E.D.N.Y., N.D.N.Y., W.D.N.Y.):
- The Southern District has Standing Orders regarding Chapter 11 case management conferences.
- E.D.N.Y. Local Rule 3017-1 requires specific disclosure statement format compliance.
- New York State tax claims may require separate classification and treatment provisions.
- The Southern and Eastern Districts have specific requirements for fee applications included in the Plan.

FILING INSTRUCTIONS

1. Prepare the Plan using Official Form 425A or a document that substantially conforms to the form.
2. Prepare the Disclosure Statement using Official Form 425B (unless Subchapter V and no disclosure statement is required).
3. File the Plan with the bankruptcy court clerk via the CM/ECF electronic filing system.
4. Serve the Plan on the United States Trustee, all creditors, the Subchapter V Trustee (if applicable), and all parties in interest.
5. File a Certificate of Service documenting service on all required parties.
6. File the Disclosure Statement simultaneously with the Plan (if required).
7. Solicit Acceptances after disclosure statement approval (if required) using Official Form 314.
8. File Ballot Summary tabulating votes by class before the confirmation hearing.
9. Attend the Confirmation Hearing prepared to demonstrate all confirmation requirements are met.
10. File Notice of Substantial Consummation within 14 days after substantially consummating the confirmed plan.

SOURCES AND REFERENCES

• Official Form 425A (effective February 19, 2020): U.S. Courts Forms Page
• 11 U.S.C. § 1123 (Contents of Plan): Cornell LII
• 11 U.S.C. § 1129 (Confirmation of Plan): Cornell LII
• 11 U.S.C. §§ 1181-1195 (Subchapter V): Cornell LII
• Small Business Reorganization Act of 2019 (P.L. 116-54): Congress.gov
• Fed. R. Bankr. P. 3016, 3017, 3018, 3019: Cornell LII
• U.S. Trustee SBRA Legal Manual: DOJ UST