An Involuntary petition for bankruptcy is filed by a creditor(s), when creditors take these measures; it can force a defaulter into bankruptcy. An involuntary petition may be filed in opposition to any defaulter which is competent of filing a voluntary petition under Chapter 7. Involuntary petitions contend that debtors are not current on their arrears. It is required that if the debtor attains twelve or more creditors, the petition needs to be signed by at least three creditors. Conversely, if the defaulters have less than twelve creditors, the petition may be signed by any number of creditors. The creditor(s) that engage in the signing of the petition are required to retain a legitimate unsecured claim of a minimum of ten-thous ...view middle of the document...
In the case of Mr. Friese, even though he submitted a plan of reorganization with his creditors separated into three classes, the bankruptcy court is not able to verify his plan for reorganization. This is due to the reason that not one of the creditors voted to agree to the plan. Under Section 1129 (a) or the acceptance method, the bankruptcy court is required to verify a plan of reorganization if the following examinations are met: (Cheeseman, 2006).1.It is required that the plan is in the preeminent interest of the creditors either by undivided election of approval by the creditors, or if the creditors receive assets that is worth the amount they would receive upon insolvency.2.The plan is required to be viable.3.At least one class of claims is required to vote approval of the plan.4.Each class of claims and interests are nonimpaired (Cheeseman, 2006).Also, the unsecured creditors are being impaired as their lawful, reasonable, and contractual rights are being distorted. If Mr. Friese can not obtain the necessary votes needed to verify a plan, Mr. Friese is able to "cram down" a plan on creditors and get the plan established in spite of creditor resistance, by means of meeting particular legislative examinations. Chapter 11 is perhaps the supplest of all the chapters; however, it is the most complicated to simplify. Because of its suppleness it is normally more costly to the defaulter. Unfortunately, the rate of victorious Chapter 11 reorganizations is bleakly low, sometimes estimated at 10% or less (Bankruptcy in Brief., n.d.)References:Cheeseman, H. (2006). Contemporary Business An Online Commerce Law. Upper RiverSaddle N.J.Bankruptcy in Brief. (n.d.). Retrieved on August 15, 2007 fromhttp://www.moranlaw.net/chapter11.htm
