11 U.S.C. Section 1190 -- Acceptance of Plan in Subchapter V

What Is Section 1190?

Section 1190 of Title 11 of the United States Code (Acceptance of Plan in Subchapter V) is a foundational provision of the Bankruptcy Code. It governs plan acceptance in Subchapter V cases, allowing confirmation either consensually (with class acceptance) or nonconsensually (cramdown) under Section 1191.

Key Provisions of Section 1190

Section 1190 and the related Section 1191 provide two paths to confirmation:

• Consensual (1191(a)): If all impaired classes accept the plan, the plan is confirmed under the standard 1129(a) requirements.
• Nonconsensual (1191(b)): If at least one impaired class rejects the plan, the court may still confirm if the plan does not discriminate unfairly, is fair and equitable, and the debtor will be able to make plan payments. The debtor must commit all projected disposable income for 3-5 years.

How This Affects You

The nonconsensual path is what makes Subchapter V so powerful for small businesses:

• No creditor class needs to accept the plan -- the debtor can confirm even if every creditor opposes
• No absolute priority rule means the owner keeps the business
• The trade-off is committing projected disposable income for 3-5 years

Related Bankruptcy Code Sections

Section 1190 works in conjunction with several other provisions of the Bankruptcy Code:

• Section 1189 -- Plan filing
• Section 1193 -- Post-confirmation modification

Understanding how these sections interact is critical for anyone navigating the bankruptcy process, whether as a debtor, creditor, or attorney.