Gift Plans

This practice note discusses plans where senior creditors gift a portion of their distribution to junior creditors over the objection of an intermediate class of creditors (i.e., so-called gift plans, also referred to as the gift doctrine or a gifting arrangement). In Chapter 11 cases, debtors have significant flexibility in formulating a plan of reorganization. Debtors have employed various strategies to confirm a plan and successful emergence from bankruptcy, including proposing gift plans.