Post Confirmation Issues:  Ascertaining the Effective Date; Post-Confirmation Jurisdiction; Serial Filing; Post-Confirmation Litigation Vehicles

By Harold S. Novikoff

March 2007

With increasing frequency, many issues are purposefully relegated to the "back burner" during the pendency of a chapter 11 case and are resolved post-confirmation of the plan. Other issues arise unexpectedly after the chapter 11 plan has been confirmed. This Outline examines some of the mechanics for dealing with such issues. Part I of this Outline will review issues surrounding the effective date of the chapter 11 plan--when it occurs and its significance. Part II analyzes the reach of the bankruptcy court's power to assert jurisdiction after the plan is confirmed and goes into effect. Part III investigates the phenomenon know as "serial filing." Part IV explores the issues surrounding the designation of post-confirmation vehicles to prosecute causes of action after confirmation of the chapter 11 plan.
 
I. Effective Date
 
A. Significance of the Effective Date.
 
1. What is the "effective date" of a plan?
Although the Bankruptcy Code uses the term "effective date" of a chapter 11 plan in several sections, it neither defines the term nor specifies when the "effective date" occurs. Nonetheless, it is almost universally understood that the effective date of a plan is the "date on which the provisions of a plan of reorganization become effective and binding on the parties." Kenneth K. Klee, Adjusting Chapter 11: Fine Tuning the Plan Process, 69 Am. Bankr. L.J. 551, 560-61 (1995) [hereinafter Fine Tuning]; see also In re Potomac Iron Works, Inc., 217 B.R. 170 n.1 (Bankr. D. Md. 1997) (listing Bankruptcy Code sections in which the term "effective date" appears); Benjamin Weintraub & Michael J. Crames, Defining Consummation, Effective Date of Plan of Reorganization and Retention of Postconfirmation Jurisdiction: Suggested Amendments to the Bankruptcy Code and Bankruptcy Rules, 64 Am. Bankr. L.J. 245, 276 (1990) ("Effective Date is the date upon which a confirmed plan becomes operative and distribution of property and cash is commenced."); .cf. Rule 3020(e) n1 (stating that unless a court orders otherwise, an order confirming a plan is stayed for 10 days following the entry of the confirmation order).
 
2. Why does the effective date matter?
The effective date is not just the date on which a confirmed plan becomes operative; it is also the key reference date used in § 1129 of the Bankruptcy Code for determination of the financial confirmation requirements of a plan. The propriety of an effective date specified in a plan is also occasionally raised in the context of plan feasibility: A distant effective date is often considered an indication that the plan may not be consummated.
 
B. Timing of the Effective Date.
Because there is no express statutory specification as to when the effective date should occur, most chapter 11 plans provide for an effective date. See Potomac Iron Works, 217 B.R. at 172 ("The effective date plays an important role in valuation and should therefore be set forth in the plan with specificity."). Typically, the effective date specified in a plan will be the date following confirmation of the plan on which it becomes binding and distributions commence. While there may be a theoretical difference between the effective date specified in most plans and the date as of which the financial confirmation requirements should be measured under § 1129, the entry of the confirmation order, the date on which the order becomes final and the date on which the plan's distributions commence all typically occur within a period of 30 days or less. Thus, the theoretical difference is generally not a substantial issue. However, if there is a substantial gap between confirmation and substantial consummation, the determination of the effective date may have material economic consequences.
Courts have generally selected the following guidelines for determining a plan's effective date.

1. Date on which confirmation order is entered.
Some courts hold that the effective date should be on or close to the date on which the order confirming the plan is entered. See, e.g., In re Rives, Case No. 05-50750, 2006 Bankr. LEXIS 853, at *7 (Bankr. M.D.N.C. May 4, 2006) ("When the term 'effective date' is not specifically defined in a plan, it is apparent that the meaning is the same as the 'confirmation date.'"); In re Hutchinson, 354 B.R. 523, 532 n.27 (Bankr. D. Kan. 2006) (stating that in most chapter 13 cases, "the date the order of confirmation is entered is the effective date"); In re Milleson, 83 B.R. 696, 699 (Bankr. D. Neb. 1988) (finding that the effective date of a chapter 12 plan must be on or after the date on which the confirmation order is entered); In re Kruegen, 66 B.R. 463, 465 (Bankr. S.D. Fla. 1986) (holding that an effective date set at approximately four months after the confirmation hearing date is "beyond the interval essential for liquidation . . . [and] is unreasonable"); In re Jones, 32 B.R. 951, 958 n.13 (Bankr. D. Utah 1983); Klee, Fine Tuning, 69 Am. Bankr. L.J. at 560-61 (proposing the enactment of a statute defining "effective date" to bear "some reasonable relationship to the confirmation-hearing date"); see also In re Luchenbill, 112 B.R. 204, 216 (Bankr. E.D. Mich. 1990) (holding that if a chapter 12 plan fails to specify an effective date, the confirmation hearing date shall be the effective date).
Effective dates that occur well after the confirmation date may be based on out-dated financial information. Jones, 32 B.R. at 958 n.13 (noting that the effective date is the "critical point for the major financial standards for confirmation. The valuations required by these sections are likely to be less accurate if the effective date is not close to the date of the hearing on confirmation.") (citation omitted).
 
2. Date on which confirmation order becomes final.
Some courts hold that the effective date may be on or around the date on which the confirmation order becomes final -- that is, after any appeals are resolved or the time to bring an appeal has expired. This will often approximate the date on which distributions under the plan commence. See, e.g., In re T-H New Orleans L.P., 188 B.R. 799, 805 (E.D. La. 1995), aff'd, 116 F.3d 790 (5th Cir. 1997); Cont'l Sec. Corp. v. Shenandoah Nursing Home P'ship, 188 B.R. 205, 216-17 (W.D. Va. 1995); Potomac Iron Works, 217 B.R. at 174 (holding that a delay of more than one year between the confirmation order and the effective date is unreasonable); In re Wonder Corp., 70 B.R. 1018, 1021 (Bankr. D. Conn. 1987) (holding that an effective date defined as the twentieth business day following the date on which a confirmation order becomes final is reasonable); In re Loveridge Mach. & Tool Co., 36 B.R. 159, 167 (Bankr. D. Utah 1983) (noting that an effective date set at thirty days after the confirmation order becomes final may be permissible).
The Potomac Iron Works court reasoned that setting the effective date "on or shortly after the final order [was] reasonable" since the creditors themselves could avoid any delay by simply foregoing any appeals and allowing the order to become final. Potomac Iron Works, 217 B.R. at 174; see also Wonder Corp., 70 B.R. at 1020 (noting that, while requiring that the effective date be within a short period after the confirmation date "may be conceptually attractive, in the real world of bankruptcy reorganization, it may not be attainable") (citation omitted).
Query whether it is ever justifiable to use an earlier effective date, such as the petition date or the date on which the debtor and its principal creditors reach an agreement on plan terms. Contra In re Becker, 169 B.R. 725, 732 (Bankr. D. Kan. 1994); In re Foos, 121 B.R. 778, 784 (Bankr. S.D. Ohio 1990) (finding that the effective time cannot be earlier than the date of the confirmation hearing for the first confirmable plan); In re Musil, 99 B.R. 448, 451 (Bankr. D. Kan. 1988) (holding that the effective date may not be defined as the petition date and can be no earlier than the date of the confirmation hearing for the first confirmable plan) (chapter 12).
Query who should bear the cost of money during the period between confirmation and substantial consummation of a plan. Is there any reason to exclude this issue from the plan negotiation process?
 
3. Other effective dates.
While most effective dates that survive court scrutiny are defined by reference to the entry or finality of the confirmation order, some courts have validated effective dates that were defined by reference to events related to the timing of substantial consummation of the plan. In In re Rolling Green Country Club, 26 B.R. 729, 734-35 (Bankr. D. Minn. 1982), the court upheld an effective date that the plan defined as the date on which liquidation proceeds would become sufficient to effect payments required by the plan. In In re Inter Urban Broadcasting, Inc., No. 94-2382, 1994 WL 646176, at *2 (F.D. La. Nov. 16, 1994), the district court upheld an effective date defined as the "closing date" of the sale of a radio station, which in turn was defined as not later than fifteen business days after the later of either Federal Communications Commission (FCC) approval of the assignment of FCC licenses to the buyer or the date the confirmation order would become final. See Wonder Corp., 70 B.R. at 1021 (noting that an effective date is acceptable if it "is linked to the happening of a particular event and is no later than is reasonably necessary to accomplish a legitimate purpose such as the determination of administrative expenses or the resolution of objections to claims"); In re Krueger, 66 B.R. 463, 465 (Bankr. S.D. Fla. 1986) (implying that an effective date may be deferred for a limited interval essential to conduct a liquidation). But, as noted immediately below, courts often reject the designation of deferred effective dates that put creditors' negotiated recoveries at risk.
 
4. Effective dates held unreasonable.
Courts have invalidated distant or indefinite effective dates as well as effective dates that otherwise violate provisions of the Bankruptcy Code. Prior to the 1994 Amendments to the Bankruptcy Code, which (among other things) deleted § 1124(3) (which had provided that a claim was unimpaired if the holder of the claim received cash equal to the allowed amount of the claim), payment on the effective date was one way to leave a class unimpaired. But even cases decided before the 1994 Amendments became effective prohibited an open-ended gap between confirmation and effectiveness. Jones, 32 B.R. at 958 n.13.
In Potomac Iron Works, 217 B.R. 170, the debtor's plan provided for an effective date one year after the confirmation order or, in the event of an appeal, one year after the confirmation order would become final. The debtor contended that it needed a full year to close out its receivables while completing current contracts. Id. at 171. The court upheld objections to this distant effective date because it unreasonably required the creditors to bear all the risk occasioned by the delay.
Accord In re Premiere Network Servs., No. 04-33402-HDH-11, 2005 Bankr. LEXIS 2298, at *14, *15, *18 (Bankr. N.D. Tex. July 1, 2005) (rejecting an effective date conditioned on the resolution of appeals of the confirmation order because the date's uncertainty would force claimants to subsidize the confirmation plan); In re Cent. European Dev. Co., 288 B.R. 572 (Bankr, N.D. Cal. Jan. 2, 2003) (finding that where delay is likely to prejudice creditors, the effective date should be reasonably close to the confirmation date) (citing to the 2002 version of this Outline); In re Yates Dev. Inc., 258 B.R. 36, 42 (Bankr. M.D. Fla. 2000) (stating that an effective date is unreasonable where it is defined by reference to the time when "an appellate court issues a ruling that [an increase in the purchase price for optioned property] is not enforceable ... [since] the only circumstance under which an effective date exists is a future appellate ruling in Debtor's favor"); Krueger, 66 B.R. at 465 (finding that a four month delay unreasonably resulted in creditors subsidizing the plan).

n1 All references to the "Bankruptcy Code" are to the United States Bankruptcy Code. All section numbers shall refer to the Bankruptcy Code unless otherwise indicated. References to the "Bankruptcy Rules" are to the Federal Rules of Bankruptcy Procedure.

II. Post-Confirmation Jurisdiction.
 
A. Sources of Post-Confirmation Jurisdiction.
 
1. Statutory Provisions
Bankruptcy courts, like all federal courts, are courts of limited jurisdiction. A federal court presumptively lacks jurisdiction unless a party can demonstrate affirmatively that subject matter jurisdiction exists. In re Shuman, 277 B.R. 638, 645 (Bankr. E.D. Pa. 2001).
Both the Judicial Code and the Bankruptcy Code provide sources of jurisdiction.
 
a. Judicial Code
The Judicial Code confers original, but not exclusive, jurisdiction on the district courts over civil proceedings "arising under" title 11 or cases "arising in or related to" title 11. 28 U.S.C. § 1334(b); see also 28 U.S.C. § 1334(e) (granting district courts exclusive jurisdiction over all of the debtor's property as of the commencement of the case). The district courts are authorized to refer any or all bankruptcy cases to the bankruptcy courts. 28 U.S.C. § 157(a).
 
b. Bankruptcy Code
Chapter 11 assumes that a bankruptcy court retains jurisdiction over certain post-confirmation matters. See, e.g., § 1112(b)(6)-(9) (stating that courts may dismiss or convert a chapter 11 case to chapter 7 after confirmation); § 1123(b)(3)(B) (stating that plans may provide for the retention and enforcement of estate causes of action brought by the debtor, trustee, or representative of estate); § 1127(b) (stating that courts may modify a plan before substantial consummation); § 1142(b) (stating that courts may enter orders necessary to implement the plan and order the performance of acts necessary for plan consummation); § 1144 (stating that courts may revoke confirmation for fraud). Section 105(a) authorizes a bankruptcy court to issue any order necessary or appropriate to carry out Bankruptcy Code provisions.
 
2. Court Interpretation
 
a. Judicial Code as Exclusive Source of Jurisdiction
Some courts have held that the Judicial Code is the sole source of a bankruptcy court's subject matter jurisdiction. E.g., In re Resorts Int'l, Inc., 372 F.3d 154, 165 (3d Cir. 2004) ("Although § 1142(b) assumes that post-confirmation jurisdiction exists for disputes concerning the consummation of a confirmed plan, 28 U.S.C. § 1334 remains the source of this jurisdiction."); In re U.S. Brass Corp., 301 F.3d 296, 306 (5th Cir. 2002); U.S. Tr. v. Gryphon at the Stone Mansion, Inc., 166 F.3d 552, 555 (3d Cir. 1999) ("The District Court correctly concluded that an analysis of the Bankruptcy Court's jurisdiction begins with 28 U.S.C. § 1334, not with 11 U.S.C. § 1142."); In re Pegasus Gold Corp., 296 B.R. 227, 233 (D. Nev. 2003), aff'd in part, rev'd in part on other grounds, 394 F. 3d 1189 (B.A.P. 9th Cir. 2005); In re Chateaugay Corp., 213 B.R. 633, 640 (S.D.N.Y. 1997) ("[N]either section 1142 nor section 105 confers jurisdiction on the Bankruptcy Court; they merely codify that court's equitable powers."); In re Cary Metal Prods., Inc., 158 B.R. 459, 465 (N.D. Ill. 1993), aff'd sub nom., Zerand-Bernal Group, Inc. v. Cox, 23 F.3d 159 (7th Cir. 1994) ("Section 105 does not provide a jurisdictional basis but provides the scope and forms of relief the court may order in an action in which it has jurisdiction.") (quotation omitted); see also 8 Collier on Bankruptcy § 1142.04[1], at 1142-47 (15th ed. rev.) ("[N]either section 1142 nor the terms of a plan confer jurisdiction upon a bankruptcy court. Bankruptcy jurisdiction is governed by 28 U.S.C. § 1334.").
 
b. Bankruptcy Code as Basis for Jurisdiction
Other courts have taken a broader view of § 1142 jurisdiction. E.g., In re Gordon Sel-Way, Inc., 270 F.3d 280, 289 (6th Cir. 2001) (noting that the court retains jurisdiction under the line of cases holding that § 1142 provides bankruptcy courts with the broad power to enforce the terms of a confirmed plan); Hillis Motors, Inc. v. Haw. Auto. Dealers' Ass'n, 997 F.2d 581, 587 n.l 1 (9th Cir. 1993), other findings superseded by statute, 11 U.S.C. § 362(b)(4); Beal Bank, S.S.B. v. Jack's Marine, Inc., 201 B.R. 376, 379 (E.D. Pa. 1996); In re Gallien, 214 B.R. 583, 585 (Bankr. E.D. Ark. 1997).
 
c. Section 105(a) Limitations
Supreme Court jurisprudence has undermined efforts to view § 105(a) as a wide-ranging source of jurisdiction, however. Specifically, the Court has held that a bankruptcy court may exercise § 105(a) powers only in a manner consistent with the other enumerated provisions of the Bankruptcy Code. In Norwest Bank Worthington v. Ahlers, 485 U.S. 197 (1988), the Court rejected an effort by family farmers to retain equity in their farm in violation of the absolute priority rule. Rebuffing the debtors' contention that the bankruptcy court had the power to approve the plan by asserting its equitable powers, the court held that "whatever equitable powers remain in the bankruptcy courts must and can only be exercised within the confines of the Bankruptcy Code." Id. at 206.
 
A year later, the Eighth Circuit discussed the breadth of § 105(a):
 
Section 105(a) is comparable to the All Writs Statute, 28 U.S.C. § 1651. Its purpose is to allow the bankruptcy court to issue equitable orders such as injunctions and stays and to punish for contempt in cases where such actions are consistent with the provisions of the Code. Section 105 does not empower a bankruptcy court to create new substantive rights.
 
In re NWFX, Inc., 864 F.2d 593, 596 (8th Cir. 1989); see also In re Combustion Eng'g, Inc., 391 F.3d 190, 225 (3d Cir. 2004) ("[Section] 105 does not provide an independent source of federal subject matter jurisdiction."); In re Birting Fisheries, Inc., 300 B.R. 489, 497 (B.A.P. 9th Cir. 2003) ("[Section] 105(a) does not confer subject matter jurisdiction . . . . Power under Section 105 is the scope and forms of relief the court may order in an action in which it has jurisdiction."); Cunningham v. Pension Benefit Guar. Corp., 235 B.R. 609, 618 (N.D. Ohio 1999); In re Nunez, No. 98-7077, 2000 U.S. Dist LEXIS 12078, at *24 (E.DN.Y. Mar. 21, 2000) (holding that § 105 could be used to enforce its orders for which subject matter jurisdiction had been established under § 1134 but could not be a predicate for jurisdiction); cf. In re Am. Preferred Prescription, Inc., 255 F.3d 87 (2d Cir. 2001) (explaining the difference between a court's subject matter jurisdiction (authority) and § 105 power (scope and forms of relief the court may order in an action in which it has jurisdiction)).
 
B. Jurisdiction Retention Clauses.
Plans and confirmation orders frequently contain provisions that retain jurisdiction in the bankruptcy court. Such provisions can be general, or may relate to specific matters. Courts do not agree on the effect of these clauses.
 
1. Retention Clause in Plan Crucial.
Some courts have held that a jurisdiction retention clause is a prerequisite to a bankruptcy court's post-confirmation jurisdiction. See, e.g., Northwood Estates v. Evergreen Bank, 114 Fed. Appx. 416, 416 (2d Cir. 2004) ("'[A] bankruptcy court retains post-confirmation jurisdiction in a chapter 11 proceeding only to the extent provided in the plan of reorganization.'") (quoting In re Johns-Manville Corp., 7 F.3d 32, 34 (2d Cir. 1993)); In re Smith, 141 F.3d 1179 (9th Cir. 1998); Falise v. Am. Tobacco Co., 241 B.R. 48, 58 (E.D.N.Y. 1999); Gallien, 214 B.R. at 585 ("Indeed, the Bankruptcy court lacks subject matter jurisdiction over adversary proceedings commenced post-confirmation unless the plan expressly provides for retention of jurisdiction."); Chateaugay Corp., 213 B.R. at 638 (same); see also Guccione v. Bell, 06 Civ. 492 (SHS), 2006 U.S. Dist. LEXIS 49526, at *10-11 (S.D.N.Y. July 20, 2006) (finding jurisdiction under § 1334 because the matter had a close nexus to the bankruptcy proceeding and the plan provided for the retention of jurisdiction); Gordon Sel-Way, 270 F.3d at 289 (relying on § 1142 and a plan provision to establish post-confirmation jurisdiction); In re Kevco, Inc., 309 B.R. 458, 464 n.10 (Bankr. N.D. Tex. 2004) ("[S]ome courts find a retention of jurisdiction in the plan to be a prerequisite to post-confirmation jurisdiction.").
The court in In re Murray, 214 B.R. 271, 277 (Bankr. D. Mass. 1997), interpreted a narrowly drafted jurisdiction retention clause as a restriction on the court's post-confirmation jurisdiction. Specifically, the court held that its jurisdiction was limited by language in the plan and the confirmation order reserving post-confirmation jurisdiction over adversary proceedings to those commenced prior to confirmation. See also In re Sunbrite Cleaners, Inc., 284 B.R. 336 (N.D.N.Y. 2002) (finding that because the plan did not provide for broad retention of jurisdiction, the bankruptcy court did not have subject matter jurisdiction over a post-confirmation motion).
 
2. Retention Clause in Plan Not Necessary.
Other courts have held that "the absence of a provision retaining jurisdiction in a confirmed plan or confirmation order does not deprive a bankruptcy court of jurisdiction." Gryphon at the Stone Mansion, 216 B.R. 764, 769 (W.D. Pa. 1997), aff'd, 166 F.3d 552 (3d Cir. 1999). Most courts agree, however, that since subject matter jurisdiction cannot be conferred by consent of the parties, Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982), a provision in a plan or confirmation order cannot confer jurisdiction on a bankruptcy court where none exists by statute. In re Resorts Int'l, 372 F.3d 154, 161 (3d Cir. 2004) ("[I]f a court lacks jurisdiction over a dispute, it cannot create that jurisdiction by simply stating it has jurisdiction in a confirmation or other order."); Harstad v. First Am. Bank, 39 F.3d 898, 902 n.7 (8th Cir. 1994) (noting that a plan provision "cannot and does not confer jurisdiction upon the court, as only Congress may do that"); Zerand-Bernal Group, Inc. v. Cox, 23 F.3d at 164 ("A court cannot write its own jurisdictional ticket."); In re Burlington Motor Holdings, Inc., No. 99-1557, 2002 WL 73490, at *1 (D. Del. Jan. 18, 2002) (finding that a retention of jurisdiction provision in a plan can neither confer nor deprive a bankruptcy court of jurisdiction); In re TGX Corp., 168 B.R. 122, 130 n.29 (W.D. La. 1994); Pegasus, 296 B.R. at 233; Walnut Assocs. v. Saidel, 164 B.R. 487, 494-95 (E.D. Pa. 1994); Unico Holdings, Inc. v. Nutramax Prods., Inc., 264 B.R. 779, 785 (Bankr. S.D. Fla. 2001); In re Diagnostic Int'l, Inc., 257 B.R. 511, 514 (Bankr. D. Ariz. 2000); In re Goodman Bros. Steel Drum Co., 247 B.R. 604, 612 (Bankr. E.D.N.Y. 2000); In re Mendez, 246 B.R. 141, 144-45, (Bankr. D.P.R. 2000); In re Cont'l Airlines, Inc., 236 B.R. 318, 323 (Bankr. D. Del. 1999). But see In re Ground Sys., Inc., 213 B.R. 1016, 1020 (B.A.P. 9th Cir. 1997) (holding that even if a plan improperly gave the bankruptcy court post-confirmation jurisdiction, an objection should have been raised at confirmation and is otherwise res judicata).
 
C. Scope of Post-Confirmation Jurisdiction.
Courts are split on the scope of a bankruptcy court's post-confirmation jurisdiction. Much of the disagreement stems from the fact that some courts have relied on cases decided under the former Bankruptcy Act, which contained provisions limiting a court's post-confirmation jurisdiction in chapter XI cases. Other courts have relied on the jurisdictional grant in 28 U.S.C. § 1334(b), which does not contain any language limiting post-confirmation jurisdiction. See generally Frank. R. Kennedy & Gerald K. Smith, Postconfirmation Issues: The Effects of Confirmation and Postconfirmation Proceedings, 44 S.C. L. Rev. 621 (1993). Even courts that rely on § 1334 find that such jurisdiction "shrinks once bankruptcy plan confirmation has occurred." Guccione v. Bell, 06 Civ. 492 (SHS), 2006 U.S. Dist. LEXIS 49526, at *10 (S.D.N.Y. July 20, 2006).
 
1. Narrow Scope of Post-Confirmation Jurisdiction.
Some courts have limited the reach of the bankruptcy court's post-confirmation jurisdiction to matters necessary to protect its confirmation decree and issues that need to be addressed in order to aid in the execution of the chapter 11 plan.
The Fifth Circuit, in In re Craig's Stores, Inc., 266 F.3d 388 (5th Cir. 2001), recently crafted an "exacting theory of post-confirmation bankruptcy jurisdiction." Id. at 391. The court held that:
 
After a debtor's reorganization plan has been confirmed, the debtor's estate, and thus bankruptcy jurisdiction, ceases to exist, other than for matters pertaining to the implementation or execution of the plan.
 
Id. at 390. After its decision in Craig's Stores, the Fifth Circuit fine-tuned its holding in In re U.S. Brass Corp., 301 F.3d 296 (5th Cir. 2002). Citing Craig's Stores, the U.S. Brass court found that the motion before it pertained to the plan's implementation or execution and the bankruptcy court thus had jurisdiction because "[b]ankruptcy law will ultimately determine this dispute, and the outcome could affect the parties' post-confirmation rights and responsibilities." 301 B.R. at 305.
In a recent case, a bankruptcy court asserted post-confirmation jurisdiction after analyzing the dictates of Craig's Stores and U.S. Brass. In In re Kevco, Inc., 309 B.R. 458 (Bankr. N.D. Tex. 2004), the court asserted jurisdiction because it perceived that the plaintiffs were trying to manipulate the process by reasserting in a post-confirmation case filed in state court virtually the same claims they had asserted during the bankruptcy case. The court noted that an agent had been appointed under the plan to pursue avoidance actions. A recovery by the plaintiffs in state court against the debtor's D&O insurance policy carriers could reduce the recovery by the agent for the benefit of all the debtor's creditors, and thus would distort the bankruptcy policy of equality of distribution among similarly situated creditors. Id. at 465-66. Subsequently, in Texas Mexican Railway Co. v. Sun Drilling Products Corp., No. 04-2613, 2004 U.S. Dist. LEXIS 24382 (E.D. La. Nov. 30, 2004), a district court held that the bankruptcy court had post-confirmation jurisdiction because the "issue of whether or not Sun Drilling defaulted on its payments to Tex Mex pursuant to the provisions of the Amended Plan clearly involves an obligation created by the debtor's reorganization plan" but that the court did not abuse its discretion in abstaining from exercising that jurisdiction. Id. at *12-17 (citation omitted). In In re LJM2 Co-Inv., L.P., 319 B.R. 495 (Bankr. N.D. Tex. 2005), however, a bankruptcy court held that it lacked jurisdiction to entertain a claim against certain of the debtor's personnel. While the defendants who sought to remove the action to bankruptcy court asserted that the action constituted a collateral attack on the distribution scheme established by the plan of reorganization, the court disagreed on the basis that only third parties would be affected by the suit, not the debtor. See id. at 497, 504.
For additional cases propounding a narrow scope of post-confirmation jurisdiction, see In re Fairfield Communities, Inc., 142 F.3d 1093, 1095 (8th Cir. 1998); Goodman v. Phillip R. Curtis Enters., Inc., 809 F.2d 228, 232 (4th Cir. 1987); In re Encompass Servs. Corp., Civ. Action No. H-06-CV-0392, 2006 U.S Dist. LEXIS 28406, at *7-9 (S.D. Tex. May 3, 2006) (applying In re Craig's Stores); Liberty Mut. Ins. Co. v. Lone Star Indus., Inc., 313 B.R. 9, 15 (D. Conn. 2004); Cytomedix, Inc. v. Safeblood Techs., Inc., No. 02 C 4773, 2003 U.S. Dist. LEXIS 2466 at *8 (N.D. Ill. Feb. 20, 2003) (stating that once a confirmation order is entered, a federal court's "arising under" jurisdiction remains but its "related to" jurisdiction "is severely limited"); Beal Bank, 201 B.R. at 378 ("[P]ost-confirmation jurisdiction is limited by the need to end the debtor's tutelage status before such oversight causes harm.").
 
2. Broad Scope of Post-Confirmation Jurisdiction.
At least as many courts, a number of which rely on the fact that 28 U.S.C. § 1334(b) contains no language limiting subject matter jurisdiction upon confirmation, have held or assumed that a bankruptcy court's jurisdiction is unchanged upon confirmation, and thus jurisdiction lies if the matter falls within the bankruptcy court's "related to" jurisdiction. The Third Circuit in Gryphon at the Stone Mansion, 166 F.3d at 556, held that the actions listed under § 1142(b), ensuring that the bankruptcy court can safeguard consummation of the confirmed plan, are not "the only action[s] the bankruptcy court may entertain post-confirmation." Id. at 556. As a grant of authority, § 1142(b) does not abrogate the broader grant of jurisdiction conferred by § 1134. The court described the breadth of bankruptcy court jurisdiction existing post-confirmation as the "jurisdiction to entertain issues that necessarily must come its way prior to the close of the case." Id.
For additional cases affording a broad scope of post-confirmation jurisdiction, see In re CF & I Fabricators of Utah, Inc., 150 F.3d 1233, 1237 (10th Cir. 1998); In re Xonics, Inc., 813 F.2d 127, 132 (7th Cir. 1987); In re Encompass Servs. Corp., 337 B.R. 864 872 (S.D. Tex. 2006) ("Most circuits generally agree that 'related to' jurisdiction for post-confirmation disputes is warranted when the outcome of the suit could have any conceivable effect on the administration of the estate in bankruptcy."); NVF Co. v. New Castle County, 276 B.R. 340, 348-49 (D. Del. 2002), aff'd, 2003 U.S. App. LEXIS 2371 (3d Cir. Jan. 21, 2003); In re TGX Corp., 168 B.R. at 129; In re Charis Hosp., L.L.C., No. 01-106 16, 2002 Bankr. LEXIS 1885, at *5-6 (Bankr. M.D. La. Dec. 5, 2002) (applying In re Craig's Stores to find that state court claims that may effect distribution are not sufficient to bring them under the court's jurisdiction); Eubanks v. Esenjay Petroleum Corp., 152 B.R. 459, 464 (E.D. La. 1993) ("It therefore appears that bankruptcy jurisdiction . . . extends to proceedings that have a conceivable effect upon the administration of a bankruptcy case.") (quotation omitted); In re Burlington Motor Holdings, Inc., 2002 WL 73490, at *1-2; In re Pegasus Gold Corp., 275 B.R. 902, 909-12 (Bankr. D. Nev. 2002); In re MAI Sys. Corp., 178 B.R. 50, 52 (Bankr. D. Del. 1995) ("Nothing in the language of 28 U.S.C. § 1334 limits this broad grant of jurisdiction to pre-confirmation proceedings."); In re Holly's Inc., 172 B.R. 545, 554 (W.D. Mich. 1994); In re Omega Corp., 173 B.R. 830, 834 (Bankr. D. Conn. 1994) ("The post-confirmation constriction of the bankruptcy court's jurisdiction results not from a change in the statutory basis for jurisdiction . . . but rather from the fact that the universe of matters related to a case is diminished once confirmation is achieved.").
Some cases do not even discuss whether bankruptcy court jurisdiction should contract in the post-confirmation period. For example, the court in Belcufine v. Aloe, 112 F.3d 633 (3d Cir. 1997), analyzed the breadth of jurisdiction over an action filed by the debtor's former employees post-confirmation in terms of the breadth of § 1334(b). The court did not analyze the scope of jurisdiction by reference to the extent that the plan had been consummated. See also In re Marcus Hook Dev. Park, Inc., 943 F.2d 261, 264 (3d Cir. 1991); In re Wolverine Radio Co., 930 F.2d 1132, 1140-43 (6th Cir. 1991).
Query as to the effect of § 1127(b)'s prohibition against post-confirmation plan modification on the scope of post-confirmation jurisdiction. Compare § 1127(b), with Bankruptcy Act § 387 (providing procedures to be followed where modifications or alterations are proposed to a plan of arrangement that has already been confirmed).
 
3. Scope of Jurisdiction after Closing of Case.
 
a. General Rule
As a general rule, a bankruptcy court's subject matter jurisdiction ends after a chapter 11 final decree closing the case is entered pursuant to Rule 3022. Blakeley v. United Cable Sys., 105 F. Supp. 2d 574, 580-81 (S.D. Miss. 2000); Cook v. Chrysler Credit Corp., 174 B.R. 321, 327 (M.D. Ala. 1994); Walnut Assocs., 164 B.R. at 491; In re Poplar Run Five L.P., 192 B.R. 848, 859 (Bankr. E.D. Va. 1995); In re Terracor, 86 B.R. 671, 676 (D. Utah 1988).
The court in In re Diagnostic Int'l, Inc., 257 B.R. 511 (Bankr. D. Ariz. 2000), described the bankruptcy court's diminishing jurisdiction as the case proceeds through consummation to closure:
 
The bankruptcy court's jurisdiction can be seen as slowly diminishing as the proceeding before the court has less and less to do with bankruptcy and as the bankruptcy itself slowly resolves. It is generally accepted that bankruptcy courts retain some measure of jurisdiction after confirmation, though somewhat diminished, to enforce the court's own orders, modify the plan, and ensure enforcement of the plan. Jurisdiction further erodes upon entry of the final decree.
 
Id. at 515 (citations omitted).
 
b. Enforcement by Court of its Own Orders
A recognized exception to the general rule is that subject matter jurisdiction exists where a bankruptcy court is asked to enforce or interpret its own orders. In re Colarusso, 382 F.3d 51, 57 (1st Cir. 2004) (finding jurisdiction exists for the court to interpret its own order); United States v. Mourad, 289 F.3d 174, 180 (1st Cir. 2002) (holding in a contempt case that bankruptcy courts retain jurisdiction to enforce their orders after the case closes); Koehler v. Grant, 213 B.R. 567, 569-70 (B.A.P. 8th Cir. 1997) (finding that the court has jurisdiction to issue a contempt order for the violation of a pre-confirmation disqualification order even though the case is closed); In re Kewanee Boiler Corp., 270 B.R. 912, 920-21 (Bankr. N.D. Ill. 2002) (holding that the court had permanent and continuing jurisdiction to determine the reach and effect of a § 524(a)(2) discharge injunction); In re Commercial Fin. Servs., Inc., 247 B.R. 828, 842-44 (Bankr. N.D. Okla. 2000) (retaining the power to enforce or modify a protective order that survives the closing or dismissal of a case).
 
c. Reopened Cases
If a case has been closed but is subsequently reopened, a bankruptcy court may exercise subject matter jurisdiction. Donaldson v. Bernstein, 104 F.3d 547, 551-53 (3d Cir. 1997) (finding that after chapter 11 case had been reopened and converted to chapter 7, the court had jurisdiction to hear the chapter 7 trustee's claim against the debtor's principals for breach of fiduciary duty). It seems, however, that the administrative act of reopening a case is not a prerequisite for jurisdiction. In re Midstate Mortgage Invs., Inc., 105 Fed. Appx. 420, 422 (3d. Cir. 2004) (citing Donaldson, 104 F.3d at 552, and stating "[t]hat the case was closed did not prevent the court from reopening the case to enforce its own order"); In re Menk, 241 B.R. 896, 917 (B.A.P. 9th Cir. 1999) ("[T]he order reopening the case was in the nature of administrative bookkeeping and had no effect on the bankruptcy court's § 1334(b) jurisdiction over the underlying adversary proceeding."); In re Taylor, 216 B.R. 515, 521 (Bankr. E.D. Pa. 1998) (holding that a court has jurisdiction to determine the fee payable to a "property finder" for a debt twelve years after the case closed without formally reopening the case because whether a case is open or closed relates solely to its administrative status and not to the court's jurisdiction).
A court has broad discretion to abstain from reopening a case to hear a matter over which it has jurisdiction, however. The court should consider such issues as: (1) whether there is an alternative forum to adjudicate the issue; (2) comity; (3) avoidance of forum shopping; and (4) judicial economy. § 1334(c); In re Middlesex Power Equip. & Marine, Inc., 292 F.3d 61, 69 (1st Cir. 2002). Similarly, when a court does have jurisdiction, it is within the court's discretion to abstain from exercising that jurisdiction. In re Colarusso, 382 F.3d 51, 57 (1st Cir. 2004). Colarusso noted, however, that federal courts should generally exercise their jurisdiction when it exists, and abstention is the exception rather than the rule. Id.

III. Serial Filing
Serial filings are referred to derisively as "Chapter 22s," In re Woodson, 213 B.R. 404, 404 (Bankr. M.D. Fla. 1997), or as part of a "serial filing syndrome," In re Weaver, 222 B.R. 521 (E.D.Va. 1998). Analysts have noted that the re-failure rate of the 295 public companies that emerged from bankruptcy between 1992 and 1998 was 55 or "at least 19 percent." John Yozzo & Randall S. Eisenberg, Rethinking WACC in Estimating Reorganization Value, 22 Am. Bankr. Inst. J. 38, 38-39 (2003). Some chapter 11 plans of reorganization may be formulated on the basis of overly optimistic business plan projections and/or reorganization valuations, which can lead to the debtor's emergence from chapter 11 with an over-leveraged capital structure and, possibly, the need for another trip to bankruptcy court. Id. (arguing that the extraordinary "execution risk" inherent in the ability of a debtor to perform in accordance with its business plan projections is not typically reflected in such projections or the discount rate applied in performing a valuation based on such projections, resulting in an improperly high valuation). See generally Noel S. Cohen, Note, Serial Chapter 11 Filings: Finding Method in the Madness, 17 Bankr. Dev. J. 461 (2001), for a comprehensive discussion of the topic. On the other hand, certain authors have attempted to link failed chapter 11 cases and repeat filings to particular venues. See Lynn M. LoPucki & Joseph W. Doherty, Why Are Delaware and New York Bankruptcy Reorganizations Failing?, 55 Vand. L. Rev. 1933 (2002); Lynn M. LoPucki & Sara D. Kalin, The Failure of Public Company Bankruptcies in Delaware and New York: Empirical Evidence of a "Race to the Bottom," 54 Vand. L. Rev. 231 (2001).
 
A. No "Per Se" Prohibition.
The Bankruptcy Code contains no per se prohibition against filing a subsequent chapter 11 petition after confirmation of a plan in a previously filed chapter 11 case. In re Weaver, 222 B.R. at 524. But see 11 U.S.C. §§ 109(g); 727(a)(8) and (9) (limiting the right to serial filings). n2
In Johnson v. Home State Bank, 501 U.S. 78, 87 (1991), which involved serial filings of petitions under chapters 7 and 13, the Supreme Court reasoned that the express prohibition of serial filings under specific circumstances evinced Congressional intent not to prohibit serial filings as a general matter. Following this reasoning, most courts agree that there is no per se prohibition against serial chapter 11 filings. See, e.g., In re Elmwood Dev. Co., 964 F.2d 508, 511 (5th Cir. 1992); In re Jartran, Inc., 886 F.2d 859, 871 (7th Cir. 1989); In re Wash., No. 04-11956DWS, 2004 Bankr. LEXIS 939, at *121 (Bankr. E.D. Pa. 2004); In re Northtown Realty Co. L.P., 215 B.R. 906, 911 (Bankr. E.D.N.Y. 1998).
 
B. Conflict with Bankruptcy Code.
Although there is no blanket prohibition against serial chapter 11 filings, such filings may run afoul of § 1127(b)'s prohibition against modification of a confirmed plan after substantial consummation and/or § 1112(b)'s implicit requirement that a chapter 11 petition not be filed in "bad faith."
 
1. Substantial Consummation
Courts generally agree that § 1127(b) prohibits a serial chapter 11 petition that seeks to modify obligations created under a previously confirmed, substantially consummated plan. In re Elmwood Dev. Co., 964 F.2d at 511 (finding that the debtor was pursuing the "impermissible purpose" of evading the Bankruptcy Code's prohibition against modification of substantially consummated confirmed plans); In re Jartran, Inc., 886 F.2d at 867; In re Frank's Nursery & Crafts, Inc., Case No: 04-15826(PCB), 2006 Bankr. LEXIS 1964, at *9-10 (Bankr. S.D.N.Y. May 8, 2006); In re Tillotson, 266 B.R. 565, 568-69 (Bankr. W.D.N.Y. 2001); Northtown Realty Co., L.P., 215 B.R. at 911-12; In re Delray Assocs., 212 B.R. 511, 516 (Bankr. D. Md. 1997); In re Northampton Corp., 39 B.R. 955, 956 (Bankr. E.D. Pa.), aff'd, 59 B.R. 963 (E.D. Pa. 1984) (holding that the filing of a second chapter 11 case in which the plan was expected to affect obligations created under the plan confirmed in the first chapter 11 case is "so akin to modifying the previous plan within the meaning of § 1127(b)" that the new filing is deemed an attempted modification under that provision). n3
Section 1127(b), however, is a consideration when determining the permissibility of a serial filing only when the first plan has been substantially consummated. See Woodson, 213 B.R. at 406 (holding that since the first plan was not substantially consummated, a second chapter 11 petition was not an impermissible attempt to modify a substantially consummated plan).
 
2. Exceptions
 
a. "Unanticipated Changed Circumstances"
A number of courts have held that "unanticipated changed circumstances" may justify a serial filing even if the result of that filing is to modify obligations created under a previously confirmed, substantially consummated plan. See, e.g., Elmwood Dev. Co., 964 F.2d at 511-12 ("[A] legitimately varied and previously unknown factual scenario might require a different plan to accomplish the goals of bankruptcy relief."); In re Frank's Nursery, 2006 Bankr. LEXIS, at *10 ("'It is impermissible to use such filings to alter or modify obligations . . . except in the most extraordinary circumstances.'") (citing In re Northtown Realty Co., 215 B.R. at 911); In re Tillotson, 266 B.R. at 569; In re Bouy, Hall & Howard and Assocs., 208 B.R. 737, 745 (Bankr. S.D. Ga. 1995); In re Savannah, Ltd., 162 B.R. 912, 916-17 (Bankr. S.D. Ga. 1993); In re Casa Loma Assocs., 122 B.R. 814, 818 (Bankr. N.D. Ga. 1991); In re Mableton-Booper Assocs., 127 B.R. 941, 943-44 (Bankr. N.D. Ga. 1991) ("Where unexpected circumstances doom the debtor's chances for success, binding the parties to the original confirmation decision in the name of finality would frustrate this goal, and the confirmation decision should be reevaluated."); In re Garsal Realty, Inc., 98 B.R. 140, 148-50 (Bankr. N.D.N.Y. 1989) (holding that a second filing was not an attempt to modify the confirmed plan since the debt in the second filing did not come into existence until after the plan had been substantially consummated).
Courts have examined various factors in determining whether to permit a serial filing. For example, the court in Bouy, Hall & Howard and Associates considered five factors:
1. The length of time between the two cases;
2. The foreseeability and substantiality of events that ultimately caused the subsequent filing;
3. Whether the new plan contemplates liquidation or reorganization;
4. The degree to which creditors consent to the filing of the subsequent reorganization; and
5. The extent to which an objecting creditor's rights were modified in the initial reorganization and its treatment in the subsequent case.
 
Bouy, Hall & Howard & Assoc., 208 B.R. at 743-44.
The court in In re Adams, 218 B.R. 597, 602 (Bankr. D. Kan. 1998), applied a two-prong test to determine whether the purported change was of the kind justifying a serial filing.
1. Are the changes unforeseeable or extraordinary?
2. If the changes are unforeseeable or extraordinary, did such changes cause the debtor's default or substantially impair the debtor's performance under the plan?
Plainly, there can be substantial differences of opinion whether some event or condition is reasonably foreseeable. Examples of changed circumstances that courts have found justified a second filing include: Adams, 218 B.R. at 602 (fire destroying 3,000 of the debtor's 8,000 acres of ranch and farmland and substantial personal property); Bouy, Hall, 208 B.R. at 745 (relocation of a nearby airport's terminal, which greatly increased the distance to the debtor's hotel, and the airlines' discontinuance of services to the airport); Casa Loma Assocs., 122 B.R. at 815-16 (discovery of fire damage and structural defects in an apartment complex necessitating substantial repairs, and an unanticipated change in the law, requiring the debtor to accept children as tenants and resulting in increased vacancies in what had been an all adult complex).
In a Palsgraf-like sequence of events, n4 the court in Garsal Realty, 98 B.R. at 150, observed that a doubling of the debt load and the inability to make payments were due to unforeseen levels of rental vacancies, which were sparked by a drop in interest rates and which, in turn, encouraged potential renters to buy homes. Additionally, a nearby company, which had provided a pool of potential tenants, had closed its doors. The court held that this confluence of events could account for the requisite, unforeseeable change in circumstances.
However, courts have generally taken a narrow view of changed circumstances justifying a subsequent petition. A change in general economic conditions, without more, is usually insufficient. Northtown Realty, 215 B.R. at 913-14 (rejecting the debtor's argument that a decline in the occupancy rate due to a rash of bankruptcies among its tenants justified a subsequent chapter 11 petition); In re Roxy Real Estate Co., 170 B.R. 571, 576 (Bankr. E.D. Pa. 1993) (same); Savannah, 162 B.R. at 916-17 (finding that an increase in competition and a resulting change in market conditions were ordinary and foreseeable risks of doing business); Mableton-Booper Assocs., 127 B.R. at 944 (rejecting a debtor's claim based on a "softening" of the market for office space). Indeed, one court has said that "[w]hen a debtor is able to anticipate the changed circumstances prior to confirmation of the first plan, yet it files a second petition to relieve itself from the requirements of the prior plan, then bad faith may be inferred." In re Motel Props., Inc., 314 B.R. 889, 896 (Bankr. S.D. Ga. 2004).
Query: If it is correct to interpret a filing or plan intended to modify obligations created under a confirmed, substantially consummated plan as a modification of such plan that is prohibited by § 1127(b), why does the existence of unanticipated changed circumstances change the statutory analysis? Why not limit changes to those that are consented to by the holders of the plan obligations in accordance with any amendment, waiver, and consent provisions contained in the first plan?
Query whether restrictions against modifying obligations created under confirmed, substantially consummated plans should be loosened or tightened in view of relatively high levels of repeat filings by major chapter 11 debtors.
 
b. Liquidation.
In the leading case of In re Jartran, 886 F.2d 859 (7th Cir. 1989), the Seventh Circuit allowed a second chapter 11 petition to be filed for the purpose of conducting a liquidation of assets after the reorganization had failed. It upheld the bankruptcy court's finding that the debtor's second chapter 11 petition had not been filed to effect a modification of its obligations under a confirmed, substantially consummated plan, but rather that it constituted "a good faith admission that Jartran was unable to continue operating as a going concern." 886 F.2d at 867 (quoting the bankruptcy court decision in In re Jartran, 71 B.R. 938, 942 (Bankr. N.D. Ill. 1987)); see also In re Jartran, 886 F.2d at 868-69 (finding that the second Chapter 11 was filed in good faith and emphasizing that the debtor filed a liquidation plan instead of a reorganization plan); Del. Valley Broads., 166 B.R. 36, 39-40 (Bankr. D. Del. 1994) (dismissing a second chapter 11 petition filed during pendency of the first case and distinguishing Jartran as involving a debtor that had substantially consummated its initial plan and had not attempted to evade its responsibilities under such plan in its subsequent filing).
 
3. Prohibition against "Bad Faith Filing"
Serial filings tend to be particularly vulnerable to "bad faith" challenges. A court will dismiss a serial filing pursuant to § 1112(b) if it determines that the filing was made in "bad faith." See, e.g., In re Jones, 289 B.R. 436, 439 (Bankr. M.D. Ala. 2003) (dismissing the debtor's fifth serial filing with prejudice, holding that multiple filings may be evidence of bad faith); Northtown Realty Co., 215 B.R. at 914-16; Woodson, 213 B.R. at 406; In re Delray Assocs., 212 B.R. 511, 516 (Bankr. D. Md. 1997); In re Delaware Valley Broads. Ltd., 166 Bankr. at 40-41 (Bankr. D. Del. 1994) (dismissing a second chapter 11 filing while the first case was still pending where the plan had not been substantially consummated in the first case, the second case dealt with the same claims addressed under the first plan, no changed circumstances warranted a second filing, and the court, while not ruling on the issue of bad faith, noted that bad faith may be inferred if the debtor can anticipate changed circumstances prior to confirmation of the first plan); In re AT of Maine, Inc., 56 B.R. 55, 58 (Bankr. D. Me. 1985) (dismissing a second chapter 11 case filed prior to the closure of the earlier case where the first plan of reorganization was substantially consummated; a new petition would in essence affect or modify substantially the consummated plan; and the second petition was not filed in good faith since the debtor held property only as the trustee for the benefit of the sole beneficiary, the debtor had no assets, business, or employees, and the sole justification for filing the second case was to protect the trust beneficiary by preventing the trust's creditors from proceeding against res to collect claims arising from default under the first plan).
 
a. Bad Faith Checklists.
Though there is no particular test for determining whether a filing has been made in "bad faith," In re Harco Co., 331 B.R. 453, 455-56 (M.D. Fla. 2005), some courts have applied one of several checklists developed by case law and guided by the factors set forth in § 1112(b) (conditions for converting or dismissing a case) to determine whether a filing was made in "bad faith." For example, the court in Northtown Realty applied the eight-factor test articulated by the Second Circuit in In re C-TC 9th Avenue Partnership, 113 F.3d 1304, 1311 (2d Cir. 1997), holding that the subsequent filing was in bad faith. Northtown Realty, 215 B.R. at 915-16; see also Savannah, 162 B.R. at 916-17 (Bankr. S.D. Ga. 1993) (applying six objective "bad faith" factors enunciated in In re Phoenix Piccadilly, Ltd., 849 F.2d 1393, 1394-95 (11th Cir. 1988)); Woodson, 213 B.R. at 406 (same).
 
b. Impermissible Plan Modifications.
The focus of the inquiry in the serial-filing context as to the debtor's good faith is often whether the second filing was made to evade the strictures of § 1127(b). See, e.g., Elmwood Dev. Co., 964 F.2d at 511 ("Where a debtor requests Chapter 11 relief for a second time, the good faith inquiry must focus on whether the second petition was filed to contradict the initial bankruptcy proceedings."); Tillotson, 266 B.R. at 571-72 (assuming arguendo that circumstances were "extraordinary," the court nonetheless found the second filing to be an impermissible effort to modify the prior plan to the substantial prejudice of the objecting creditor and to be without "objective" good faith in the form of "fundamental fairness" where the collateral's value was dramatically eroded while under the debtor's control, and where the lender had been diligently pursuing available remedies for five years); Savannah, 162 B.R. at 917 (finding bad faith where one of the purposes of filing a second plan of reorganization was to modify a consensual plan of reorganization that had been achieved after protracted negotiations); Adams, 218 B.R. at 602 (concluding that since extraordinary, unforeseeable changes in circumstances substantially and directly impeded the debtor's continued performance under the confirmed plan, a second bankruptcy case was filed in good faith and was not an improper attempt to modify the plan in contravention of § 1127); see also Mableton-Booper, 127 B.R. at 944 (finding that bad faith can be inferred where a debtor can anticipate the changed circumstances before confirmation of the first plan and later files a second petition to relieve itself of its obligations under the prior plan).
Delray Associates, 212 B.R. 511, represents a particularly egregious example of a bad faith filing. The debtor orchestrated an involuntary filing "for the purpose of creating the misleading and erroneous impression that Case No. 2 was not a voluntary entry into a serial filing by this debtor." Id. at 514. Noting that "subjective bad faith is demonstrated by the impermissible serial filing, the duplicitous scheme to cloak a serial filing in an involuntary mantle, and the attempt to portray the filing as acts done by creditors independent of the debtor," id. at 516, the court dismissed the second case.
 
C. Assumed Leases and Executory Contracts.
The filing of a second chapter 11 case can have a particularly adverse effect on the treatment of a lease or executory contract that was assumed in the first case but rejected in the second case. In Jartran, 886 F.2d 859, the Seventh Circuit held that a lessor under a lease that was assumed in the first case did not have an administrative expense priority claim in the second case for its damages arising from rejection of the lease in the second case. Id. at 870-71. Since the lease was not assumed in the same case in which it was rejected, the court held that § 365(g) was facially inapplicable. Id. The court also noted that the claim was not entitled to administrative expense priority since it was not a necessary and actual cost of preserving the estate, thereby construing "estate" to refer only to the estate in the second case. Id.; see also In re Jamesway Corp., 205 B.R. 32 (Bankr. S.D.N.Y. 1996) (following Jartran); In re Jamesway Corp., 202 B.R. 697 (Bankr. S.D.N.Y. 1996) (same); cf. In re Official Comm. of Unsecured Creditors of White Farm Equip. Co., 943 F.2d 752 (7th Cir. 1991) (holding that a trust fund tax claim under a confirmed plan retains priority status in a subsequent chapter 11 case); In re Conston, Inc., 181 B.R. 769, 774-81 (D. Del. 1995) (following White Farm Equip. Co.).

n2 The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA"), which is effective in relevant part for cases filed on or after October 17, 2005, contains provisions intended to provide protection against abusive serial filings involving real estate. BAPCPA added a new § 362(d)(4), under which a secured creditor can obtain relief from the automatic stay of actions against real property if the court finds that the filing of the bankruptcy petition is part of (i) a scheme to delay, hinder, and defraud creditors that involves either a transfer of all or part of ownership of, or other interest in, the real property without the consent of the secured creditor or court approval, or (ii) "multiple bankruptcy filings affecting the property." See also In re Johnson, 346 BR 190, 193 n. I (BAP 9th Cir. 2006). The order granting relief from the stay is recordable in the real estate records, which will be binding on any bankruptcy petition commenced within 2 years that affects the real property unless the debtor in the subsequent case can show good cause or changed circumstances. § 362(d)(4).
BAPCPA also added § 362(n)(1)(D), which provides that the automatic stay will not apply (subject to some exceptions noted below) if the debtor previously acquired substantially all of the assets or business of certain kinds of small business debtors: (a) a debtor in a small business case pending at the time the petition is filed; (b) an entity that was a debtor in a small business case that was dismissed for any reason by an order that became final in the two-year period ending on the date of the order for relief entered with respect to the petition; or (c) an entity that was a debtor in a small business case in which a plan was confirmed in the two-year period ending on the date of the order for relief entered with respect to the petition. The stay will apply, however, if it is established by a preponderance of the evidence that the debtor acquired substantially all of the assets or business of the small business debtor in good faith and not for the purpose of evading § 362(n)(1)(D)'s serial-filing restrictions. Section 362(n)(1)(D) also will not prevent the automatic stay from applying (i) when the case is an involuntary case involving no collusion by the debtor with creditors or (ii) if the filing of the petition resulted from circumstances beyond the control of the debtor not foreseeable at the time the case then pending was filed and it is more likely than not that the court will confirm a feasible non-liquidating plan within a reasonable period of time.
n3 BAPCPA added special provisions applicable in individual debtor chapter 11 cases. The new § 1127(e) allows modification of a plan, even after substantial consummation, to increase or reduce the amount of payments for a particular class of creditors, extend the time for such payments, or alter the distribution to a creditor whose claim is provided for under the plan to take account of payments made to that creditor other than under the plan. Moreover, the new § 1141(d)(5) generally delays the individual debtor's discharge until completion of payments under the plan but provides that at any time after the confirmation of the plan, and after notice and a hearing, the court may grant a discharge to an individual debtor who has not completed payments under the plan if (i) the value, as of the effective date of the plan, of property actually distributed under the plan on account of each allowed unsecured claim is not less than the amount that would have been paid on such claim if the estate of the debtor had been liquidated under chapter 7 on such date and (ii) modification of the plan is not practicable.
n4 In the widely-studied tort case of Palsgraf v. Long Island R.R., 248 N.Y. 339 (1928), Judge Benjamin Cardozo held that the defendant railroad could not be held liable for an unforeseeable string of events that led to the plaintiff's injury. While one passenger was running to catch a train, one of the defendant railroad's employees, trying to assist the passenger running aboard the train, caused the package underneath the passenger's arms to fall upon the rails. The unmarked package contained fireworks, which exploded and overturned some scales, which subsequently fell upon the plaintiff and injured her.

 
IV. Post-Confirmation Litigation Vehicles
Bankruptcy Code § 1123(b)(3)(B) expressly authorizes the inclusion in a chapter 11 plan of a provision for "the retention and enforcement by... a representative of the estate appointed for such purpose" of any claim belonging to the debtor or the estate. It is now commonplace in chapter 11 plans, whether contemplating the reorganization or liquidation of the debtor, for (a) a trust, limited liability company, or other entity (the "vehicle") to be transferred avoidance and/or other causes of action belonging to the estate; (b) the vehicle to be designated pursuant to § 1123(b)(3)(B) as a representative of the debtor and the estate to enforce such causes of action; (c) the vehicle to be transferred cash and/or other property to fund the costs of prosecuting such actions; and (d) the holders of claims of one or more classes to be distributed beneficial interests in the vehicle (e.g., certificates of beneficial interest in a trust, membership interests in a LLC, stock, etc.) as a "plan currency" in full or partial consideration for such claims. The vehicle may also be used to liquidate various residual assets of the debtors and/or to make post-confirmation distributions to creditors.
An increasingly common scenario: It is probably impossible to obtain a perfected prepetition lien on avoidance actions. The adequate protection orders entered in favor of prepetition secured lenders in chapter 11 cases often exclude--at the insistence of the bankruptcy court, U.S. trustee, and official committees of unsecured creditors--avoidance actions from the coverage of the adequate protection liens granted thereunder. Consequently, in a case where the prepetition secured lenders have a blanket lien on all of the debtor's assets and the secured lenders are undersecured (each of which is fairly typical), the only or principal unencumbered assets of the estate available to fund a recovery for the unsecured trade and other creditors may be avoidance actions. It is not unusual for a post-confirmation litigation vehicle to be created under the plan to prosecute the avoidance actions and for the equity of, or other beneficial interests in, the vehicle to be distributed to the unsecured creditors. The secured creditors may agree to permit some funds to be transferred to the vehicle under the plan to cover its litigation and other costs in exchange for (i) a release from lender liability, equitable subordination, avoidance, lien perfection, or other challenges by the official committee of unsecured creditors, and /or (ii) an interest in the vehicle. It is also not unusual for counsel to the creditors' committee to be retained by the vehicle to conduct such litigation.
 
A. Who Can Be a Representative?
Section 1123(b)(3)(B) provides that the debtor, the trustee, or a representative of the estate, appointed for such purpose, may represent the estate in the post-confirmation litigation.
The issue of who may be appointed as a representative of the estate has arisen in the case law. The representative is charged with the "retention and enforcement" of the claims and interests of the debtor. § 1123(b)(3)(B). Generally, courts use a case-by-case approach to determine whether a party may be a representative of the estate by focusing on whether the appointed representative's recovery would benefit the estate. See In re AmeriServe Food Distrib., Inc., 315 B.R. 24, 31-32 (D. De. 2004); In re N. Atl. Millwork Corp., 155 B.R. 271, 281 (Bankr. D. Mass. 1993). Some courts appear to have construed the "retention" language to mean that a representative may not be a third-party acquirer of claims or interests that has not previously been authorized as a "representative of the estate" by the court. See, e.g., id. at 284 (finding that a purchaser may not maintain an avoidance action); In re S&D Foods, Inc., 110 B.R. 34, 36 (Bankr. D. Colo. 1990) (same); In re Morning Treat Co., 77 B.R. 62, 65 (Bankr. M.D. La. 1987) (holding that the purchaser of a debtor's assets cannot acquire avoiding power, which is a "right exercisable in a fiduciary capacity"); cf. Ameriserve Food Distrib., Inc., 315 B.R. 24, 31 (Bankr. D. Del. 2004) (permitting the establishment of a post-confirmation fund to bring avoidance actions); In re Xonics, Inc., 63 B.R. 785, 787-88 (Bankr. E.D. Ill. 1986) (confirming a plan that called for the post-confirmation prosecution of preference litigation by purchasers of the debtor's assets and certain key creditors, stating "Code § 547 and other avoiding transfer concepts are intended to distribute the impact of a business failure over various claimants . . . . To limit authority under any of the avoiding transfer concepts to an 'anointed' person such as a trustee or a debtor is not compatible with these goals.").
Section 1123(b)(3)(B) does not address who will benefit from the causes of action enforced by the representative. While suggesting that the proceeds of avoidance actions would typically be available for unsecured creditors, the Tenth Circuit, in In re Sweetwater, 884 F.2d 1323, 1326-27 (10th Cir. 1989), allowed post-confirmation litigation to be brought by a representative of administrative claimants. The court reasoned that (a) the creditors had approved the plan and (b) if the avoidance actions were used to pay administrative claimants, there would be other funds available in the estate to pay unsecured creditors. See also In re Amarex, Inc., 96 B.R. 330, 334 (W.D. Okla. 1989) (stating that the primary concern is whether successful recovery by a representative would benefit the estate and particularly the unsecured creditors).
 
B. Description of Causes of Action.
The claims, interests, and causes of action to be pursued post-confirmation should be set forth in the plan pursuant to § 1123(b)(3)(B), or else such property will become part of the debtor's post-confirmation property pursuant to § 1141(b). Harstad v. First Am. Bank, 39 F.3d 898, 902-03 (8th Cir. 1994). The Harstad Court viewed § 1123(b)(3), in part, as a notice provision, maintaining that "the creditors are entitled to know if the debtors intend to pursue the preferences in post-confirmation actions." Id. at 903.
The courts are not of one mind as to the level of specificity required to retain such causes of action post-confirmation. Courts requiring a high level of specificity have ruled that, absent such specificity, the actions are barred by res judicata. See, e.g., In re G-P Plastics, Inc., 320 B.R. 861, 867 (E.D. Mich. 2005) (citing to Browning v. Levy, 283 F.3d 761 (6th Cir. 2002) (holding that a confirmation order is a final order in litigation, and general preservation of rights language is inadequate to preserve a legal malpractice claim not specifically identified)); In re A.P. Liquidating Co., 283 B.R. 456, 460 (Bankr. E.D. Mich. 2002), aff'd on other grounds, 350 B.R. 752 (Bankr. E.D. Mich. 2006); In re Huntsville Small Engines, Inc., 228 B.R. 9, 13 (Bankr. N.D. Ala. 1998). Other courts have held that a more general preservation of rights in the chapter 11 plan, describing the reserved claims by category, is adequate. See, e.g., In re P.A. Bergner & Co., 140 F.3d 1111 (7th Cir. 1998); In re Associated Vintage Group, Inc., 283 B.R. 549 (B.A.P. 9th Cir. 2002); In re I. Appel Corp., 300 B.R. 564 (S.D.N.Y. 2003); In re Kmart Corp., 310 B.R. 107 (Bankr. N.D. Ill. 2004); In re Pen Holdings, Inc., 316 B.R. 495 (Bankr. M.D. Tenn. 2004); In re Bleu Room Experience, Inc., 304 B.R. 309 (Bankr. E.D. Mich. 2004); In re USN Commc'ns, Inc., 280 B.R. 573 (Bankr. D. Del. 2002); In re Ampace Corp., 279 B.R. 145, 160-61 (Bankr. D. Del. 2002). It is likely, however, that overly broad blanket reservations (i.e., provisions that do not reserve causes of action by category) are invalid. See D&K Props. Crystal Lake v. Mut. Life Ins. Co. of N.Y., 112 F.3d 257, 261 (7th Cir. 1997) ("A blanket reservation that seeks to reserve all causes of action reserves nothing. To hold otherwise would eviscerate the finality of a bankruptcy plan containing such a reservation, a result at odds with the very purpose of a confirmed bankruptcy plan.").
Note that in this respect the natural tension that may exist between (a) the broad interests of unsecured creditors in aggressively prosecuting preference actions to maximize overall unsecured creditor recoveries and (b) the interests of certain individual creditors--including, perhaps, large trade creditors represented on the committee or with whom a reorganizing debtor may intend to continue doing business--to negotiate for the general release of potential preference actions. Also. factor into the mix the possible desire of committee counsel to be retained by the vehicle to prosecute such actions. This not so uncommon set of circumstances could serve as the basis for a case study on ethics and fiduciary duties.
 
C. Organization of the Vehicle.
The most common form of a post-confirmation litigation vehicle is a liquidating trust. Other forms may be used, and it is expected that LLCs will become increasingly more popular for this purpose in view of their greater flexibility compared to trusts. In the discussion below, it will be assumed for convenience that a trust form is used, but the discussion is equally applicable to other forms of vehicles.
The plan will specify the beneficiaries of the trust, usually the holders of claims in one or more classes under the plan. The trustee should act as a fiduciary for such beneficiaries.
Typically, the trustee of the litigation trust will be specified in the plan or at the time of confirmation of the plan. The trustee may be a person who has been involved in the case (e.g., an attorney for or member of the creditors' committee) or a professional with experience in similar engagements. It is also typical for the trustee to consult with a steering committee comprised of representatives of the beneficiaries of the trust.
Among other things, the trust agreement and/or plan should address:
(a) The powers, duties, and responsibilities of the trustee, including which lawsuits, settlements, and other actions require bankruptcy court approval and/or consultation with or approval by the steering committee;
(b) The compensation, removal, and replacement of the trustee;
(c) The retention of attorneys, financial advisors, expert witnesses, consultants, and other professionals by the trust (an important issue in this regard may be whether the attorneys and, perhaps, other professionals are engaged on a hourly or contingent fee basis);
(d) The funding of the trust, through cash or property capable of being liquidated, the establishment of expense reserves, replenishment of reserves, spending limits, and requirements for the safe maintenance and investment of trust funds;
(e) Periodic reports by the trustee to the beneficiaries of the trust;
(f) Distribution of litigation and property liquidation proceeds to the beneficiaries, including timing;
(g) The tax treatment of trust recoveries and investment income; and
(h) The duration of the trust

See generally Wesley Vines & Vernon O. Teofan, The Preservation and Prosecution of Avoidance Actions Post-Confirmation, 12 Bankr. Dev. J. 735 (1996).
 
D. Standing of the Vehicle.
The pre-confirmation use of creditors' committees to pursue derivative actions on behalf of estates has been the subject of some tumultuous litigation. See In re Cybergenics Corp, 330 F.3d 548 (3d Cir. 2003)(en banc). As a general matter, the designation of a representative to enforce debtor and estate claims pursuant to § 1123(b)(3)(B) is not vulnerable to the kind of standing issues raised in Cybergenics.
Nonetheless, it should be noted that the Supreme Court, in Hartford Underwriters Ins. Co. v. Union Planters Bank, 530 U.S. 1 (2000), held that the operative phrase "the trustee may," which is included in the avoidance provisions set forth in §§ 544, 547, 548, 549, and 550, must be construed as a limitation on who can exercise those powers. Section 1123(b)(3)(B) permits a plan to provide for the retention and enforcement of claims and interests "by the debtor, by the trustee, or by a representative of the estate appointed for such purpose . . . ." It has thus been suggested that § 1123(b)(3)(B) cannot be used to designate a representative for the enforcement of Bankruptcy Code avoidance actions.
Most courts have construed the broad definition of "claim" in § 101(5) to include avoidance actions for purposes of § 1123(b)(3)(B). In re Tex. Gen. Petroleum Corp., 52 F.3d 1330 (5th Cir. 1995); Sweetwater, 884 F.2d at 1327; In re Chase & Sanborn Corp., 813 F.2d 1177, 1180 (11th Cir. 1987); In re Enron Corp., No. 03-4181, 2004 Bankr. LEXIS 2117, at *9-10 (Bankr. S.D. Tex. Dec. 1, 2004); In re Kroh Bros. Dev. Co., 101 B.R. 1000, 1005 (W.D. Mo. 1989), appeal denied, 101 B.R. 1000 (W.D. Mo. 1989). But see In re Morning Treat Co., 77 B.R. 62 (Bankr. M.D. La. 1987).
Query whether these cases are rightly decided or whether Hartford Underwriters changes the analysis. Is an avoidance action really a "claim or interest" of the debtor or estate, or is it a power conferred by the Code? See Robert M. Quinn, Not So Fast, Mr. Liquidating Trustee!: May Anyone Other Than a Bankruptcy Trustee Exercise Avoidance Powers After Confirmation?, 22 Am. Bankr. Inst. J. 28 (2003).
 
E. Some Additional Issues Regarding Post-Confirmation Litigation Vehicles.
Query whether post-confirmation litigation vehicles are subject to all of the defenses to which the estate would have been subject had it brought the same claims (including in pari delicto defenses).
Query whether a transfer of a cause of action to a vehicle can defeat the mutuality of a setoff to which such cause of action would have been subject in the hands of the estate. Is a setoff a defense? Does a transfer free and clear of claims and interests pursuant to § 1141(c) strip away a defense?
Query whether it is possible to transfer third-party claims owned by creditors to the post-confirmation litigation vehicles pursuant to the plan. For example, it might be viewed as desirable to assign claims held directly by the prepetition purchasers of the debtor's debt securities against such auditors to a vehicle that is expected to pursue claims against the debtor's former auditors. Could creditors who reject (or do not accept) the plan be bound by the plan to an assignment of their third-party claims to the vehicle?
 
F. Pros and Cons of Post-Confirmation Litigation Vehicles.
Pros. The principal reason for the use of post-confirmation litigation vehicles is to facilitate early emergence from chapter 11. Depending on the nature of the litigation to be prosecuted by or on behalf of the debtor or the estate, such litigation might take months or years to bring to a final resolution. Chapter 11 cases are notoriously expensive. During a chapter 11 case there is an inevitable redundancy in professional costs because any action is being examined by the attorneys, financial advisors, and other professionals retained by the debtor, the official committees, and the secured creditors. The end of the case will quickly terminate much of the redundancy and often result in substantial savings, even after the cost of the trustee and his professionals are taken into consideration. Consequently, effectuating the termination of a chapter 11 case before a resolution of all litigation by preserving such litigation in a post-confirmation litigation vehicle may provide substantial savings and, thus, enhanced creditor recoveries. This is true regardless of whether the chapter 11 plan contemplates a reorganization or a liquidation.
Moreover, in a reorganization case, there are often compelling business reasons to seek an expedited emergence from chapter 11. Early emergence from chapter 11 may help a reorganizing company (a) retain and recruit employees; (b) retain key suppliers who are concerned about long-term or long lead time supply agreements; (c) reassure customers of products with warrantees; and (d) sign up new or existing customers to agreements requiring long-term performance by the debtor.
Also, it has been argued that putting a professional who is experienced in supervising litigation in place as the litigation trustee may help produce a better outcome.
Cons. The dockets of bankruptcy courts that handle a large volume of major chapter 11 cases, such as the District of Delaware and the Southern District of New York, have virtually exploded with literally thousands of actions brought by post-confirmation litigation vehicles. While it may certainly be fairly observed that some portion of such litigation would be brought in any event, the wave of plans creating post-confirmation litigation vehicles has also certainly resulted in the filing of many avoidance and other actions that in prior years would not have been commenced. While there may be legitimate debate as to the benefit/detriment of the prosecution of a preference action against a trade creditor for a $ 10,000 payment that, in prior years, would not have been brought, there is substantial anecdotal evidence that these actions are putting a substantial strain on bankruptcy court resources. Indeed, this concern is reflected in the new § 547(c)(9) added by BAPCPA, which provides, in a case filed by a debtor whose debts are not primarily consumer debts, a $ 5,000 minimum threshold requirement for preference challenges.
The need to emerge promptly from chapter 11 often created a strong incentive to resolve litigation. The use of post-confirmation litigation vehicles removes plan confirmation deadlines that were often helpful in achieving timely resolution of matters that might otherwise result in expensive, time-consuming litigation. On the other hand, the time deadlines often put disproportionate pressure on debtors and/or official committees that could produce unfavorable results.
Perhaps the most troubling aspect of the widespread use of post-confirmation litigation vehicles is the somewhat unseemly role of the bankruptcy bench and bar in producing entities that have no purpose but to bring litigation. This is particularly true where (a) the vehicle has a substantial pool of cash to fund its operations; (b) funding may be supplemented above the amounts identified to the court and creditors by replenishing reserves from liquidation proceeds; (c) the vehicle's professionals are being paid on an hourly or monthly fee basis; (d) creditor representatives are not intimately involved in supervising the vehicle's post-confirmation activities; and/or (e) the professionals retained by the vehicle were involved in formulating the plan that created the vehicle. Such vehicles are often not subject to the normal oversight that would be involved in a conventional attorney-client relationship, where the client is a business or individual paying the bills on a periodic basis. Absent vigilant post-confirmation creditor involvement and oversight, a trustee paid an hourly or flat monthly fee and an attorney being paid on an hourly basis have an economic incentive to cause their post-confirmation litigation vehicle to litigate to the full extent of its available funds and, thus, pose a potential threat to the integrity of the bankruptcy system.
"You are to reflect, Mr. Woodcourt," observed Mr. Kenge, ... "that this has been a great cause, that this has been a protracted cause, that this has been a complex cause. Jarndyce and Jarndyce has been termed, not inaptly, a monument of Chancery practice."
"And patience has sat upon it a long time," said Allan.
"Very well indeed, sir," returned Mr. Kenge with a certain condescending laugh he had. "Very well! You are further to reflect...that on the numerous difficulties, contingencies, masterly fictions, and forms of procedure in this great cause, there has been expended study, ability, eloquence, knowledge, intellect, Mr. Woodcourt, high intellect. For many years, the--a--I would say the flower of the bar, and the -a--I would presume to add, the matured autumnal fruits of the woolsack--have been lavished upon Jarndyce and Jarndyce. If the public have the benefit, and if the country have the adornment, of this great grasp, it must be paid for in money or money's worth, sir."
"Mr. Kenge," said Allan, appearing enlightened all in a moment. "Excuse me, our time presses. Do I understand that the whole estate is found to have been absorbed in costs?"
"Hem! I believe so," returned Mr. Kenge. "Mr. Vholes, what do you say?"
I believe so," said Mr. Vholes.
"And that thus the suit lapses and melts away?"
"Probably," said Mr. Vholes.
Charles Dickens, Bleak House, 868-69
 
(Signet Classics 1964).