In March 1988, Daniel E. Beren, John M. Elliot, and Edward F. Mannino formed Walnut Street Four, a general partnership, to purchase and renovate an office building in Harrisburg, Pennsylvania. They borrowed more than $200,000 from Hamilton Bank to purchase the building and begin renovation. Disagreements among the partners arose when the renovation costs exceeded their estimates. When Beren was unable to obtain assistance from Elliot and Mannino regarding obtaining additional financing, the partnership quit paying its debts. Beren filed an involuntary petition to place the partnership into Chapter 7 Bankruptcy. The other partners objected to the bankruptcy filing. At the time of the filing, the partnership owed debts of more than $380,000 and had approximately $550 in the partnership bank account.

Should the petition for involuntary bankruptcy be granted? Explain.
Plan of Reorganization

Richard P. Friese (Debtor) filed a voluntary petition for Chapter 11 bankruptcy. In May 1989, Debtor filed a plan of reorganization that divided his creditors into three classes. The first class, administrative creditors, were to be paid in full. The second class, unsecured creditors, were to receive 50% on their claims. The IRS was the third class. It was to receive $20,000 on confirmation and the balance in future payments. No creditors voted to accept the plan. The unsecured creditors are impaired because their legal, equitable, and contractual rights are being altered.

Can the bankruptcy court confirm the debtor's plan of reorganization? Explain.

To determine whether the petition for involuntary bankruptcy should be granted or if the bankruptcy court can confirm the debtor's plan of reorganization, we need to analyze the relevant bankruptcy laws and considerations. Here's an overview of the factors to consider in each case:

1. Petition for Involuntary Bankruptcy:
In this case, the partnership filed for Chapter 7 Bankruptcy after disagreements between the partners regarding additional financing. Here are the key points to consider for granting the petition:

a. Eligibility Criteria: The Bankruptcy Code allows for the involuntary bankruptcy of individuals or partnerships if certain criteria are met. Generally, a partnership can be involuntarily placed into bankruptcy if it has fewer than 12 partners and meets the monetary threshold for owed debt.

b. Sufficient Grounds: The petitioner (Beren) needs to establish sufficient grounds for the involuntary bankruptcy, such as showing that the partnership is generally not paying its debts when they become due.

c. Objection from other partners: It is mentioned that the other partners (Elliot and Mannino) objected to the bankruptcy filing. Their objections and reasons should be considered when deciding to grant the petition.

Considering these factors, the bankruptcy court would need to review the evidence provided by Beren, including relevant financial records, to determine if the grounds for involuntary bankruptcy are satisfied. If the court finds sufficient evidence, the petition may be granted. However, if the evidence is insufficient or the objections raised by Elliot and Mannino are compelling, the petition may not be granted.

2. Plan of Reorganization:
In this case, the debtor (Friese) filed a voluntary petition for Chapter 11 bankruptcy and submitted a plan of reorganization. Here are the key points to consider for confirming the plan:

a. Classification of Creditors: The debtor's plan divides the creditors into three classes: administrative creditors, unsecured creditors, and the IRS. Each class has different treatment in terms of payment.

b. Impairment of Rights: The plan impacts the rights of the unsecured creditors, as it alters their legal, equitable, and contractual rights. The fact that no creditors voted to accept the plan suggests that the unsecured creditors are likely to object to the proposed changes to their rights.

c. Confirmation Requirements: For a plan of reorganization to be confirmed, various requirements need to be met, such as satisfying the "best interests of creditors" test and obtaining the acceptance of impaired classes of creditors.

Considering these factors, the bankruptcy court would need to evaluate whether the plan of reorganization meets the necessary requirements. Since the unsecured creditors are impaired and have not accepted the plan, it may be challenging for the court to confirm the plan. The court would need to analyze whether the plan satisfies the best interests of creditors and if any modifications can be made to address the objections raised.

It's important to note that bankruptcy proceedings can be complex, and the outcome can vary based on the specifics of each case, applicable bankruptcy laws, and the evidence presented. Consulting with a qualified bankruptcy attorney is recommended for a precise analysis of these situations.