Issue link: https://mbozikis.ufcontent.com/i/1422521
178 2. Implementation of a Plan After the court confirms a Chapter 11 plan, a debtor and other parties in interest typically will work together to finalize the transactions necessary to effectuate the plan. Among other things, these transactions can include exit financing, transfers of assets, cancellation of old debt and equity and issuance of new debt and equity, all as contemplated by the particular plan. Once these transactions (and any other conditions precedent to consummation of the plan) have been completed, a plan is considered effective, and the date on which this occurs is referred to as the "effective date." 100 To the extent that a particular party in interest, including the debtor, is not fulfilling its obligations in this regard, however, the court may direct such party to take any act necessary for the plan to be consummated, including executing or delivering any instrument required to effect a transfer of property contemplated by the plan. 11 U.S.C. § 1142(b). 3. Third Party Releases and Injunctions The inclusion of third party releases and/or injunctions in a plan raises interesting issues to consider. Generally, a bankruptcy court does not have the power to release nondebtors who may be primarily or secondarily liable for any debt of a debtor. 11 U.S.C. § 524(e). Notwithstanding the provisions of Section 524(e), however, plans of reorganization often contain releases or seek to enjoin actions against third parties. Voluntary releases, such as where the creditor needs to check the box to grant the release, are not necessarily controversial. However, forced releases of claims of creditors and/or injunctions of actions against third parties are controversial. The outcome of this issue may well vary depending upon the circuit in which the case is pending. 100 While not necessarily the same, it is not unusual for the "effective date" to also be considered or deemed the same as substantial consummation of the plan as defined in Section 1101(2) of the Bankruptcy Code, discussed in greater detail in Chapter VI.F.7.