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The Discharge
While some courts have a practice of
issuing a discharge order in a case
involving an individual, a separate
order of discharge is usually not
entered in a chapter 11 case. Section
1141(d)(1) specifies that the confirmation
of a plan discharges the debtor
from any debt that arose before the
date of confirmation. After the plan is
confirmed, the debtor is required to
make plan payments and is bound by
the provisions of the plan of reorganization.
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The confirmed plan creates new
contractual rights, replacing or superseding
pre-bankruptcy contracts.
There are, of course, exceptions to
the general rule that an order confirming
a plan operates as a discharge.
Confirmation of a plan of reorganization
will discharge any type of
debtor-corporation, partnership, or
individual-from most types of prepetition
debts. It does not, however, discharge
an individual debtor from any
debt made nondischargeable by section
523 of the Bankruptcy Code.
Confirmation does not discharge the
debtor if the plan is a liquidation plan,
as opposed to one of reorganization,
and the debtor is not an individual.
When the debtor is an individual, confirmation
of a liquidation plan will
effect a discharge unless grounds
would exist for denying the debtor a
discharge if the case were proceeding
under chapter 7 instead of chapter 11.
11 U.S.C. §§ 1141(d)(2), 727(a).
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