Subchapter V and the story of Lisa’s Pizza

Under subchapter V, Lisa’s Pizza can elect to have a three-year plan, or a five-year plan. We elect a threeyear plan. This plan will be “confirmable” if Lisa (among other things) devotes its monthly “projected disposable income” to the repayment of her creditors. Note the word “projected” and not “actual.” Lisa must also satisfy her secured creditors by (1) reaffirming their debt, (2) paying the secured creditor the value of their claim in cash, or (3) providing them with the indubitable equivalent of the value of their claim (in English, this typically means surrendering the collateral securing the claim).

Lisa calculates her projected disposable income as follows:

Her monthly revenue fluctuates but it averages to be $100,000. She then subtracts her expenses, which includes not only her own personal wages, but also reasonable contributions to a capital account (a “rainy day” account) for Lisa’s Pizza. The final calculation reveals projected disposable income of $1,000 per month.

The Plan gets filed with the Court. It provides for the following treatment for creditors:

1. The $250,000 secured loan with Nice Bank will be reaffirmed;

2. The $150,000 partially secured loan with Mean Bank will be repaid as follows: Lisa will surrender all the kitchen equipment, chairs and tables from the second location which will equal $25,000; Mean Bank’s $125,000 deficiency claim will be treated as a general unsecured claim.

3. The two general unsecured creditors (Mean Landlord for $240,000 and Mean Bank for $125,000) will be paid, on a pro-rata basis, the $1,000 in projected disposable income each month for 36 months. More spe- www.swfloridabusinesstoday.com

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OUR MISSION cifically, Mean Bank will receive $342 per month for 36 months for a total of $12,312. Mean Landlord will receive $658 per month for 36 months for a total of $23,688.

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Lisa delivers ballots to the Creditors hoping that they will vote in favor of the Plan. Mean Bank and Mean Landlord, of course, both reject the Plan. Now what?