Prompt Pilotby Write.law
All prompts

Analyze/Featured

Stress-test a Chapter 11 plan for feasibility

Runs a proposed plan through the feasibility standard with real numbers (coverage by year, the tightest month of cash, three downside cases) and names the assumption the objector will depose first.

About 25 minadvancedBankruptcy, Litigation

Your prompt5,297 characters

Still to fill in: Plan summary, Projections, Historical performance, Bankruptcy court and circuit

RoleYou are a restructuring partner who has confirmed dozens of Chapter 11 plans and defended feasibility objections in front of judges who read the projections themselves. You work backward from the cash flow statement, you know the difference between a plan that pencils and a plan that prays, and you never call a plan feasible when what you mean is that nobody has objected yet.What I needTest the plan below against the feasibility standard that governs Traditional Chapter 11 cases in Bankruptcy court and circuit, from the seat of Debtor's counsel testing our own plan. I need the coverage math, the downside cases, and a confirmation likelihood I can put in front of a client.InputsPlan summary: Plan summary Projections: Projections Historical performance: Historical performance Case type: Traditional Chapter 11 Court: Bankruptcy court and circuit Whose side I am on: Debtor's counsel testing our own planHow to work this1. Name the standard you apply: § 1129(a)(11), or the § 1191(c) projected-disposable-income test for a nonconsensual Subchapter V plan, and say why Traditional Chapter 11 triggers it. Do not blend them. 2. Reconcile Year 1 revenue and EBITDA to Historical performance: state the percentage change and name the operational event the plan says produces it. If the plan names none, that is finding one. 3. Build a coverage table for every projected year: EBITDA, cash interest plus scheduled amortization, ratio to two decimals, dollar cushion. Do not stop at Year 1. 4. Find the tightest month, not the tightest year: set minimum cash against the largest month-over-month working capital swing and say what happens if one large receivable slips 30 days. 5. Run three downside cases, giving coverage and minimum cash for each: revenue down 10%, gross margin down 200 basis points, largest customer lost. Name the one that breaks the plan and when. 6. Take each impaired class in turn: treatment, acceptance or deemed rejection, and for each rejecting class the cramdown provision plus the one factual issue that gates it. If equity or an insider takes an interest, run the new-value elements and say whether it faces a market test. 7. Close with HIGH / MODERATE / LOW, naming for each risk the party who raises it and the assumption they attack, then amendments stated with the coverage or cash delta each produces.Ask me firstBefore you produce anything, ask me these questions, then stop and wait: 1. Does Year 1 start from trailing-twelve-month actuals or from a normalized figure, and who signed the declaration supporting the projections: the CFO, a CRO, or a retained expert? 2. Is exit financing committed under a signed commitment letter, or is it a term sheet or an assumed refinancing at maturity? 3. Which classes have already voted or signed a plan support agreement, so I know whether cramdown is the headline or a footnote? 4. Who is likely to object (U.S. Trustee, committee, one large unsecured creditor) and has any of them retained a financial advisor? Do not begin the analysis until I answer. If I tell you to proceed anyway, state each assumption you are making at the top of your output and mark it [ASSUMPTION - verify].Output formatA memo, in this order: one-paragraph likelihood with the two assumptions driving it; standard applied; reconciliation to history; coverage table by year; liquidity with the tightest month named; the three downside cases; a class table (Class | Treatment | Impaired | Accepting | Cramdown provision | Gating issue); new-value analysis if equity is retained or sold; numbered amendments with their numerical effect. End with one line naming the two of my answers that most moved the likelihood rating, and what you would have rated this plan without them. If an answer changed nothing, say so. It means I should not have been asked.Never do this- If this memo would read the same against any debtor's plan, it is too generic. Every conclusion has to move when my numbers move. - No hedging filler. Cut "arguably" and "results will vary with market conditions." Do not tell me to consult an attorney or a restructuring professional. That is who is reading this. - Every Code section, rule, and case must come from my inputs or carry [UNVERIFIED - confirm before filing]. Do not paraphrase § 1129 from memory, and never invent authority for the new-value market test. - Where Projections does not give you a figure (monthly cash, revolver availability, maintenance versus growth capex), say you do not know rather than modeling a number I never gave you. Do not smooth over the gap with fluent prose. - Do not pad. If the plan fails on one assumption, say so in three sentences and spend the memo on the fix. Length is not value.Before you answer- Did I compute coverage for every projected year, and name the tightest month with its balance rather than calling liquidity "adequate"? - Is every figure traceable to Projections or Historical performance, or did I fill a gap by inference? - Is every Code section either in my inputs or marked unverified, and would this memo be useless against a different debtor's plan? It should be.

Adds driver's-seat tunes: options instead of answers, questions before work, every citation flagged. Your values come with it.

2

Pressure-test it

Makes the AI switch hats and attack its own answer.

A feasibility objection gets written by someone who is paid to find the soft spot in projections like these. Be that person (the financial advisor retained by the creditors' committee) and work the memo as the objector rather than its author. Name the three projection assumptions you would attack first, the document requests and 30(b)(6) topics you would serve to test them, and the question you would ask the debtor's declarant on cross that has no good answer. Then rewrite the memo's two weakest passages to survive that attack without changing a single number, or, if the numbers cannot survive it, name the plan amendment that fixes the problem and what it costs the debtor.
3

Go deeper

Pushes the work further once the basics are right.

Confirmation turns on whether the debtor's witness survives cross on the projections. Build the feasibility declaration outline for that witness: paragraph by paragraph, with the exhibit each paragraph must cite, the foundation the witness needs for the revenue assumption, and the three cross-examination questions the declaration should be drafted to absorb rather than invite.

Before you run it

What to gather first

  • The plan and disclosure statement, including the treatment of every class
  • Five-year projections with monthly cash detail if you have it
  • Trailing-twelve-month actuals and the last three fiscal years
  • Exit financing documents: commitment letter or term sheet
  • Whether the case is under Subchapter V and whether the plan is consensual

Watch for

  • Subchapter V cramdown runs on the § 1191(c) disposable-income test, not § 1129(a)(11) feasibility verbatim. Confirm which standard the case is under before relying on any conclusion.
  • Coverage thresholds are industry- and lender-specific. A 1.10x floor is a heuristic, not a legal standard, and no Code section supplies a number.
  • New-value plans draw market-test scrutiny that differs by circuit and by judge. Confirm the local rule before assuming an auction provision is adequate.
  • Disclosure statement projections are testable at confirmation by deposition and expert testimony. Anything the model flags as unsupported will be the deposition topic.
  • Verify every Code citation. § 1129 is long, cross-referenced, and frequently misquoted from memory.

What comes back

A memo opening with a one-paragraph likelihood and the two assumptions driving it, then: standard applied, projection-to-history reconciliation, coverage table by year, liquidity with the tightest month named, three downside cases with numbers, a class-by-class cramdown table with the gating issue for each, new-value analysis where equity is retained or sold, likelihood with named objectors, and numbered amendments each stated with its numerical effect.

See an example of what you’ll get
*(After you answer the four questions: Year 1 starts from trailing-twelve-month actuals, the CFO signed the projections rather than a retained expert, exit financing is a term sheet and not a signed commitment, no class has voted and there is no plan support agreement, and the committee has retained a financial advisor.)* Bottom line. MODERATE, dropping to LOW without two amendments. The plan works only if FY26 revenue recovers to FY22 levels (a 19% jump off trailing twelve months with no signed contract behind it) and Year 2 minimum cash falls to $480K in March against average monthly working capital swings of $1.1M. Standard applied. § 1129(a)(11) (traditional case). § 1129(b) cramdown will be reached for Class 4 (GUC, 22%, impaired, vote pending) and Class 5 (equity, deemed to reject). Reconciliation. Year 1 revenue of $42.1M is +8% over TTM of $39.0M and is supported by two customer agreements signed in Q1 2025 ($4.8M combined): defensible. Year 2 of $46.3M is +19% and assumes one of those customers expands to a regional master supply agreement that is not signed. This is the objection. Coverage by year. | Year | EBITDA | Debt service | Ratio | Cushion | |---|---|---|---|---| | Y1 | $5.8M | $3.1M | 1.87x | $2.7M | | Y2 | $6.9M | $4.4M | 1.57x | $2.5M, but on unsigned revenue | | Y3 | $7.6M | $4.6M | 1.65x | $3.0M | | Y5 | $8.5M | $2.1M + balloon | n/a | Refinancing risk | Tightest month. March of Year 2: $480K minimum cash, immediately after the Q1 tax payment, against $1.1M average monthly swings and no revolver post-effective date. One receivable slipping 30 days takes the debtor negative. Downside cases. Revenue −10%: Y2 EBITDA $4.4M, coverage 1.00x, cash negative in March. Plan breaks. Margin −200bp: Y2 EBITDA $6.0M ($6.9M less 2% of $46.3M), coverage 1.36x, survives. Largest customer lost: Y2 EBITDA $5.0M, coverage 1.14x, survives with no cushion. Amendments that move the number. (1) Eighteen-month interest-only period on the FNB note: Y2 coverage 1.57x → 2.10x, March minimum cash $480K → $1.6M. (2) $1.5M sponsor revolver, undrawn: removes the single-receivable failure mode. (3) Reset Year 2 revenue to signed contracts only ($44.0M) and re-test. Better to concede the assumption than to defend it on cross. Assumptions I had to make. The debt service line in the projections ($3.1M in Year 1, $4.4M in Year 2, $4.6M in Year 3) is cash interest plus scheduled amortization with no mandatory sweep [verify - the plan summary does not say]. No revolver exists post-effective date [verify - absence of mention is not the same as absence]. What your answers changed. That the committee has retained a financial advisor is what holds this at MODERATE rather than HIGH: an unrepresented objector does not reconcile Year 2 to trailing twelve months, and an advisor will do it in the first week. That exit financing is a term sheet rather than a signed commitment is why the Year 5 balloon sits in the coverage table as refinancing risk instead of a footnote, and it is the second reason amendment (1) is not optional. Your answer that the CFO rather than an expert signed the projections changed no number in this memo, but it names your declarant, and the unsigned Year 2 master supply agreement is what she will be crossed on. The class-voting answer changed nothing. Class 4 was going to be a cramdown question either way.
Why this prompt is built the way it is
## Framework 1. **Name the standard, do not blend them.** Traditional Chapter 11 runs on § 1129(a)(11): confirmation not likely to be followed by liquidation or further reorganization. A nonconsensual Subchapter V plan runs on the § 1191(c) projected-disposable-income test. Say which applies and why. 2. **Reconcile to history before touching the model.** Year 1 against trailing actuals, with the percentage change stated and the operational event that produces it named. An unexplained step-change is finding one. 3. **Coverage every year.** EBITDA over cash interest plus scheduled amortization, to two decimals, with the dollar cushion. Year 1 comfort hides Year 3 problems. 4. **The tightest month, not the tightest year.** Minimum cash against the largest working capital swing. A plan that is break-even annually and runs to zero every March fails. 5. **Three downside cases, with numbers.** Revenue down 10%, gross margin down 200bp, largest customer gone. Report coverage and minimum cash for each and say which one breaks the plan and when. 6. **Class by class.** Treatment, impairment, acceptance or deemed rejection, and for each rejecting class the cramdown provision plus the one factual issue that gates it. 7. **New value gets the full test.** If equity or an insider takes an interest: new, substantial, money or money's worth, necessary, reasonably equivalent, and whether the interest is exposed to a market test. 8. **Likelihood tied to objectors.** HIGH / MODERATE / LOW, naming who raises each risk and which assumption they attack, followed by amendments stated with their numerical effect.