Businesses, as opposed to individuals, can discharge the debts described in 11 U.S.C. § 523(a) with cramdown plans under Subchapter V of the Bankruptcy Code.  There are two routes for plan confirmation available to debtors in cases under Subchapter V.

If a consensual plan is confirmed under 11 U.S.C. § 1191(a), discharge of debts is governed by 11 U.S.C. § 1141.  Read together, sections 1141(d)(1) and (d)(3) provide that corporate debtors receive a discharge of otherwise non-dischargeable debts.  But Section 1141(d)(2) provides that individual debtors do not receive a discharge of those same non-dischargeable debts.

If a cramdown plan is confirmed under 11 U.S.C. § 1191(b), discharge is governed by 11 U.S.C. § 1192.  In a case of first impression,[1] Maryland bankruptcy court Judge Maria E. Chavez-Ruark held that a corporation can discharge debts listed in Section 523 and that the exception to discharge under Sections 1192 and 523 is limited to individuals.

 

[1] Gaske v. Satellite Restaurants Inc. Crabcake Factory USA (In re Satellite Restaurants Inc. Crabcake Factory USA), 21-00012 (Bankr. D. Md. March 19, 2021).