The purpose of "chapter proceedings" is to work out a compromise or extension of indebtedness. Thus, a proposed plan under Chapters 11, 12, or 13 amounts to a compromise offer or request for extension, as the case may be. If the plan proposes payment of the government's claim over a longer period of time than was originally called for, but there will be no reduction in the amount of the government's claim, and no release of security is required, no compromise is deemed involved. In some instances, plans provide for a cash deposit to pay the government's claims in full. Such proposals do not require the Civil Division's approval as a compromise of the government's claims.

Proposed plans that call for the government to accept less than the full amount due it, or for the release or substitution of security, amount to compromise proposals, and should be processed as any other compromise offer. If the offeror insists on an answer before necessary financial data, proper recommendations, and clearances can be obtained, the United States Attorney should object to the plan. The amount that would be realized by the government in the event of liquidation is a relevant consideration in judging the adequacy of an offer of compromise by way of a plan. Plans that call for the government to accept stock in a debtor or successor corporation in payment or partial payment of its claims, or that call for the government to accept a percentage of net profits, should be avoided.

[updated April 2018]