There is little Chapter 9 precedent. What little there is often deals with the challenges a municipality faces getting into Chapter 9. Less is written about how a municipality gets out of Chapter 9. There are material differences between the confirmation standards for a Chapter 9 plan of adjustment and those of a Chapter 11 plan of reorganization. One of the primary ways these differences manifest themselves is in the distinct way the“best interests of creditors” and “feasibility” tests are interpreted in Chapter 9.

The best place to start is the statute itself. Bankruptcy Code Section 943(b) deals with confirmation standards for a Chapter 9 plan of adjustment. It provides, in relevant part, that the court shall confirm a plan if...