Legal Definitions - feasibility standard

The feasibility standard is a requirement in bankruptcy cases that a Chapter 11reorganization plan must be workable and have a reasonable likelihood of success in order to obtain approval from the bankruptcy court.

For example, if a company files for bankruptcy and proposes a reorganization plan that involves significant debt restructuring and cost-cutting measures, the feasibility standard requires that the plan be realistic and achievable. The court will evaluate the plan to determine if it has a reasonable chance of success and if it is in the best interest of the company's creditors and stakeholders.

Another example could be a real estate developer who files for bankruptcy and proposes a plan to sell off some of their properties to pay off creditors and restructure their debt. The feasibility standard would require that the plan be viable and have a reasonable chance of success in order to be approved by the court.

The feasibility standard is important because it ensures that bankruptcy reorganization plans are not just wishful thinking, but rather realistic and achievable solutions to financial difficulties. This protects the interests of creditors and stakeholders and helps to ensure a successful outcome for all parties involved.