U.S. Truck Company, Inc., filed for a reorganization under Chapter 11 of the Bankruptcy Code. When the reorganization plan was presented for confirmation, one creditor objected to the plan. The creditor argued that the debtor was facing a possible strike and a new labor contract, both of which could place an additional strain on the debtor's finances. These potential labor problems, the creditor concluded, made the plan unfeasible.

U.S. Truck admitted that the labor problems existed but noted that the company had recently rebounded from its financial problems to become very successful. Moreover, the labor union had just ratified two previous labor contracts by a 95 percent majority vote.

U.S. Truck concluded that these factors made the plan workable, which was enough under the code, because the code did not require a guarantee of success. Was the conclusion correct?

In the Matter of U.S. Truck Co., Inc., 47 B.R. 932 (Bankr. E.D. MI).