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Absolute Priority Rule does NOT apply to individual
So curiously, you have to do a cramdown, i.e. no consenting impaired class,
but you don't have to commit 5 years of disposable income under 1129(a)(15)
because there was no objection. Gotta love those boys (and girls) over in
DC.
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal
Specialization.
L
Sent: Wednesday, March 03, 2010 6:45 PM
To: cdcbaa@yahoogroups.com
Subject: Re: [cdcbaa] Absolute Priority Rule does NOT apply to individual
Chapter 11 Debtors (Judge Markell Opinion; In re Shat)
Not necessarily. Even if the class had accepted (by 2/3 amount and 1/2
number of claims "voting" in favor of the Plan) and any ONE member of the
class holding a general unsecured claim had "objected" to the Plan, then the
debtor would still have been required to committ 5 years of PDI, pursuant to
1129(a)(15) and that 1115(a)(2) property would not have vested in the debtor
at confirmation.
It was the failure to "object" distinguished from a yes or not "vote" that
was focused on in the ruling.
Here is the mental gymnastics: The only vote of the general unsecured
creditor class (of many creditors) voted "no" but did not "object" to
confirmation. The failure to "object" was deemed to result in no
requirement to pay 60 months of PDI into the Plan by the debtor
[(1129(a)(15) which is analogous to 1325(b)(1)(B)'s requirement of 60 months
of PDI if Class 5 objects), of course in Chapter 13 there is a standing
objection by the Chapter 13 Trustee so this result never happens in Chapter
13] so the Plan could be confirmed under 1129(b)(2)(B)(ii) as being "fair
and equitable" without paying the unsecured creditors in full. Due to the
failire to object, all of the property (1115 post-petition earning of the
debtor during the 5 years from the effective date of the Plan and 541
property) vested in the debtor at confirmation except the 10% payment
provided to the general unsecured creditors, as if the Plan was "accepted"
by the general unsecured class.
Peter M. Lively, JD/MBA
Law Office of Peter M. Lively * Personal Financial Law Center I
11268 Washington Blvd, Suite 203, Culver City, CA 90230-4647
Telephone: (310)391-2400 * (800)307-3328 * Fax: (310)391-2462
A-Bankruptcy-Attorney.com
Personal Financial Law Center II
1706-B Newport Boulevard, Costa Mesa, CA 92627-3073
Telephone: (949)650-3328
THIS MESSAGE IS INTENDED ONLY FOR THE USE OF THE INDIVIDUAL OR ENTITY TO
WHICH IT IS ADDRESSED, AND MAY CONTAIN INFORMATION THAT IS PRIVILEGED,
CONFIDENTIAL AND EXEMPT FROM DISCLOSURE UNDER APPLICABLE LAW. IF THE READER
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The post was migrated from Yahoo.
Peter:
Doesn't this case also establish the proposition that those who abstain are
not treated as "yes" votes? If those abstaining had been counted as yes
votes, this plan would have been confirmed consensually. See f.n. 3.
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal
Specialization.
L
Sent: Tuesday, March 02, 2010 10:38 AM
To: cdcbaa@yahoogroups.com
Subject: [cdcbaa] Absolute Priority Rule does NOT apply to individual
Chapter 11 Debtors (Judge Markell Opinion; In re Shat) [1 Attachment]
[Attachment(s) from P L included below]
Peter M. Lively, JD/MBA
Law Office of Peter M. Lively * Personal Financial Law Center I
11268 Washington Blvd, Suite 203, Culver City, CA 90230-4647
Telephone: (310)391-2400 * (800)307-3328 * Fax: (310)391-2462
A-Bankruptcy-Attorney.com
Personal Financial Law Center II
1706-B Newport Boulevard, Costa Mesa, CA 92627-3073
Telephone: (949)650-3328
THIS MESSAGE IS INTENDED ONLY FOR THE USE OF THE INDIVIDUAL OR ENTITY TO
WHICH IT IS ADDRESSED, AND MAY CONTAIN INFORMATION THAT IS PRIVILEGED,
CONFIDENTIAL AND EXEMPT FROM DISCLOSURE UNDER APPLICABLE LAW. IF THE READER
OF THIS MESSAGE IS NOT THE INTENDED RECIPIENT, OR THE EMPLOYEE OR AGENT
RESPONSIBLE FOR DELIVERING THE MESSAGE TO THE INTENDED RECIPIENT, YOU ARE
HEREBY NOTIFIED THAT ANY DISSEMINATION, DISTRIBUTION OR COPYING OF THIS
COMMUNICATION IS STRICTLY PROHIBITED. IF YOU HAVE RECEIVED THIS
COMMUNICATION IN ERROR, PLEASE NOTIFY US IMMEDIATELY BY E-MAIL OR BY
TELEPHONE. THANK YOU.
Message
Peter:
Doesn't this case also
establish the proposition that those who abstain are not treated as "yes"
votes? If those abstaining had been counted as yes votes, this plan would
have been confirmed consensually. See f.n. 3.
David A.
Tilem
Certified Bankruptcy
Specialist*
The post was migrated from Yahoo.