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Help me understand the APR in a small biz CH 11 - unsecured class rejected plan
You might be able to convince your judge to confirm with 100% payout to your class 12 if you cant get that class to vote yes and dont want to go with the new value approach.
The unsecured portions of the undersecured claims are not in your class 12 so they are apples v oranges re treatment of class 12 claims.
The two ballots from undersecured creditors in their separate classes results in the two portions of those claims being treated in dissimilar ways within those classes, but if those classes vote yes, then the court should confirm. See 1123a4
My guess is that if one of those classes doesnt vote yes, then the court will find its equivalent to an 1111b election and the entire claim would need to be treated as fully secured to avoid having dissimilar claims in the same class. See 1129a7B
Sent from my iPhone - please excuse typos.
> On Dec 3, 2017, at 8:45 PM, Holly Roark hollyroark22@gmail.com [cdcbaa] wrote:
>
> No one made an 1111(b) election but on the ballots some of the undersecured creditors filled out both the secured and unsecured part of the ballot and put their unsecured claim there.
>
>> On Sun, Dec 3, 2017 at 6:21 PM Yahoo petermlively2000@yahoo.com [cdcbaa] wrote:
>>
>> If you have undersecured claims and arent assuming an 1111(b) election (treating them as fully secured) - in your class 2 (for example) you would only have one vote of the entire claim - then you would need to bifurcate those claims using 506 and provide an opportunity for electing 1111b. If no 1111b election, then the unsecured portion would stay in your class 12 and be able to vote in that class.
>>
>>
>> Sent from my iPhone - please excuse typos.
>>
>> On Dec 3, 2017, at 9:23 AM, Holly Roark hollyroark22@gmail.com [cdcbaa] wrote:
>>
>>> I dont think Ive adequately portrayed the stress and anxiety going on over here. My hearing is on Wednesday, December 6, and it cannot be continued (judge said so). This is our last shot and Im ready to retire my license and go wait tables if I cant make this work. I am not joking. I am freaking out over here. Please, I have a mom and pop counting on me. This is their lives, and mine.
>>>
>>> I am trying to find a solution that is workable and really need your brain trust to help.
>>>
>>> The facts are that the claims classed as the general unsecured class (class 12) voted no.
>>>
>>> There are several undersecured claims which were not specifically classed as class 12 claims. For example, if BOA had a secured claim of $100k and $20k of it was unsecured, BOA was just classed as Class 2. When BOA voted for the plan, it voted yes for both its secured and unsecured portion on one ballot thought it could have submitted 2 ballots I suppose, one for its secured claim and one for its undersecured claim.
>>>
>>> If I were to now count all of these undersecured claims as (in substance) class 12 claims then the GUC would have voted yes. But I dont know if I can do this since they were not specifically designated class 12 GUC, though treated the same way.
>>>
>>> The GUC only total $45k and we could probably propose to pay them 100%. However if we have to include the undersecured claims ($400k), this wont be doable.
>>>
>>> Can we satisfy the APR by proposing to pay the GUC class 12 claims 100% ($45k) while still only paying the deficiency claims ($400k) the 10% per the plan even though they are similarly situated as class 12? As separate classes they all voted in favor after all for the treatment of their unsecured claims. Will this work?
>>
>>> On Sat, Dec 2, 2017 at 9:31 PM Holly Roark wrote:
>>
>>>> I have a confirmation hearing on Wed, Dec 6th that wont be continued in this small business case, so I need to figure this out in the next few days here.
>>>>
>>>> The unsecured class voted NO, except if you found the unsecured portions of the secured claims which are treated exactly the same but which are not technically labeled in the same class in the plan. (Form over substance.)
>>>>
>>>> In the first round of votes on the initial plan, we had yes votes from the GUC. But then we had to amend the plan for other reasons not affecting the GUC and now they voted no.
>>>>
>>>> If anyone could shed some light on whether Im doomed or not and whether I should just burn my license now or not that would be great. Thank you for your guidance. My clock is ticking over here.
>>>>
>>>>> On Sat, Dec 2, 2017 at 8:25 PM jhayes@hayesbklaw.com [cdcbaa] wrote:
>>>>>
>>>>> In the 50+ ch 11 plans Roksana has gotten confirmed in the past 5+ years APR has been an issue 2-3 times. It only comes up when the unsecured class votes against the plan. It doesn't apply unless the unsecureds vote as a class No. most unsecureds don't vote. So you need to pay enough to get someone to vote yes. Or enough to vote yes.
>>>>>
>>>>> The new value that must be paid has to equal the value of what the debtor is retaining which almost by definition has 0 value. VZ made Roksana file a brief showing we met the requirements of some case which escapes me right now. The new value was very little. It has to be "necessary" and a few other things.
>>>>>
>>>>> Go Gonzaga by the way!
>>>>>
>>>>> Check with Roksana. New Prez of cdcbaa.
>>>>>
>>
>>>> --
>>
>>>> Holly Roark
>>>> Certified Bankruptcy Specialist*
>>>> and Sports Lawyer
>>>> holly@roarklawoffices.com **primary email address**
>>>> www.roarklawoffices.com
>>>> Central District of California & District of Idaho - Consumer Bankruptcy Attorney
>>>> 1875 Century Park East, Suite 600 Los Angeles, CA 90067
>>>> T (310) 553-2600; F (310) 553-2601
>>>> *By State Bar of California Board of Legal Specialization
>>
>>> --
>>> Holly Roark
>>> Certified Bankruptcy Specialist*
>>> and Sports Lawyer
>>> holly@roarklawoffices.com **primary email address**
>>> www.roarklawoffices.com
>>> Central District of California & District of Idaho - Consumer Bankruptcy Attorney
>>> 1875 Century Park East, Suite 600 Los Angeles, CA 90067
>>> T (310) 553-2600; F (310) 553-2601
>>> *By State Bar of California Board of Legal Specialization
>>
>
> --
> Holly Roark
> Certified Bankruptcy Specialist*
> and Sports Lawyer
> holly@roarklawoffices.com **primary email address**
> www.roarklawoffices.com
> Central District of California & District of Idaho - Consumer Bankruptcy Attorney
> 1875 Century Park East, Suite 600 Los Angeles, CA 90067
> T (310) 553-2600; F (310) 553-2601
> *By State Bar of California Board of Legal Specialization
>
>
The post was migrated from Yahoo.
If you have undersecured claims and arent assuming an 1111(b) election (treating them as fully secured) - in your class 2 (for example) you would only have one vote of the entire claim - then you would need to bifurcate those claims using 506 and provide an opportunity for electing 1111b. If no 1111b election, then the unsecured portion would stay in your class 12 and be able to vote in that class.
Sent from my iPhone - please excuse typos.
> On Dec 3, 2017, at 9:23 AM, Holly Roark hollyroark22@gmail.com [cdcbaa] wrote:
>
> I dont think Ive adequately portrayed the stress and anxiety going on over here. My hearing is on Wednesday, December 6, and it cannot be continued (judge said so). This is our last shot and Im ready to retire my license and go wait tables if I cant make this work. I am not joking. I am freaking out over here. Please, I have a mom and pop counting on me. This is their lives, and mine.
>
> I am trying to find a solution that is workable and really need your brain trust to help.
>
> The facts are that the claims classed as the general unsecured class (class 12) voted no.
>
> There are several undersecured claims which were not specifically classed as class 12 claims. For example, if BOA had a secured claim of $100k and $20k of it was unsecured, BOA was just classed as Class 2. When BOA voted for the plan, it voted yes for both its secured and unsecured portion on one ballot thought it could have submitted 2 ballots I suppose, one for its secured claim and one for its undersecured claim.
>
> If I were to now count all of these undersecured claims as (in substance) class 12 claims then the GUC would have voted yes. But I dont know if I can do this since they were not specifically designated class 12 GUC, though treated the same way.
>
> The GUC only total $45k and we could probably propose to pay them 100%. However if we have to include the undersecured claims ($400k), this wont be doable.
>
> Can we satisfy the APR by proposing to pay the GUC class 12 claims 100% ($45k) while still only paying the deficiency claims ($400k) the 10% per the plan even though they are similarly situated as class 12? As separate classes they all voted in favor after all for the treatment of their unsecured claims. Will this work?
>
>
>
>> On Sat, Dec 2, 2017 at 9:31 PM Holly Roark wrote:
>> I have a confirmation hearing on Wed, Dec 6th that wont be continued in this small business case, so I need to figure this out in the next few days here.
>>
>> The unsecured class voted NO, except if you found the unsecured portions of the secured claims which are treated exactly the same but which are not technically labeled in the same class in the plan. (Form over substance.)>>
>> In the first round of votes on the initial plan, we had yes votes from the GUC. But then we had to amend the plan for other reasons not affecting the GUC and now they voted no.
>>
>> If anyone could shed some light on whether Im doomed or not and whether I should just burn my license now or not that would be great. Thank you for your guidance. My clock is ticking over here.
>>
>>> On Sat, Dec 2, 2017 at 8:25 PM jhayes@hayesbklaw.com [cdcbaa] wrote:
>>>
>>> In the 50+ ch 11 plans Roksana has gotten confirmed in the past 5+ years APR has been an issue 2-3 times. It only comes up when the unsecured class votes against the plan. It doesn't apply unless the unsecureds vote as a class No. most unsecureds don't vote. So you need to pay enough to get someone to vote yes. Or enough to vote yes.
>>>
>>> The new value that must be paid has to equal the value of what the debtor is retaining which almost by definition has 0 value. VZ made Roksana file a brief showing we met the requirements of some case which escapes me right now. The new value was very little. It has to be "necessary" and a few other things.
>>>
>>> Go Gonzaga by the way!
>>>
>>> Check with Roksana. New Prez of cdcbaa.
>>>
>>
>> --
>> Holly Roark
>> Certified Bankruptcy Specialist*
>> and Sports Lawyer
>> holly@roarklawoffices.com **primary email address**
>> www.roarklawoffices.com
>> Central District of California & District of Idaho - Consumer Bankruptcy Attorney
>> 1875 Century Park East, Suite 600 Los Angeles, CA 90067
>> T (310) 553-2600; F (310) 553-2601
>> *By State Bar of California Board of Legal Specialization
>>
>
> --
> Holly Roark
> Certified Bankruptcy Specialist*
> and Sports Lawyer
> holly@roarklawoffices.com **primary email address**
> www.roarklawoffices.com
> Central District of California & District of Idaho - Consumer Bankruptcy Attorney
> 1875 Century Park East, Suite 600 Los Angeles, CA 90067
> T (310) 553-2600; F (310) 553-2601
> *By State Bar of California Board of Legal Specialization
>
>
The post was migrated from Yahoo.
Maybe. I suppose it's up to your judge
Sent from my iPhone - please excuse typos.
> On Dec 2, 2017, at 5:10 PM, Holly Roark hollyroark22@gmail.com [cdcbaa] wrote:
>
> Are you saying that creditors would have had to have notice of this and we can't cure it in a confirmation Order?
>
> Holly Roark
> Certified Bankruptcy Specialist*
> and Sports Lawyer
> holly@roarklawoffices.com **primary email address**
> www.roarklawoffices.com
> Central District of California & District of Idaho - Consumer Bankruptcy Attorney
> 1875 Century Park East, Suite 600 Los Angeles, CA 90067
> T (310) 553-2600; F (310) 553-2601
> *By State Bar of California Board of Legal Specialization
>
>
>> On Sat, Dec 2, 2017 at 1:21 PM, Peter Lively petermlively2000@yahoo.com [cdcbaa] wrote:
>>
>> New value is an exception to the APR which is a preconfirmation requirement, so the plan needs similar language
>>
>>
>> Best luck to your debtors
>>
>> Sent from my iPhone - please excuse typos.
>>
>>> On Dec 1, 2017, at 11:13 PM, Holly Roark hollyroark22@gmail.com [cdcbaa] wrote:
>>>
>>>
>>> My colleaue said that unless the judge requires a public auction (this is a mom and pop trucking company), the principals can have the auction at their office and bid a dollar since there is zero equity for the general unsecured creditors. Sounds a little funny to me, but he claims to have done this before. In my review of other attorneys' filings locally, I have seen this language in plans, but not in confirmation orders or as a proposed cure, post vote, to be added to a confirmation order.
>>>
>>> Holly Roark
>>> Certified Bankruptcy Specialist*
>>> and Sports Lawyer
>>> holly@roarklawoffices.com **primary email address**
>>> www.roarklawoffices.com
>>> Central District of California & District of Idaho - Consumer Bankruptcy Attorney
>>> 1875 Century Park East, Suite 600 Los Angeles, CA 90067
>>> T (310) 553-2600; F (310) 553-2601
>>> *By State Bar of California Board of Legal Specialization
>>>
>>>
>>>> On Sat, Dec 2, 2017 at 12:10 AM, Holly Roark wrote:
>>>> Thanks, Peter. So what I did was to suggest that the following language be added to the Confirmation Order:
>>>>
>>>> EQUITY INTERESTS:
>>>> CLASS EH1: On the Effective Date, the current equity interest in the Debtor will be extinguished and the ownership of the future interest will be put up for bid. The highest bid submitted to the Debtor within 30 days of the Effective Date will obtain this interest. Any party purchasing such interest will be bound by the terms of the Plan.
>>>> This was on the suggestion of a local colleague in Idaho. He said he has effectively used this language before. However, I am wondering whether this is something that can be cured in a confirmation Order or whether the creditors would have had to receive notice in the Plan? I'm out of continuances and this is a small business case.
>>>>
>>>>
>>>> Holly Roark
>>>> Certified Bankruptcy Specialist*
>>>> and Sports Lawyer
>>>> holly@roarklawoffices.com **primary email address**
>>>> www.roarklawoffices.com
>>>> Central District of California & District of Idaho - Consumer Bankruptcy Attorney
>>>> 1875 Century Park East, Suite 600 Los Angeles, CA 90067
>>>> T (310) 553-2600; F (310) 553-2601
>>>> *By State Bar of California Board of Legal Specialization
>>>>
>>>>
>>>>> On Fri, Dec 1, 2017 at 9:55 PM, Yahoo petermlively2000@yahoo.com [cdcbaa] wrote:
>>>>>
>>>>> Cram down plan confirmation is under 1129(b)
>>>>>
>>>>>
>>>>> 1129(b)(2)(C)(ii) (APR) prevents mom and pop from keeping interest in debtor Corp (lowest class) unless all senior classes are fully paid.
>>>>>
>>>>> Mom and Pop interest holders may bypass 1129(b)(2)(C)(ii) with sufficient and competitive new value contribution to buy the debtor for a sum less than full amount of allowed unsecured claims and greater than liquidation recovery for those claims.
>>>>>
>>>>> Insider compensation is a preconfirmation concept - no plan confirmation results in ch7 liquidation (or dismissal) and no salaries for mom and pop.
>>>>>
>>>>> Sent from my iPhone - please excuse typos.
>>>>>
>>>>>> On Nov 30, 2017, at 12:10 AM, Holly Roark hollyroark22@gmail.com [cdcbaa] wrote:
>>>>>>
>>>>>>
>>>>>> General unsecured creditors rejected plan in small business case (10% dividend to GUC). I have several impaired classes who voted in favor and so can cram down. However, in layman's terms, what does it mean that the "holder of any claim or interest that is junior to the claims of such class will not receive or retain under the plan on account of such junior claim or interest..."
>>>>>>
>>>>>> This is a mom and pop shop (Inc.). Will mom and pop still own the debtor if they do not provide the "new value" exception to the APR? Can they still pay themselves insider compensation pursuant to the budget attached to the Plan? Or, does this just mean that during the 5 year plan they cannot take a distribution and then after the Plan is completed they own the Debtor again?
>>>>>>
>>>>>> I really don't get this. I am trying to understand what "receive or retain" really means for the mom and pop running this Inc.
>>>>>>
>>>>>> There is no equity in the business and if it liquidated, only a priority unsecured creditor would be paid, and not even in full. GUC's would get zero.
>>>>>>
>>>>>>
>>>>>> Holly Roark
>>>>>> Certified Bankruptcy Specialist*
>>>>>> and Sports Lawyer
>>>>>> holly@roarklawoffices.com **primary email address**
>>>>>> www.roarklawoffices.com
>>>>>> Central District of California & District of Idaho - Consumer Bankruptcy Attorney
>>>>>> 1875 Century Park East, Suite 600 Los Angeles, CA 90067
>>>>>> T (310) 553-2600; F (310) 553-2601
>>>>>> *By State Bar of California Board of Legal Specialization
>>>>>>
>>>>>
>>>>
>>>
>>
>
>
The post was migrated from Yahoo.
New value is an exception to the APR which is a preconfirmation requirement, so the plan needs similar language
Best luck to your debtors
Sent from my iPhone - please excuse typos.
> On Dec 1, 2017, at 11:13 PM, Holly Roark hollyroark22@gmail.com [cdcbaa] wrote:
>
> My colleaue said that unless the judge requires a public auction (this is a mom and pop trucking company), the principals can have the auction at their office and bid a dollar since there is zero equity for the general unsecured creditors. Sounds a little funny to me, but he claims to have done this before. In my review of other attorneys' filings locally, I have seen this language in plans, but not in confirmation orders or as a proposed cure, post vote, to be added to a confirmation order.
>
> Holly Roark
> Certified Bankruptcy Specialist*
> and Sports Lawyer
> holly@roarklawoffices.com **primary email address**
> www.roarklawoffices.com
> Central District of California & District of Idaho - Consumer Bankruptcy Attorney
> 1875 Century Park East, Suite 600 Los Angeles, CA 90067
> T (310) 553-2600; F (310) 553-2601
> *By State Bar of California Board of Legal Specialization
>
>
>> On Sat, Dec 2, 2017 at 12:10 AM, Holly Roark wrote:
>> Thanks, Peter. So what I did was to suggest that the following language be added to the Confirmation Order:
>>
>> EQUITY INTERESTS:
>> CLASS EH1: On the Effective Date, the current equity interest in the Debtor will be extinguished and the ownership of the future interest will be put up for bid. The highest bid submitted to the Debtor within 30 days of the Effective Date will obtain this interest. Any party purchasing such interest will be bound by the terms of the Plan.
>> This was on the suggestion of a local colleague in Idaho. He said he has effectively used this language before. However, I am wondering whether this is something that can be cured in a confirmation Order or whether the creditors would have had to receive notice in the Plan? I'm out of continuances and this is a small business case.
>>
>>
>> Holly Roark
>> Certified Bankruptcy Specialist*
>> and Sports Lawyer
>> holly@roarklawoffices.com **primary email address**
>> www.roarklawoffices.com
>> Central District of California & District of Idaho - Consumer Bankruptcy Attorney
>> 1875 Century Park East, Suite 600 Los Angeles, CA 90067
>> T (310) 553-2600; F (310) 553-2601
>> *By State Bar of California Board of Legal Specialization
>>
>>
>>> On Fri, Dec 1, 2017 at 9:55 PM, Yahoo petermlively2000@yahoo.com [cdcbaa] wrote:
>>>
>>> Cram down plan confirmation is under 1129(b)
>>>
>>>
>>> 1129(b)(2)(C)(ii) (APR) prevents mom and pop from keeping interest in debtor Corp (lowest class) unless all senior classes are fully paid.
>>>
>>> Mom and Pop interest holders may bypass 1129(b)(2)(C)(ii) with sufficient and competitive new value contribution to buy the debtor for a sum less than full amount of allowed unsecured claims and greater than liquidation recovery for those claims.
>>>
>>> Insider compensation is a preconfirmation concept - no plan confirmation results in ch7 liquidation (or dismissal) and no salaries for mom and pop.
>>>
>>> Sent from my iPhone - please excuse typos.
>>>
>>>> On Nov 30, 2017, at 12:10 AM, Holly Roark hollyroark22@gmail.com [cdcbaa] wrote:
>>>>
>>>>
>>>> General unsecured creditors rejected plan in small business case (10% dividend to GUC). I have several impaired classes who voted in favor and so can cram down. However, in layman's terms, what does it mean that the "holder of any claim or interest that is junior to the claims of such class will not receive or retain under the plan on account of such junior claim or interest..."
>>>>
>>>> This is a mom and pop shop (Inc.). Will mom and pop still own the debtor if they do not provide the "new value" exception to the APR? Can they still pay themselves insider compensation pursuant to the budget attached to the Plan? Or, does this just mean that during the 5 year plan they cannot take a distribution and then after the Plan is completed they own the Debtor again?
>>>>
>>>> I really don't get this. I am trying to understand what "receive or retain" really means for the mom and pop running this Inc.
>>>>
>>>> There is no equity in the business and if it liquidated, only a priority unsecured creditor would be paid, and not even in full. GUC's would get zero.
>>>>
>>>>
>>>> Holly Roark
>>>> Certified Bankruptcy Specialist*
>>>> and Sports Lawyer
>>>> holly@roarklawoffices.com **primary email address**
>>>> www.roarklawoffices.com
>>>> Central District of California & District of Idaho - Consumer Bankruptcy Attorney
>>>> 1875 Century Park East, Suite 600 Los Angeles, CA 90067
>>>> T (310) 553-2600; F (310) 553-2601
>>>> *By State Bar of California Board of Legal Specialization
>>>>
>>>
>>
>
>
The post was migrated from Yahoo.
Cram down plan confirmation is under 1129(b)
1129(b)(2)(C)(ii) (APR) prevents mom and pop from keeping interest in debtor Corp (lowest class) unless all senior classes are fully paid.
Mom and Pop interest holders may bypass 1129(b)(2)(C)(ii) with sufficient and competitive new value contribution to buy the debtor for a sum less than full amount of allowed unsecured claims and greater than liquidation recovery for those claims.
Insider compensation is a preconfirmation concept - no plan confirmation results in ch7 liquidation (or dismissal) and no salaries for mom and pop.
Sent from my iPhone - please excuse typos.
> On Nov 30, 2017, at 12:10 AM, Holly Roark hollyroark22@gmail.com [cdcbaa] wrote:
>
> General unsecured creditors rejected plan in small business case (10% dividend to GUC). I have several impaired classes who voted in favor and so can cram down. However, in layman's terms, what does it mean that the "holder of any claim or interest that is junior to the claims of such class will not receive or retain under the plan on account of such junior claim or interest..."
>
> This is a mom and pop shop (Inc.). Will mom and pop still own the debtor if they do not provide the "new value" exception to the APR? Can they still pay themselves insider compensation pursuant to the budget attached to the Plan? Or, does this just mean that during the 5 year plan they cannot take a distribution and then after the Plan is completed they own the Debtor again?
>
> I really don't get this. I am trying to understand what "receive or retain" really means for the mom and pop running this Inc.
>
> There is no equity in the business and if it liquidated, only a priority unsecured creditor would be paid, and not even in full. GUC's would get zero.
>
>
> Holly Roark
> Certified Bankruptcy Specialist*
> and Sports Lawyer
> holly@roarklawoffices.com **primary email address**
> www.roarklawoffices.com
> Central District of California & District of Idaho - Consumer Bankruptcy Attorney
> 1875 Century Park East, Suite 600 Los Angeles, CA 90067
> T (310) 553-2600; F (310) 553-2601
> *By State Bar of California Board of Legal Specialization
>
>
Holly RoarkCertified Bankruptcy Specialist*and Sports Lawyer
holly@roarklawoffices.com **primary email address**
www.roarklawoffices.com
Central District of California & District of Idaho - Consumer Bankruptcy Attorney
1875 Century Park East, Suite 600 Los Angeles, CA 90067T (310) 553-2600; F (310) 553-2601
*By State Bar of California Board of Legal
Specialization
The post was migrated from Yahoo.