Ninth Circuit Holds That Impaired Accepting Class Requirement Applies to Plan Confirmation on a “Per-Plan” Rather Than a “Per Debtor” Basis
January 30, 2018
On January 25, 2018, the United States Court of Appeals of the Ninth Circuit (the “Ninth Circuit” or the “Court”) held that section 1129(a)(10) of the Bankruptcy Code, which requires that to confirm a plan there must be at least one impaired accepting class, applies on a “per‑plan” basis, rather than a “per-debtor” basis.
JPMCC 2007-C1 Grasslawn Lodging, LLC v. Transwest Resort Props. Inc., et al. (In re Transwest Resort Props. Inc.), No. 16-16221, 2018 U.S. App. LEXIS 1947 (9th Cir. Jan. 25, 2018) (the “Opinion”). The Opinion is significant because under a “per-plan” approach, only a single impaired accepting class is required among all debtors covered under a joint plan. In other words, multiple debtors with a joint plan may cram their plan down on all creditors based on a single accepting class, even where the impaired accepting class has claims against different debtors than the crammed‑down class. The Ninth Circuit is the first circuit court to address the “per-debtor” versus “per-plan” issue, and lower courts in the Southern District of New York and District of Delaware remain split on the proper approach.
This article was republished by Harvard Law School Bankruptcy Roundtable on April 3, 2018.