this case results from going into key issues where corners were cut in order to get the plane confirmation the first issue turns on ignoring otherwise valid claims and how they should be treated treated and the second reduces the issue feasibility to a mere test of whether the math adds up in both instances the law set forth in the bankruptcy code and case law requires more and for these reasons we seek reversal and remand for proper application of the law to start the first issue has to do with eleven eleven be election there were a number of properties in this case wells fargo bank had a lien against one called swire retire the worry to property had dropped dramatically in value after the real estate crisis of two thousand and eight and that set up a situation where he would see cram down under a plan in order to avoid the full effect of cram down the bankruptcy code gives the lender also became joint debtors in this large bankruptcy case and under the guarantees that were signed preet the titian there was a waiver of any ability to  defense against spillover claims from an eleven eleven b election so to put it really specifically there would be a deficiency created by an eleven eleven b election in a bankruptcy case and it in this case and that's i mean that's pretty well established law that section five twenty three and goes back to a number of cases having to do with third party guarantor liability that this court has dealt with over the years that consolidation into the bankruptcy and then you have one plan that deals with all of the individual debtors and their assets our view the banks view it as whatever the deficiency is and by some calculations  in the millions of dollars that deficiency from the eleven eleven deal action in swat return for example needs to spill over into the unsecured pool of claims that the individual guarantors have to deal with what happened here basically was the bankruptcy judge said and i can cite to the record she said i agree with you that if the debtors if the if the guarantors are not in bankruptcy they would have to treat and pay the deficiency claims but they're in bankruptcy and that's different there's no there's no basis under the code there's no basis under case law that would suggest that just because  the guarantors happened to be in bankruptcy that the deficiency claim from an eleven eleven b election evaporates just disappears it has to be treated that's one of the fundamental principles of bankruptcy you can't just  particularly in a case like this where the the third party the debtor guarantors were also the owners and they were going to hold on to all of the equity of the assets so under the absolute priority rule they had an obligation to pay all of their creditors one hundred cents on the dollar that would mean that the deficiency claim from the eleven eleven b election on swear each of spills over into one of the cups and has to be dealt with by the guarantors in their bankruptcy case in one fashion or another here again as as we've said the court just said no it's different because they're in bankruptcy and those claims were given no treatment at all so we're asking for a reman back to the bankruptcy court to say no wait a minute you must determine the amount of the deficiency and that deficiency must be an allowed claim that the guarantors have to pay this so did you when you filed a claim mean let's assume it's remanded how would you propose to calculate the deficiency which we don't know how much is going to be right well that gets into the difference between the two elections here but i'll answer provision called alternative treatment that was offered with regard to a different asset this asset was grant road or it's called la mirada that's an apartment complex and  of creating the situation where the eleven eleven b election would come in there the debtor simply said look we will pay the bank half a million dollars in return for a three million dollars debt reduction and the bank made that election and then there was some dispute that you see in the briefs about whether we should have filed the rule sixty motion to have it reconsidered and we didn't the truth is the bank took a look at that and said we'll live with the consequences we will take the cash and if the deficiency is allowed to pour over into the guarantors cups then that that's what we ought to be seeking and that's what we're seeking here today that deficiency to answer your question your honour's about two two point five million dollars so we're probably looking at somewhere between three and a half to four million dollars of deficiencies that just went up in smoke in order to cut the corner to get the plan confirmed ok and i judge kozinski at a question this is sort of a zero continue to own these real estate assets and so long as they make their payments under the plan the required payments they get whatever profits exist what so you want to be treated the same as other unsecure those claims are being paid we simply want to take our deficiency and for rita and participate in the same way as those what we think similarly situated claim what it really boils down to is off the secured creditors that these deficiencies can't just be ignored they can't just go up in smoke they can't just disappear they have to be dealt with and they have to be dealt with in a way that's fair and equitable with similarly situated claims the second issue that we have and all of the dress it units commercial loans either seven years with a balloon or maybe they're amortized over ten years this one in order to make the in order to make the the income streams work in order to sell feasibility that stretch it out to twenty five years that's a huge surprise in a bankruptcy case there's even been cases where you where you see forty years of debt pins on the on the type of asset in the market but we think twenty five years is is too long to be feasible but the big problem is that the monthly payments on the mortgage more than triple from the beginning to the end and in years twenty one through twenty five you have this more than tripled amount now there is the prospect and i think maybe some some additional work has been done to him to put more money storage units there and that maybe could show some income rise but there was no basis at all the say hey we expected in the twentieth year we're going to be able to to to triple our income that the evidence showed that they were making around four or five thousand dollars a month and they had to start with six thousand dollars a month payments and when they get to the year twenty one through twenty five now they've got to make twenty please the court my name is fred peterson from mesh park and rush out in tucson arizona represent nine joint debtors who are proponents of a joint plan of reorganization confirmed by the bankruptcy court in september of two thousand eleven for those entities are important for those appeal although the relief requested by wells fargo to set aside the confirmation order will no doubt affect all of those debtors the four they're affected  four fifteen east grant road which at times is referred to as the record is grant road at times is by the name of the apartment complex which was law morata aberdeen group and max chris that confirmed joint plan resolves claims for the eight entities in the two individuals i mentioned above addressing over seventy five classes of claims institutional lenders and scores of vendors and taxing well so we can take the two situations where there was an election in the grant road case they were offered options a b and c certainly in a bankruptcy case that the traditional cramdown where i can foresee the court can force against their will certain treatment that was one of the options they could have chosen that but instead they chose treatment where they got well more than they would have gotten otherwise in a cram down the government media team it was a loan to improve their collateral r then they could not they would be bound by their election which is exactly what happened here ok let me ask the question one more time i'll give you a chance to answer it if you don't answer it i will simply accept that you don't have a good answer there are  well there mechanism are two cases so one is the eleven eleven b and one is the grant road case so i was i was addressing the grant road case if you want to address the sasha tory election less they elected that that treatment there's one claim in the joint case would get treated in full in one class there's nothing by definition that could be in the guarantor coude place because it's one claim in the  think it's different but i'm asking yes they could ok and that can a max when the reason why that's different the reason why it's different is outside of bankruptcy you don't have the automatic say interest continues to run against those parties their assets aren't being administered by the joint plan and there aren't the source of funds that question you asked before it was a good one this was one enterprise he's worked debtors who had different jobs or different assets their whole if they make an election that does not carry a waiver of their claims are going to go on top i don't see why any of that makes a difference where well is there a waiver under either reference was in our supplemental forty which is our ballot report which identifies the election that they made i want  o reference on page thirteen plan they were waving the guarantors they were doing only to pursue claims in that class because they were getting more in that class and they would have otherwise gotten a cram down and see this was a planned a covered all done us wrecked one joint plan for nine dollars and it's in the plan understanding of the parties you know to five days of confirmation trial it was clear from everyone involved that this was effective and that's why by the end wells fargo stopped and said we made a mistake we didn't mean our election to me the transcript when wells fargo said we want to change our election they said you'd be an ringing the bell he'd be making a substantial change that effect where it's in there's a substantial discussion and he just you know five to fifteen perhaps the best place to look is the very end fifteen twenty one after a series of discussions mr shelley tells the court it's late you've done a good job here in issues we entering th the plan has to they have to take a second look at it or mind your honor it's their plan they wrote it and they gave us it ought to be taken into account we think it was i think we'll be back filing the appropriate pleading  there was no action that they could make that would have benefited them and i'd i disagree with that i think that is just a statement without a warrant the truth is if you look at the claims that they filed the claims they filed are treated plan that effects that's across the board the dutch have to have a sub some consolidation rather than a procedural consolidation you don't if they elect the treatment that wells fargo did in this case well it does make a difference because they elected one steer radical and one bankruptcy and not another but they were never substantively consolidated if you know i think you're i think your argument might be stronger if they were if it if it happened perhaps it would but i don't think it's fatal to this case they still made an election pursuant to a joint plan and you look at the plan as a whole of whether it's confirmable whether legal there has been made and you look at the wells fargo claims as a whole of whether they're being paid they're being paid every dollar they're entitled to pursuant to their election their choice that led through the confirmation hearing their failure to file their will sixty motion to correct what they claim is their mistake means you have this record on appeal before you today they can't say we have a we we made both of those elections but they're fundamentally different in the sense that one was one that they came up with and the other one is statutory mr peterson's referring when he talks about the mistake when we got to the final hearing the debtor indicated oh that plan election means that you're waving your deficiency against this other debt or the guarantor debtor and we said well no we made the election doesn't say anything in  plan itself the bankruptcy plan that if we make the plan of election that we have waived the deficiency it's silent on that so when the debtor comes and says you know open court yeah but that's what it means we said well that's not why we chose it we did understand that was the that was the consequence so it's almost like a matter of contract law where it's not clear and somebody has to decide what the contract really says the two ships  pardon me the two ships p l s yes or yes or and so we said well all right if that's what it means we may go ahead and make a rule sixty motion to to unring the bell or pull our election which we took a step back and we said no we're not going to do that we don't think it eliminated the deficiency the darling i think it will be what their argument is is that when you elected and said that the debt was essentially current  satisfied that that was that was tantamount to an extent question of the guarantee and that's the argument i gather that's the argument but but again i'll call you back to page five of our opening brief where we were we put the language from the guarantees long before has to participate and the same way similarly situated and secured claims a couple more points so we have final day of oral argument the bankruptcy judge said when she was confronted with this question  said outside of bankruptcy i think you're right inside a bankruptcy i think you're wrong so one story to we're done that's the problem that we have nobody disagrees that if the if the guarantor through outside of bankruptcy there's no issue here you put them inside bankruptcy and a separate bankruptcy and administrative the consolidated bankruptcy what's the authority that says that the deficiency debt disappears there is and i think his argument is that if you take the language that they propose that might have the effect of extend wishing and whether that's where that takes us i don't know that i think that's that's the argument will go on and this seems to me that's the argument that if the debtor thinks that it must be so i think not just what is the effect to the language it all comes out of that i think i think that's correct you