Source: http://www.abiworld.org/AM/Template.cfm?Section=Submission_Abstract&Template=/CM/ContentDisplay.cfm&ContentID=36626
Timestamp: 2013-06-19 18:04:23
Document Index: 542056944

Matched Legal Cases: ['§ 1122', '§ 1129', '§ 546', '§ 507', '§ 507', '§ 341', '§ 507', '§1129']

American Bankruptcy Institute | Chapter 11: Claims Classification
Bankruptcy Reports, Research and Testimony
Bankruptcy-Related Organizations
National Bankruptcy Review Commission Archive
ABI Testimony
Bankruptcy Visuals
Bankruptcy Research Database
News RoomBankruptcy Research CenterNBRCA
Chapter 11: Claims Classification ID
NBRC-0129
M.O. Sigal, Jr.
Attorney; Simpson, Thacher & Bartlett
Invited Participant - July Meeting
Proposal to permit separate classification based on a rational business judgment test exposes a dissenting member of an accepting class (that was separately classified under the proposed rational business justification and essentiality standard) but I think that is justified under federal reorganization policy.
Absent essentiality, believes the classification of claims proposal would be justifiably subjec to attack on the grounds that identical legal entitlements are voidable based on friendliness to the debtor. I think an essentiality standard is necessary to justify overriding otherwise existing equality of treatment.
NBRC-0178
Gary White, on behalf of the Natl. Assoc. of Credit Management
Chair, Government Affairs Comm., Natl. Assoc. of Credit Management
Supports the working group's proposal regarding claims classification. This proposal would allow all similarly classified claims to be treated correspondingly.
Supports the working group's proposal regarding claims classification.
NBRC-0253
Professor, NYU School of Law
Proposal amending § 1122 to provide that a reorganization plan be permitted to separate claims of the same priority into different classes if the proponent of the plan has a valid basiness reason for such separation could invite unwanted strategic behavior on the part of the debtor.
In order to avoid potential strategic debtor behavior, the author offers the follwoing supplemental proposal: also amend § 1129(a)(10) so that it reads, in its entirety, "If a class member is impaired under the plan, at least one class of claims that is impaired under the plan has accepted the plan, determined without including any acceptance of the plan by any insider, and determined as if multiple classes of claims with the same priority, if any, constituted a single class."
NBRC-0273
Chapter 11 Working Group's current consensus on claims classifications would expose a dissenting member of an accepting class (that was separately classified under the proposed rational business justification and essesntiality standard), but this exposure is justified under federal reorganization policy. Absent essentiality, however, the claims classification proposal would be justifiably subject to attack on the grounds that identical legal entitlements are voidable based on friendliness to the debtor.
An essentiality standard is necessary to justify overriding otherwise existing equality of treatment.
NBRC-0303
The Commerical Law League of America believes that the following issue should be considered by the NBRC: What should be the rules for including claims together in the same class How much freedom should the plan proponents have to make classification decisions Should the requirement that at least one impaired class of creditors accept a plan be amended
The CLLA believes that these issues should receive top priority (no additional details are provided).
NBRC-0318
Paul Mignini, Jr., Mary E. Wysocki and Charles M. Tatelbaum
President-National Association of Credit Management ("NACM"), Chair-NACM Government Affairs Committee, and NACM Legislative and Bankruptcy Counsel, respectively
546(c), 507(a)(1)
NACM sought the input of all NACM members with respect to proposed changes to the bankruptcy laws. The NACM Government Affairs Committee, without discussing the rationales for their suggestions, prepared the proposals below.
NACM's Government Affairs Committee concludes that § 546 should be amended to provide that: any goods or services that are provided or delivered to a debtor within ten days of the filing of a bankruptcy petition shall be entitled to be treated as an administrative priority claim under § 507(a)(1).
507(a)
NACM's Government Affairs Committee concludes that § 507(a) should be amended to provide that: when credit is extended to a debtor-in-possession under chapter 11, any unpaid obligation incurred from the date of the petition until the date of the first § 341 meeting of creditors shall be entitled to a super priority ahead of claims entitled to priority under § 507(a)(1).
NBRC-0320
Robert M. Zinman, on behalf of the Bankruptcy Institute
American Bankruptcy Institute ("ABI")
Numerous position papers, memoranda and research material
Similar claims should be classified together unless there is a real good reason for separate classification. Gerrymandering should not be permitted. The Code shold probably still require the acceptance of one impaired class (no additional details provided).
NBRC-0384
ABI presents this "Report on the State of the American Bankruptcy System," which is the capstone of ABI's three-year Bankruptcy Reform Study Project. The Project's efforts culminated with a 65-question survey covering a broad spectrum of possible areas of reform. The study indicates that: (1) in general, the Code of 1978 is working well; and (2) probelms of delay, excessive costs, unfairness, and abuse need to be addressed in the current round of reforms.
ABI recommnds: (1) strict deadlines for dismissal or appointment of trustees to help combat abuse; (2) reorganization of chapter 11 policy to provide stricter time limits, elimination of non-viable debtors, and reduction of excessive professional fees; (3) relaxing eligibility requirements for consumer reorganizations under chapter 13, and providing time limits, limited discharge and uniform national exemptions; (4) high standards of integrity for all professionals; (5) a balance between creditors' and debtors' rights, and equality of distribution; and (6) not adopting priority classes of claimants.
NBRC-0386
National Association of Credit Management ("NACM")
In this statement entitled "Issues Involving Governmental Agencies and Bankruptcy," the NACM expresses the following conerns about government agencies in the bankruptcy process: the expansion of priority status to government claims only serves to inhibit and frustrate the ability of businesses to successfully reorganize.
Government claims should not be given expanded status.
NBRC-0780
Director, Commercial Litigation Branch, U.S. Department of Justice
1122(a)
"We oppose the Commission's proposals to codify a new value exception to chapter 11 and to permit separate classification of legally similar claims if supported by a 'rational business justification.' The two proposals, working toether, erode sifnificantly the absolute priority and creditor democracy structures of chapter 11." "The Commission's classification proposal, which is closely intertwined with the new value exception, is likewise seriously flawed. It invites gerrymandering and greatly undermines section 1129(a)(10) of the Bankrutpcy Code."
"A clear rule on classification simplifies the confirmation standards, prevents abusive classification and saves its attendant costs." "Modifying section 1122(a) to require that claims of the same rank be placed in the same class for voting purposes and receive consideration of the same value is the better course."
NBRC-0921
Dean S. Cooper and George Kielman
Associate General Counsel and Assistant General Counsel, respectively, of The Federal Home Loan Mortgage Corporation ("Freddie Mac")
1129(a)(10)
"We understand that the chapter 11 working group is considering a proposal to abolish section 1129(a)(10), which requires as a condition of plan confirmation at least one vote in favor of the plan from an impaired class of claims." "If section 1129(a)(10) is eliminated, ther would be a possibility of cramdown in every single asset case even if none of the creditor classes supports the debtor's plan of reorganization."
"Freddie Mac strongly urges the Commission to retain section 1129(a)(10)."
"The Working Group's discussion supporting the claims classification proposal states that the proposal was intended to codify the rule that separate classification of substantially similar claims is not permissible unless a business rationale for separate classification exists." "If the proposal as adopted by the Commission actually accomplished this result, Freddie Mac would not have substantial problems with it. However, we are concerned what the proposal, as currently adopted by the Commission, does not achieve the intended result." "By using the term 'legally similar' (instead of the current 'substantially similar'), the proposal infuses uncertainty into the Code and guarantees, in our opinion, intense new litigation over the meaning of this term."
"We believe that the Commission can correct this defect by modifying the terminology of the classification proposal to, first, affirmatively state that 'substantially similar' claims shall be classified together and, second, to provide the exception to the rule when there is nevertheless a rational business reasonfor separate classification, provided that the need to obtain an affirmative vote under section 1129(a)(10) is not such a reason."
NBRC-0930
C. Daniel Motsinger
Attorney, Krieg, Devault, Alexander & Capehart
Letter from Grant F. Shipley to C. Daniel Motsinger dated July 10, 1997, attached as Appendix A.
"There was substantial sentiment that, in light of the Commission's current recommendations regarding classification and the 'lifting' of exclusivity when a debtor seeks to cram-down a new value plan, 11 U.S.C. §1129(a)(10) should be repealed for the reasons set forth at page 2 of your July 8, 1997 memorandum."
Repeal section 1129(a)(10).
NBRC-1047
George Kielman
Assistant General Counsel, Freddie Mac
Author is responding to request for Freddie Mac's position on the possible elimination of section 1129(a)(10).
"While we understand that elimination of section 1129(a)(10) may be of interest and useful to certain segments of the bankruptcy bar, we strongly urge that section 1129(a)(10) be retained at least insofar as it applies to single asset real estate cases."