Opinion ID: 77241
Heading Depth: 2
Heading Rank: 2

Heading: Equal-Treatment Requirement of Bankruptcy Code

Text: 31 Enron also challenges new § 5.20 on the ground that the interim distributions provision violates the Code's equal treatment requirement. A plan must provide the same treatment for each claim or interest of a particular class. 11 U.S.C. § 1123(a)(4). We review this question de novo. See, e.g., In re Dow Corning Corp., 255 B.R. 445, 501 (E.D.Mich.2000). 32 Enron argues that § 5.20 allows Class 9 equity interest holders that are not subject to the examiner's investigation to seek immediate distribution and that this provision unfairly discriminates against Enron, which must wait for either the consent of the examiner and New Power or an order of the bankruptcy court before its claim will be allowed and any distribution made, thereby creating a significant risk that Enron will not be paid its pro-rata share. Appellant's Br. at 35. Section 5.20 does not award interim distributions; it only provides a procedure for their award under the supervision of the bankruptcy court. Either Holdings or any interest holder wishing to effect an interim distribution pursuant to § 5.20 must file its proposed procedure [for making such a distribution] with the Bankruptcy Court and apply to the Bankruptcy Court for authorization. R-Exh.2-653 at 21-22. The bankruptcy court must then hold a hearing on notice to the Trustee and other parties in interest. Id. The bankruptcy court is thus in a position to ensure compliance with § 1123(a)(4) in the event of any proposed distribution. 33 Further, delayed receipt of distributions to members of a class whose claims remain disputed does not, in and of itself, violate § 1123(a)(4). See Bustop Shelters of Louisville, Inc. v. Classic Homes, Inc., 914 F.2d 810, 814 n. 7 (6th Cir.1990) (the requirement of 11 U.S.C. § 1123(a)(4) that all claims or interest of the same class receive the same `treatment' does not appear to be violated by the escrowing of one class member's payments pending the outcome of disputes over the claim's validity); In re Western Asbestos Co., 313 B.R. 832, 842 (Bankr.N.D.Cal.2003) (It is not necessary to make liquidated claims wait for payment until all unliquidated claims [in that class] have been resolved.). Accordingly, because this section is procedural rather than substantive and because a delay in receipt of distributions for disputed claims does not alone constitute unequal treatment, § 5.20 does not violate § 1123(a)(4).