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It is more debatable whether a plan can deem a claim unimpaired simply by reinstating all of its legal, equitable and contractual rights post-confirmation, under § 1124(1), without full cash payment.70
The Code requires that unless each holder agrees to different treatment, the plan must provide that administrative claims71 and "gap claims" be fully paid in cash on the effective date of the plan. § 1129(a)(9)(A). Consequently a class vote cannot vary that treatment over a claimant's dissent. But specified priority wage claims,72 employee benefit claims, claims of depositors in a grain storage facility or fish produce storage or processing facility, consumer deposit claims73 and alimony, maintenance and support claims74 must be paid cash on the effective date of the plan, unless the class accepts the plan, in which case deferred cash payments can be made equal to the allowed present value of the claims. § 1129(a)(9)(B). Certain unsecured tax claims75 must be paid over a period not exceeding six years after the
868 F.2d 335 (9th Cir. 1989)(cure avoided a default rate of 9% and reinstated contract rate of 6%, even though both were clearly significantly below current market rates). Although the cure language appears only in § 1124's definition of unimpairment and in § 1123(a)(5)'s listing of permissible means of plan implementation, at least one court has held that defaults can also be cured by a § 363 sale. In re Casa Blanca Project Lenders, L.P., 196 B.R. 140 (9th Cir. BAP 1996). See also In re Phoenix Bus. Park Ltd. Ptshp., 257 B.R. 517 (Bankr. D. Az. 2001)( Debtor's Chapter plan did not have to satisfy penalty rate of 24percent or a provision relating to a nonmonetary default in order to effect a "cure" and leave oversecured mortgage creditor unimpaired).
70 Solow v. PPI Ent., Inc. (In re PPI Ent., Inc.), 324 F.3d 197, 207 (3d Cir. 2003)(landlord's claim unimpaired by full payment of the amount capped by § 502(b)(6)); In re Smith, 123 B.R. 863 (Bankr.
C.D. Cal. 1991)(claim impaired when validity not determined in bankruptcy case, even though plan restored all legal rights post-confirmation). Contra, In re River Village Associates, 181 B.R. 795 (E.D. Pa. 1995)(reinstating lease terms including right to payment of security deposit upon termination of tenancy constitutes cure, reinstatement and unimpairment).
71
An administrative claim in a prior case does not retain that status in the subsequent case. In re Larsen, 59 F.3d 783 (8th Cir. 1995); Freuhauf Corp. v. Jartran, 886 F.2d 859 (7th Cir. 1995).
72
The Bankruptcy Reform Act of 1994 increased to $4000 the amount of the employment claims entitled to priority if earned within 90 days prepetition, applicable to cases filed after October 22, 1994. Code § 507(a)(3), as amended by Reform Act § 108. That Act also amended Code § 104 to require the priority amounts to be adjusted every three years, starting April 1, 1998, to reflect the change in the consumer price index. The wage priority amount is currently $4,650.
73
The Bankruptcy Reform Act of 1994 increased to $1800 the amount of a consumer deposit entitled to priority, applicable to cases filed after October 22, 1994. Code § 507(a)(6), as amended by Reform Act § 108. With the CPI adjustments made since, the amount is currently $2,100.
74
The Bankruptcy Reform Act of 1994 added a new seventh priority in § 507(a)(7) for alimony, maintenance or support payable to a debtor's spouse, former spouse or child.
75
Contrary to the holdings with respect to administrative claims, one court has held that tax claims
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