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Holding: The court held that the plan did provide equal treatment because the objecting claimant failed to show a disadvantage by litigating their claims in bankruptcy court, as opposed to another forum. The court explained that the only difference between the objecting claimants and all other claimants in their class, which were all future claimants, was that the objecting claimants filed a proof of claim. By filing a proof of claim the objecting claimants submitted to the bankruptcy court's jurisdiction. The court concluded that even if the objecting claimants could show a disadvantage in having to litigate in the bankruptcy court, they agreed to less favorable treatment by filing a proof of claim. Therefore, the plan did not violate the equal treatment requirements of 11 U.S.C. §§ 524(g), 1123(a)(4).
iii. Teta v. Chow (In re TWL Corp.), 712 F.3d 886 (5th Cir. 2013)
Issue: Whether a bankruptcy court may consider factors related to the bankruptcy case in determining a class certification motion.
Holding: The Fifth Circuit held that it is not impermissible for a bankruptcy court to consider bankruptcy factors, such as a comparison for a superiority determination between a class action and normal bankruptcy procedures, when determining class certification. A debtor in bankruptcy would expend a great amount of funds that would otherwise be available for creditors in adjudicating a class adversary proceeding that could efficiently be disposed of through the normal bankruptcy claims procedure.
iv. In re Marlow Manor Downtown, LLC, 499 B.R. 717 (Bankr. D. Ark 2013)
Issue: Creditor objected to debtor's proposed Chaper 11 plan, based on its separate classification of creditor's wholly unsecured claim on promissory note in class apart from those of other noninsider unsecured creditors.
Holding: The Bankruptcy Court, Herb Ross, J., held that Chapter 11 debtor could not separately classifiy unsecured claim where claim was very similar to a garden-variety unsecured claim, notwithstanding its easy repayment terms, and debtor failed to establish any legitimate reason for this separate classification, either on theory that easy payment terms rendered the advance supporting creditor's claim analogous to capital contribution or otherwise.
v. In re O'neal, 490 B.R. 837 (Bankr. W.D. Ark. 2013)
Issue: Whether placing the claims of a secured creditor in the same class as the subordinated claims of another secured creditor violated 11 U.S.C. § 1122(a)'s prohibition against placing claims that are not substantially similar in the same class.
©2014 William L. Norton III
