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The Sixth Circuit affirms the district court's finding that the Chapter 11 plan was proposed in bad faith. The plan proposed to pay small claims in full but over a 60-day period.
The Sixth Circuit affirms the district court's finding that
the Chapter 11 plan was proposed in bad faith. The plan proposed to
pay small claims in full but over a 60-day period. This class of
claims was technically impaired due to the delayed payment and it
voted to accept the plan. The principle secured lender appealed.
The Court finds that the plan was not proposed in good faith, as
required by 11 U.S.C. § 1129(a)(3), because it was designed to
circumvent § 1129(a)(10)'s requirement for an accepting
impaired class of claims. Opinion below.
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