Absolute Priority

Question 1

What are the 3 options for getting around 1129(a)8

Answer 1

Non-impairment; approval; cramdown under b1

Question 2

What is a remedy against reinstatement?

Answer 2

ex-post: convert to ch7; get a 363 sale
ex-ante: negotiate some condition that requires the debtor to do something unbearably burdensome in the event of default. Since the debtor has to cure the default under 1124 (minus acceleration) the debtor will choose not to reinstate

Question 3

What does a debtor have to do to reinstate?

Answer 3

Cure, compensate for damages caused by default, reinstate original maturity (disregard ipso facto clauses and acceleration)

Question 4

What is required to accept a claim under 1126

Answer 4

2/3 is principal and 1/2 in number. Ignoring votes not made in good faith

Question 5

Sometimes tweaking the value of the company can solve an unfair discrimination issue

Answer 5

this was done in the legislative history examples

Question 6

What is “Fair discrimination”?

Answer 6

favoritism showed towards certain creditors because their satisfaction is essential to the future of the company (employees, suppliers, other favorites). The distance from the plan to the pro-rata distribution and the closeness of a vote might also factor in

Question 7

Can bankruptcy plans conflict with state law?

Answer 7

Only if the law is related to the debtor’s financial condition