The authority of a debtor to place substantially similar claims into separate classes in order to cram down a reorganization plan: should a bright line rule requiring all substantially similar claims to be placed into a single class be adopted?

Article Abstract:

Bankruptcy Code section 1122 does not allow corporate debtors to rig creditor approval of a reorganization plan by assigning all dissenting creditors to one class and all consenting creditors to another class if all creditors' claims are substantially similar. Though debtors in some jurisdictions have benefited from judicial uncertainty regarding 1122's reorganization approval requirements, courts must adopt a uniform rule requiring debtors to assign all substantially similar claims for repayment to one class. A uniform policy will ensure honest debt repayment plans and protect all creditors' interests.

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Clueless on classification: toward removing artificial limits on Chapter 11 claim classification

Article Abstract:

Classification of claims under section 1122 of the Bankruptcy Code should be modified to allow any classification that does not place together claims that have different priorities outside of bankruptcy. For example, secured claims could not be classified with unsecured claims. Unlike the current scheme, the motive for a proposed classification would not be considered. Claim classification allows a plan to be structured to gain confirmation by placing potential dissenters in a class in which the majority is likely to support the plan. Most cases on the issue concern single-asset debtors.

United States, Priorities of claims and liens

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Claims trafficking in Chapter 11 - has the pendulum swung too far?

Article Abstract:

The courts and legislature should provide guidelines for a market in Chapter 11 claims trading. There has been a resurgence in purchase and trading of claims as a means to control bankrupt companies, with the result that a market has developed without formal structures. The market should be more efficient and provide adequate information to concerned parties.

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