Ice House America, LLC v. Charles Cardin

Citation:
2014 U.S. App. LEXIS 8882, 2014 FED App. 0099P (6th Cir.), 6th Circuit Appellate Case No. 13-5764, on appeal from the United States District Court for the Eastern District of Tennessee at Case No. 2:12-cv-00463
Tag(s):
Ruling:
The United States Court of Appeals for the Sixth Circuit held that the “absolute-priority rule” applies to individual Chapter 11 debtors; therefore, objecting impaired unsecured creditors must be paid in full before an individual debtor can retain any pre-petition property under a Chapter 11 plan.
Procedural context:
Appeal to the United States Court of Appeals for the Sixth Circuit on certification by the district court as to the bankruptcy court's decision.
Facts:
The individual debtor, Cardin, filed a Chapter 11 reorganization. His proposed plan allowed him to retain equity in pre-petition assets while paying an objecting impaired unsecured creditor, Ice House, less than full. The bankruptcy court confirmed the debtor’s proposed plan over the objection of the unsecured creditor and the United States Trustee. The unsecured creditor appealed to the district court, which certified the issue for direct appeal to the Sixth Circuit, which granted the appeal. The Sixth Circuit reviewed the bankruptcy court's decision on a de novo basis, and reversed and remanded the case for further proceedings consistent with the opinion that the absolute priority rules applies in individual Chapter 11 proceedings.
Judge(s):
Richard Fred Suhrheinrich Eugene Edward Siler, Jr. Raymond Kethledge

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