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Summarizing by Shane Ramsey

Zachary, et al. v. California Bank & Trust

Ninth Circuit Court of Appeals - No. 13-16402
The absolute priority rules applies in individual Chapter 11 cases. The exception created by BAPCPA only applies to property acquired by the debtor after the commencement of the case.
Procedural context:
The bankruptcy judge sustained an unsecured creditor's objection to the Debtors' Individual Chapter 11 Plan on the grounds that the Plan violated the absolute priority rule. The bankruptcy court certified the appeal and the Ninth Circuit authorized a direct appeal of the bankruptcy court order.
The Debtors proposed a Plan that sought to cram down their unsecured creditors. California Bank & Trust ("California Bank") was separately classified and the Debtors' Plan proposed to pay California Bank $5,000 on its claim of nearly $2,000,000. The Court's opinion did not address any other challenges to the Debtors' Plan other than a violation of the absolute priority rule of 1129(b)(2)(b)(ii).
Hurwitz, Paez, Murguia

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