Friedman v. P+P, LLC (In Re Friedman)
466 B.R. 471
9th Cir. BAP2012Background
- Friedmans filed chapter 11 in Arizona; case centers on treatment of their prepetition property under the absolute priority rule.
- P + P, unsecured creditor, objects to second amended plan as violating absolute priority, best interests, and disclosure.
- Property at issue includes Breckenridge residence, liens by Washington Mutual and P + P, and postpetition assets via §1115.
- Prepetition corporate entities Netbeam and Peak had prior bankruptcies and related liens later assigned to P + P.
- Debtors proposed to retain ownership interests while paying unsecureds $634/month; plan modification increased unsecured payments.
- Bankruptcy court denied confirmation and converted to chapter 7; prior orders stayed on appeal; Panel reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does §1129(b)(2)(B)(ii) apply to individual chapter 11 debtors? | Friedmans/NACBA: no | Panel: yes | No absolute priority for individuals |
Key Cases Cited
- United States v. Ron Pair Enters., Inc., 489 F.2d 235 (Supreme Court (1989)) (statutory-interpretation framework; plain meaning rule)
- BFP v. Resolution Trust Corp., 511 U.S. 531 (Supreme Court (1994)) (interpretation of statutory text; coherence of scheme)
- Lamie v. U.S. Trustee, 540 U.S. 526 (Supreme Court (2004)) (textual-plain-language approach to Bankruptcy Code)