Hot'z Power Wash, Inc., 655 B.R. 107

Hot'z Power Wash, Inc. (Debtor) filed a Subchapter V Chapter 11 petition and proposed a Fifth Amended Plan containing three impaired classes: Class 1 (secured SOS Capital) and Class 3 (unsecured creditors) voted to accept; Class 2 (IRS secured claim) did not vote.
The Fifth Amended Plan included bolded language on its face stating that non-voting creditors would be deemed to have accepted the plan.
The United States Trustee (UST) objected on two grounds: (1) the deeming language violated Fed. R. Bankr. P. 3018(c); and (2) the Debtor’s alternative theory that a non-voting impaired class implicitly accepted the plan contravened 11 U.S.C. § 1129(a)(8).
The IRS withdrew its objection; the UST’s alternative § 1191(b) fairness objection was withdrawn at hearing.
The court struck the deeming language as violative of Rule 3018(c), ruled that non-votes cannot be treated as acceptances or rejections, held that non-voting impaired classes are not counted for § 1129(a)(8), and confirmed the plan under 11 U.S.C. § 1191(a).

Issue	Plaintiff's Argument (UST)	Defendant's Argument (Debtor)	Held
Whether a bolded notice on the plan that deems non-voting creditors to have accepted the plan is permissible	Such deeming circumvents Fed. R. Bankr. P. 3018(c) which requires written, signed ballots	Rule 3018(c) is inapplicable in Subchapter V or Debtor may treat silence as acceptance	Sustained: Court struck the deeming language; Rule 3018(c) prohibits deeming non-votes as acceptances
Whether a non-voting impaired class can be treated as implicitly accepting (or must be counted as rejecting) for purposes of § 1129(a)(8)	§ 1129(a)(8) requires each impaired class affirmatively accept; a non-vote prevents consensual confirmation	Silence should be deemed implicit acceptance; otherwise consensual confirmation under § 1191(a) could be impossible	Partial sustain/overrule: Court held non-votes cannot be treated as acceptance or rejection; a class that casts no votes is not counted for § 1129(a)(8); plan may be confirmed because remaining impaired classes accepted

Heins v. Ruti‑Sweetwater (In re Ruti‑Sweetwater, Inc.), 836 F.2d 1263 (10th Cir. 1988) (held non-voting creditors can be deemed to have implicitly accepted a plan)
Cypresswood Land Partners I, 409 B.R. 396 (Bankr. S.D. Tex. 2009) (adopted Ruti‑Sweetwater reasoning regarding non‑voters)
M. Long Arabians, 103 B.R. 211 (B.A.P. 9th Cir. 1989) (nonvotes cannot be counted as acceptances under § 1126)
Adelphia Communications Corp., 368 B.R. 140 (Bankr. S.D.N.Y. 2007) (criticizing treating non‑voters as rejecters and discussing counting only those who vote)
Demarest v. Manspeaker, 498 U.S. 184 (1991) (statutory literalism may be avoided where literal application produces absurd results)