661 B.R. 186
Bankr. S.D. Florida2024Background
- M.V.J. Auto World, Inc. (“Debtor”) filed for Subchapter V Chapter 11 bankruptcy and proposed a Plan of Reorganization containing two impaired creditor classes: Ocean Bank and the U.S. Small Business Administration (SBA).
- Ocean Bank (class 2) voted to accept the plan; SBA (class 3) did not submit a vote.
- The Debtor sought consensual confirmation of the plan under 11 U.S.C. §1191(a).
- Objections were raised by the U.S. Trustee, Subchapter V Trustee, and Ocean Bank asserting that unanimous acceptance by all impaired classes is required.
- The court needed to decide whether a non-voting impaired class (SBA) can be disregarded in determining acceptance under §1191(a).
- The Plan otherwise met the requirements for non-consensual confirmation under 11 U.S.C. §1191(b).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a non-voting impaired class can be ignored for consensual plan confirmation under §1191(a) | Non-voting class should be disregarded if no ballots are cast, citing decisions from Texas courts | The Plan can't be confirmed consensually if any impaired class fails to accept, regardless of voting status | A non-voting impaired class does not count as acceptance; thus, consensual confirmation under §1191(a) is not permitted |
| Statutory interpretation of §1129(a)(8) and §1126 | Text and intent support flexibility for non-voting classes to be ignored | The statute is unambiguous that all impaired classes must affirmatively accept for consensual confirmation | Statute is clear; legislative history and policy do not override plain language |
Key Cases Cited
- Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1 (2000) (statutory interpretation begins and ends with unambiguous statutory language)
- CBS Inc. v. PrimeTime 24 Joint Venture, 245 F.3d 1217 (11th Cir. 2001) (plain meaning controls statutory interpretation)
- Harris v. Garner, 216 F.3d 970 (11th Cir. 2000) (when statutory text is unambiguous, judicial inquiry is complete)
- Bracewell v. Kelley (In re Bracewell), 454 F.3d 1234 (11th Cir. 2006) (courts should not modify unambiguous statutory text based on perceived legislative intent)
- In re Ruti-Sweetwater, Inc., 836 F.2d 1263 (10th Cir. 1988) (analysis of non-voting status under former and current bankruptcy law)