In Chapter 9 and Title III, however, unsecured creditors will find little comfort with this rule. See, In re Corcoran Hosp. Dist., 233 B.R. 449, 457-58 (Bankr. E.D. Cal. 1999). The fair and equitable standard has been held to merely require that unsecured creditors receive all they can reasonably expect under the circumstances.

For example, because the "absolute priority rule" in section 1129(b)(2) of the Bankruptcy Code may not apply to nonprofit debtors, a health care provider organized as a nonprofit may be able to obtain confirmation of a cramdown chapter 11 plan that retains the pre-bankruptcy ownership structure without paying creditors in full. See In re Whittaker Memorial Hospital Ass’n, 149 B.R. 812 (Bankr. E.D. Va. 1993); In re Independence Village Inc., 52 B.R. 715 (Bankr. E.D. Mich. 1985); see also In re Corcoran Hosp. Dist., 233 B.R. 449, 458 (Bankr. E.D. Cal. 1999) (stating in a hospital case under chapter 9 that "[i]n a reorganization of a municipality under Chapter 9 or of a non-profit corporation under Chapter 11, the [absolute priority] requirement must be interpreted somewhat differently"). This obviously would be an important consideration in a nonprofit company’s pre-bankruptcy planning.

Id. (quoting In re Corcoran Hosp. Dist., 233 B.R. 449, 458 (Bankr. E.D. Cal. 1999) (internal quotation marks omitted)). It then elaborated that, unlike a Chapter 11 business bankruptcy, “‘[t]he primary purpose of debt restructure for a municipality is not future profit, but rather continued provision of public services.