Section 1325(a)(4) requires merely that unsecured creditors receive no less under the Chapter 13 plan than they would have in a liquidation under Chapter 7. The presence of an explicit standard in section 1325(a)(4) undercuts the idea that general "good faith" language in section 1325(a)(3) was intended to impose another, more rigorous standard governing the minimum amount payable to unsecured creditors. Second, in drafting section 1325(a)(3), Congress used language virtually identical to that found in various sections of the 1898 Bankruptcy Act. Although the case law is sparse, the few reported decisions mentioning "good faith" under prior law do so in the context of alleged debtor misconduct such as fraudulent misrepresentation, In re Norman Finance Thrift Corp., 298 F. Supp. 336 (W.D.Okl. 1969); nondisclosure of an agent's financial interest in the proceeding, American United Mutual Life Ins. Co. v. Avon Park, 311 U.S. 138, 61 S.Ct. 157, 85 L.Ed. 91 (1940); improper solicitation of creditors to obtain their consent, In re Village Men's Shops, Inc., 186 F. Supp. 125 (S.D.Ind. 1960); failure to provide adequate security and to set aside voidable transfers, In re Stanley Karman, Inc., 279 F. Supp. 828 (S.D.N.Y. 1967); or use of the bankruptcy proceeding to avoid child support payments, Gonzales Hernandez v. Borgos, 343 F.2d 802 (1st Cir. 1965). In short, "good faith" questions under pre-1978 law generally arose in cases of debtor misconduct in the implementation or approval of the plan, and did not relate to the contents of the plan.
3 (15th ed. rev. 1999).See, e.g., American United Mut. Life Ins. Co. v. City of Avon Park, 311 U.S. 138. 144-45, 61 S.Ct. 157, 85 L.Ed. 91 (1940) (when city's agent for solicitation of acceptances of its Chapter IX plan purchased claims on his own account without disclosure of this dual capacity, and then voted those claims in acceptance of plan, conduct deemed not in good faith); Gonzalez Hernandez v. Borgos, 343 F.2d 802, 805-06 (1st Cir. 1965) (Chapter XII plan not proposed in good faith if plan is vehicle to place debtor's assets beyond reach of his dependent children); Texas Hotel Sec. Corp. v. Waco Dev. Co., 87 F.2d 395, 399-400 (5th Cir. 1936), cert. denied, 300 U.S. 679, 57 S.Ct. 671, 81 L.Ed. 883 (1937) (no bad faith in voting of purchased claims in rejection of plan in order to advance business interest of claim purchaser to acquire lease rights in debtor's hotel); In re Norman Fin. Thrift Corp., 298 F. Supp. 336, 338 (W.D.Okla. 1969) (finding no evidence that acceptances of Chapter XI plan "were obtained by fraudulent or other means violative of the provisions, purpose or spirit of Chapter XI"); In re Stanley Karman, Inc., 279 F. Supp. 828 (S.D.N Y 1967) (no good faith in proposal of plan by Chapter XI debtor in possession in light of debtor's postpetition failure to take action to enhance estate such as setting aside debtor's prepetition fraudulent transfers); In re Village Men's Shops, Inc., 186 F. Supp. 125, 129 (S.D.Ind. 1960) (declining to find bad faith in conduct of parties soliciting and accepting plan and observing that "specific inquiry should be whether, under the circumstances of the case, there has been an abuse of the provision, purpose, or spirit of the chapter in the proposal and acceptance of the arrangement [under Chapter XI]," citing ΒΆ 9.20 of the 14th edition of Collier containing same language); In re Morris, 246 F. 1021 (D.Mass. 1917) (composition not proposed by debtor in good faith where va