2010); In re Johnson, 402 B.R. 851 (Bankr.N.D.Ind.2009); In re Tegeder, 369 B.R. 477 (Bankr.D.Neb.2007); In re Roedemeier, 374 B.R. 264 (Bankr.D.Kan.2007); In re Bullard, 358 B.R. 541 (Bankr.D.Conn.2007).
To date, one district court, one bankruptcy appellate panel, and five bankruptcy courts have taken the "broad view" and ruled, although on different grounds, that Congress intended abrogation of the absolute priority rule. See In re Friedman, 466 B.R. 471 (9th Cir. BAP 2012); SPCP Group, LLC v. Biggins, 465 B.R. 316 (M.D. Fla. 2011); In re Shat, 424 B.R. 854 (Bankr. D. Nev. 2010); In re Johnson, 402 B.R. 851 (Bankr. N.D. Ind. 2009); In re Tegeder, 369 B.R. 477 (Bankr. D. Neb. 2007); In re Roedemeier, 374 B.R. 264 (Bankr. D. Kan. 2007); In re Bullard, 358 B.R. 541 (Bankr. D. Conn. 2007). Some of these "broad view" courts have ruled Congress intended abrogation on the basis of the "plain" language of § 1129(b)(2)(B)(ii).
In addressing whether the absolute priority rule applies in Chapter 11 bankruptcy cases of individual debtors after BAPCPA, the courts are sharply divided. The courts that hold that the rule does not apply based on the so-called “broad” view of property of the estate that an individual debtor may retain under a confirmed plan pursuant to 11 U.S.C. § 1129(b)(2)(B)(ii) include: In re Tegeder, 369 B.R. 477, 479–481 (Bankr.D.Neb.2007); In re Roedemeier, 374 B.R. 264, 273–276 & nn. 15–19 (Bankr.D.Kan.2007); In re Shat, 424 B.R. 854, 862–868 (Bankr.D.Nev.2010); SPCP Group, LLC v. Biggins, 465 B.R. 316, 320–324 (M.D.Fla.2011); Friedman v. P+P, LLC (In re Friedman), 466 B.R. 471 (9th Cir. BAP 2012); see also In re Johnson, 402 B.R. 851, 852–853 (Bankr.N.D.Ind.2009) (dicta that individual Chapter 11 debtor's plan need not satisfy the absolute priority rule of 11 U.S.C. § 1129(b)(2)(B)(ii)); In re Hockenberry, 457 B.R. 646, 660–661 & n.14 (Bankr.S.D.Ohio 2011) (collecting cases on issue, but not reaching the issue because case decided on other grounds). The courts that hold that the absolute priority rule still applies, adhering to the so-called “narrow” view of property of the estate that an individual debtor may retain in a Chapter 11 plan, include: In re Gbadebo, 431 B.R. 222, 227–230 (Bankr.N.D.Cal.2010); In re Mullins, 435 B.R. 352, 359–361 (Bankr.W.D.Va.2010); In re Gelin, 437 B.R. 435, 440–443 (Bankr.M.D.Fla.2010)
Three bankruptcy courts have issued decisions concluding that §§ 1129(b)(2)(B)(ii) and 1115 should be read to have eliminated the " absolute priority" rule for individual chapter 11 debtors. SeeIn re Tegeder, 369 B.R. 477 (Bankr.D.Neb.2007); In re Roedemeier, 374 B.R. 264 (Bankr.D.Kan.2007) and, most recently, In re Shat, 424 B.R. 854 (Bankr.D.Nev.2010). The first case, Tegeder, does not contain an extensive analysis of the issue.
Three bankruptcy courts have issued decisions concluding that §§ 1129(b)(2)(B)(ii) and 1115 should be read to have eliminated the "absolute priority" rule for individual chapter 11 debtors. See In re Tegeder, 369 B.R. 477 (Bankr.D.Neb. 2007); In re Roedemeier, 374 B.R. 264 (Bankr.D.Kan. 2007) and, most recently, In re Shat, 424 B.R. 854 (Bankr.D.Nev. 2010). The first case, Tegeder, does not contain an extensive analysis of the issue.
2009); In re Roedemeier, 374 B.R. 264 (Bankr.D.Kan.2007); In re Tegeder, 369 B.R. 477 (Bankr.D.Neb.2007).In re Maharaj, 681 F.3d 558 (4th Cir.2012) (affirming the bankruptcy court's decision in 449 B.R. 484 (Bankr.E.D.Va.
As part of BAPCPA, Congress amended Bankruptcy Code § 1129(b)(2)(B)(ii)—the absolute priority rule—to provide that, even if a plan does not pay unsecured creditors in full, the debtor may still "retain property included in the estate under section 1115," causing a split of authority over what Congress meant by that phrase.Compare Friedman v. P + P, LLC (In re Friedman), 466 B.R. 471, 482 - 83 (9th Cir. BAP 2012); SPCP Grp., LLC v. Biggins, 465 B.R. 316, 322-23 (M.D. Fla. 2011); In re Shat, 424 B.R. 854, 865 - 68 (Bankr. D. Nev. 2010); In re Johnson, 402 B.R. 851, 852 - 53 (Bankr. N.D. Ind. 2009); In re Roedemeier, 374 B.R. 264, 275-76 (Bankr. D. Kan. 2007); In re Tegeder, 369 B.R. 477, 479 - 80 (Bankr. D. Neb. 2007) with In re Lively, 717 F.3d 406, 409 (5th Cir. 2013); Dill Oil Co., LLC v. Stephens (In re Stephens), 704 F.3d 1279, 1286 - 87 (10th Cir. 2013); In re Maharaj, 681 F.3d 558, 568-69 (4th Cir. 2012); In re Martin, 497 B.R. 349, 357 (Bankr. M.D. Fla. 2013); In re Lee Min Ho Chen, 482 B.R. 473, 481 - 82 (Bankr. D.P.R. 2012); In re Arnold, 471 B.R. 578, 588 - 89 (Bankr. C.D. Cal. 2012); In re Lindsey, 453 B.R. 886, 903 (Bankr. E.D. Tenn. 2011); In re Kamell, 451 B.R. 505, 512 (Bankr. C.D. Cal. 2011); In re Draiman, 450 B.R. 777, 821 - 22 (Bankr. N.D. Ill. 2011); In re Walsh, 447 B.R. 45, 48 (Bankr. D. Mass. 2011); In re Karlovich, 456 B.R. 677, 680 - 81 (Bankr. S.D. Cal. 2010); In re Gelin, 437 B.R. 435, 441 (Bankr. M.D. Fla. 2010); In re Mullins, 435 B.R. 352, 360 - 61 (Bankr. W.D. Va. 2010); In re Gbadebo, 431 B.R. 222, 228-30 (Bankr. N.D. Cal. 2010). Cases adopting the "broad view" have concluded that Congress intended for § 1115 to subsume § 541: property of the estate included in the
In re Shat, 424 B.R. 854 (Bankr.D.Nev.2010); SPCP Group, LLC v. Biggins, 465 B.R. 316 (M.D.Fla.2011); In re Tegeder, 369 B.R. 477 (Bankr.D.Neb.2007). These courts hold that when § 1129(b)(2)(B)(ii) references the property "included by" § 1115, it "refer[s] to all property Section 1115 itself references."
Further, there are bankruptcy courts that endorse the broad view, e.g., In re Tegeder, 369 B.R. 477 (Bankr.D.Neb.2007) ; In re Shat, 424 B.R. 854 (Bankr.D.Nev.2010) ; In re O'Neal, 490 B.R. 837 (Bankr.W.D.Ark.2013). Indeed, one court has continued to adhere to a broad view, even in the face of the narrow view's current circuit-level predominance.
In the first of these cases, In re Tegeder, the court found the language of the statute unambiguous, holding that “[s]ince § 1115 broadly defines property of the estate to include property specified in § 541, as well as property acquired post-petition and earnings from services performed post-petition, the absolute priority rule no longer applies to individual debtors who retain property of the estate under § 1115.” In re Tegeder, 369 B.R. 477, 480 (Bankr.D.Neb.2007). In making its determination, the court acknowledged the absence of reported decisions and instead relied upon treatises and commentators, agreeing that “[t]he absolute priority requirements imposed by section 1129(b)(2)(B)(ii) were waived by permitting a debtor to retain property included in the estate under section 1115.”