Subchapter V has a number of advantages for a qualifying business seeking to reorganize. Confirmation can be achieved as a “consensual” plan under 11 U.S.C. § 1191(a) or a “cram-down” plan under 11 U.S.C. § 1191(b). Section 1191(a) has a number of advantages for a debtor, including a prompt discharge and the closing of the Chapter 11 case, whereas a confirmation under section 1191(b) provides for discharge only plan payments are completed over a three to five year period.
However, to obtain confirmation under section 1191(a), all impaired classes must affirmatively vote for the plan.
In In re Creason, case no. 22-00988-swd in the United Sates Bankruptcy Court for the Western District of Michigan, the court rejected the debtor’s attempt to have a class with a single member be deemed to have accepted the plan. No party objected, but the court determined that for consensual confirmation of a plan under Subchapter V, all impaired classes must submit a signed ballot as required by section 1129(a)(8) and Bankruptcy Rule 3018(c): “An acceptance or rejection shall be in writing, identify the plan or plans accepted or rejected, be signed by the creditor or equity security holder or an authorized agent, and conform to the appropriate Official Form.” Creason, Dkt. # 131, at 2, quoting Rule 3018(c).
The court thus did not confirm under 1191(a), but confirmed the plan under section 1191(b) as a non-consensual plan, because, among other things, section 1191(b) allows confirmation without all impaired classes having accepted the plan.
Creason provides a helpful discussion of some of the differences in obtaining confirmation under sections 1191(a) and (b).