Unfair discrimination in Chapter 11: A comprehensive compilation of current case law

American Bankruptcy Law Journal

Volumn 72, Issue 2, 1998, Pages 191-224

  Polivy, Denise R ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0347135222     PISSN: 00279048     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (294)

1. In re Creekside Landing, Ltd., 140 B.R. 713 (Bankr. M.D. Tenn. 1992).
2. Creekstone Apartments Assocs., L.P. v. Resolution Trust Corp. (In re Creekstone Apartments Assocs., L.P.), 168 B.R. 639 (Bankr. M.D. Tenn. 1994).
3. Creekside, 140 B.R. at 716. See infra text accompanying notes 117-122.
4. Creekstone, 168 B.R. at 645. See infra text accompanying notes 123-126.
5. 11 U.S.C. § 1129(b)(1) (1994).
6. Although the word "discrimination" has negative connotations in some contexts, the Code prohibits only unfair discrimination, not all discrimination. Generally, the courts echo the Code and use the term "discrimination" to refer to disparate treatment of different creditor classes. This Article uses the terms "discrimination" and "disparate treatment" interchangeably.
7. See Bruce A. Markell, A New Perspective on Unfair Discrimination in Chapter 11, 72 AM. BANKR. L.J. 227 (1998).
8. See Kenneth N. Klee, All You Ever Wanted to Know About Cram Down Under the New Bankruptcy Code, 53 AM. BANKR. L.J. 133, (1979). See also 11 U.S.C. §§ 1121-1123.
9. See Klee, supra note 8, at 136.
10. See id. at 134.
11. Consensual plan confirmation requirements are specified in 11 U.S.C. § 1129(a)(2)-(13).
12. See 11 U.S.C. § 1129(a)(8).
13. See id. § 1129(a)(10).
14. See id.
15. A "claim" is a "right to payment" or a "right to an equitable remedy for breach of performance if such breach gives rise to a right to payment." Id. § 101(5)(A) and (B).
16. See id. § 1126(c).
17. See Kenneth N. Klee, The Concept of "Impairment" in Business Reorganizations, C946 ALI-ABA 499, 527-28 (1994).
18. See, e.g., L & J Anaheim Assocs. v. Kawasaki Leasing Int'l, Inc. (In re L & J Anaheim Assocs.), 995 F.2d 940, 942 (9th Cir. 1993).
19. See Richard F. Casher & Ronald J. Silverman, In re Dunes Hotel Associates: A Natural Response to Artificial Impairment, 28 Bankr. Ct. Dec. (LRP) No. 10, at A5 (Feb. 13, 1996).
20. See id.
21. See Klee, supra note 17, at 527-28.
22. See In re Dunes Hotel Assocs., 188 B.R. 174, 186 (Bankr. D.S.C. 1995) ("The prohibition of artificial impairment of a class of claims in order to obtain technical compliance with § 1129(a)(10) has been overwhelmingly endorsed by the case law."); Casher & Silverman, supra note 19, at A5.
23. See Casher & Silverman, supra note 19, at A10.
24. See id. See, e.g., In re One Times Square Assocs. Ltd. Partnership, 159 B.R. 695, 705 (Bankr. S.D.N.Y. 1994).
25. See 11 U.S.C. § 1123(a)(1) (1994).
26. Id. § 1122(a).
27. See In re City of Colorado Springs Spring Creek Gen. Improvement Dist., 187 B.R. 683, 687 & n.3 (Bankr. D. Colo. 1995); J. Ronald Trost et al., Survey of the New Value Exception to the Absolute Priority Rule and the Preliminary Problem of Classification, SB37 ALI-ABA 595, 606 (1997).
28. See Colorado Springs, 187 B.R. at 687-88.
29. See id. at 688; In re Barney and Carey Co., 170 B.R. 17, 24 (Bankr. D. Mass. 1994).
30. See Colorado Springs, 187 B.R. at 688 & n.4.
31. See 11 U.S.C. § 1111(b)(1).
32. See, e.g., In re Grandfather Mountain Ltd. Partnership, 207 B.R. 475, 483 (Bankr. M.D.N.C. 1996); LW-SP2, L.P. v. Krisch Realty Assocs., L.P. (In re Krisch Realty Assocs., L.P.), 174 B.R. 914, 918 (Bankr. W.D. Va. 1994).
33. See, e.g., Travelers Ins. Co. v. Bryson Properties, XVIII (In re Bryson Properties, XVIII), 961 F.2d 496 (4th Cir. 1992); Phoenix Mut. Life Ins. Co. v. Greystone III Joint Venture (In re Greystone III Joint Venture), 995 F.2d 1274 (5th Cir. 1992). See generally 7 LAWRENCE P. KING ET AL., COLLIER ON BANKRUPTCY ¶ 1122.03[6] [a], at 1122-22 to 1122-25 (15th ed. rev. 1998).
34. See, e.g., In re Woodbrook Assocs., 19 F.3d 312, 318-19 (7th Cir. 1994); In re SM 104 Ltd., 160 B.R. 202, 218-20 (Bankr. S.D. Fla. 1993); In re Aztec Co., 107 B.R. 585, 587 (Bankr. M.D. Tenn. 1989).
35. In re Pine Gate Assocs., Ltd., 10 C.B.C. 581, 591 n. 16 (N.D. Ga. 1976).
36. See Charles D. Booth, The Cramdown on Secured Creditors: An Impetus Toward Settlement, 60 AM. BANKR. L.J. 69, 104-05 (1985);
37. Richard F. Broude, Cramdown and Chapter 11 of the Bankruptcy Code: The Settlement Imperative, 39 BUS. LAW. 441, 454 (1984);
38. Jack Friedman, What Courts Do to Secured Creditors in Chapter 11 Cram Down, 14 CARDOZO L. REV. 1495, 1496, 1497 (1993); Klee, supra note 8, at 134.
39. But see Lynn M. LoPucki & William C. Whitford, Bargaining Over Equity's Share in the Bankruptcy Reorganization of Large. Publicly Held Companies, 139 U. PA. L. REV. 125, 190 (1990) (observing that the preference for a consensual plan rather than an adjudication was in large part a matter of legal culture, in that most lawyers who played key roles in reorganizing large public companies belonged to the same legal community, depended on their current adversaries for professional respect and advancement, and were not entirely free to ignore "the conventional wisdom that consensual plans were the responsible, appropriate means for accomplishing reorganization").
40. Section 1129(a)(8) of the Bankruptcy Code requires that each impaired class must have accepted the plan. 11 U.S.C. § 1129(a)(8) (1994).
41. Id. § 1129(b)(1).
42. See Klee, supra note 8, at 141.
43. With respect to a class of secured claims, a plan must provide either for a secured creditor to receive adequate deferred payments; for the collateral to be sold with the creditor's lien attaching to the proceeds; or for the creditor to receive the "indubitable equivalent" of its claim. 11 U.S.C. § 1129(b)(2)(A)(i), (ii), (iii). To be fair and equitable with respect to a class of unsecured claims or of interests, a plan must comply with the "absolute priority rule," which requires that each claimholder within a senior class must receive or retain property with a present value, as of the plan's effective date, equal to the allowed amount of the claim, or that members of a junior class must receive or retain nothing. Id. § 1129(b)(2)(B), (C). Thus unsecured creditors must be fully paid before the debtor's owners receive anything. See Principal Mut. Life Ins. Co. v. Baldwin Park Towne Ctr., Ltd. (In re Baldwin Park Towne Ctr., Ltd.), 171 B.R. 374, 378 (Bankr. C.D. Cal. 1994). However, the "new value exception" to the absolute priority rule allows a debtor's owners to retain their interest to the extent that they contribute new value to the debtor. See Nicholas L. Georgakopoulos, New Value, Fresh Start, 3 STAN. J. L. BUS. & FIN. 125 (1997).
44. As a matter of statutory construction, the word "includes" is not limiting but is open-ended. See 11 U.S.C. § 102(3).
45. See Kenneth N. Klee, Cram Down II, 64 AM. BANKR. L.J. 229, 231 (1990) (citing 124 CONG. REC. 32407 (Sept. 28, 1978) (statement of Rep. Edwards); 124 CONG. REC. 34006 (Oct. 5, 1978) (statement of Sen. DeConcini)).
46. See Aetna Realty Investors, Inc. v. Monarch Beach Venture, Ltd. (In re Monarch Beach Venture, Ltd.), 166 B.R. 428, 436 (C.D. Cal. 1993); Friedman, supra note 36, at 1504-08.
47. This discussion is based on 375 published decisions retrieved from WESTLAW that addressed unfair discrimination in Chapter 11, or, in two cases, Chapter 9. Decisions that only conclusorily held that a plan did not discriminate unfairly were discarded, and some cases not retrieved by the initial search but cited in retrieved cases were examined. The resulting data set contained thirty-seven opinions in which the court held that a plan discriminated unfairly and forty-four opinions in which the court held that a plan did not. An additional sixteen opinions contained extensive discussions of unfair discrimination but did not include holdings on unfair discrimination. Thirty-three additional cases containing some useful language on unfair discrimination were also reviewed closely, for a total of 130 cases reviewed in detail.
48. In re 203 N. LaSalle St. Ltd. Partnership, 190 B.R. 567, 585 (Bankr. N.D. Ill. 1995), aff'd, 195 B.R. 692 (N.D. Ill. 1996), aff'd, 126 F.3d 955 (7th Cir. 1997), cert. granted, 118 S. Ct. 1674 (May 4, 1998).
49. For example, the debtor in In re McCarty, 69 B.R. 377 (Bankr. M.D. Fla. 1987), intended to fund his reorganization plan by excavating and selling the soil removed from property subject to First Union Bank's lien. See id. at 378. The court ruled that the plan discriminated unfairly because it gave the bank neither a lien on the proceeds from the sale of the soil nor the indubitable equivalent of its claim. See id. In fact, the plan was not unfairly discriminatory; rather, it was not fair and equitable, violating the express requirements of § 1129(b)(2)(A)(i) and (iii). See also In re Guilford Telecasters, Inc., 128 B.R. 622 (Bankr. M.D.N.C. 1991); In re Mandalay Shores Coop. Hous. Ass'n, Inc., 53 B.R. 609 (Bankr. M.D. Fla. 1985).
50. See In re Freymiller Trucking, Inc., 190 B.R. 913, 916-17 (Bankr. W.D. Okla. 1996); In re Dilts, 126 B.R. 470, 472-73 (Bankr. W.D. Pa. 1991); In re Stoffel, 41 B.R. 390, 392 (Bankr. D. Minn. 1984).
51. See In re Medical Equities, Inc., 39 B.R. 795 (Bankr. S.D. Ohio 1984) (holding that overcompensation of junior debt unfairly discriminated against senior debt).
52. 19 B.R. 819 (Bankr. S.D.N.Y. 1982).
53. See id. at 831.
54. H. See also In re D & W Realty Corp., 165 B.R. 127 (S.D.N.Y. 1994) (holding that separate classification of unsecured deficiency claim was unfairly discriminatory); In re Kliegl Bros. Universal Elec. Stage Lighting Co., Inc., 149 B.R. 306 (Bankr. E.D.N.Y. 1992) (applying unfair discrimination analysis to plan's separate classification of union's unsecured claim and other unsecured claims); In re 11, 111, Inc., 117 B.R. 471 (Bankr. D. Minn. 1990) (holding that separate classification of equity interests and general unsecured claims was not unfair discrimination).
55. See In re Jersey City Med. Ctr., 817 F.2d 1055 (3rd Cir. 1987); In re Club Assocs., 107 B.R. 385 (Bankr. N.D. Ga. 1989).
56. 141 B.R. 275 (Bankr. E.D.N.Y. 1992), aff'd, 147 B.R. 827 (1992).
57. Id. at 286. See also In re Rivers End Apartments, Ltd., 167 B.R. 470, 478 (Bankr. S.D. Ohio 1994) ("The categorization of arguments about classification, artificial impairment and unfair discrimination is a difficult and somewhat circular process."); John Hancock Mut. Life Ins. Co. v. Roswell-Hannover Joint Venture (In re Roswell-Hannover Joint Venture), 149 B.R. 1014 (Bankr. N.D. Ga. 1992) (stressing the distinction between classification and discrimination and finding that the court need not decide whether the plan unfairly discriminated in order to reject separate classification of a deficiency claim).
58. For example, in In re Stratford Associates Limited Partnership, 145 B.R. 689 (Bankr. D. Kan. 1992), because the debtor offered no reasonable basis for classifying a deficiency claim separately from other unsecured claims and treating the deficiency claim more favorably, the court ruled that the plan unfairly discriminated on its face. Id. at 701. "While separate classification might be justified on legal or factual grounds, in the absence of grounds, separate classification and better treatment is improper discrimination." Id.
59. See supra text accompanying notes 31-34.
60. See, e.g., In re 222 Liberty Assocs., 108 B.R. 971 (Bankr. E.D. Pa. 1990) (holding that the debtor could separately classify the deficiency and general unsecured claims because the claims differed in nature, in that the deficiency claim was a recourse claim created by operation of § 1111(b), but that the plan discriminated unfairly against the deficiency claim because there was no reasonable justification for different treatment); In re Aztec Co., 107 B.R. 585 (Bankr. M.D. Tenn. 1989) (permitting separate classification and stating that the existence of natural and unnatural recourse claimants is one factor to be considered in the unfair discrimination calculus, but is not outcome determinative). See also Principal Mut. Life Ins. Co. v. Baldwin Park Towne Ctr., Ltd. (In re Baldwin Park Towne Ctr., Ltd.), 171 B.R. 374 (Bankr. C.D. Cal. 1994) (finding deficiency claim to be substantially different from trade claims so that separate classification was warranted, but stating in dicta that the plan's proposal to pay four percent on the deficiency claim while paying the trade creditors in full seemed unfair); In re Creekside Landing, Ltd., 140 B.R. 713 (Bankr. M.D. Tenn. 1992) (permitting separate classification of the Resolution Trust Corporation's (RTC's) deficiency claim but concluding that discrimination against the RTC's claim was not automatically fair simply because its claim existed only by operation of § 1111(b)); In re Mortgage Inv. Co., 111 B.R. 604 (Bankr. W.D. Tex. 1990) (permitting flexible classification without expressly finding the deficiency claim to be different from other unsecured claims and finding unfair discrimination in the plan's proposal of full and immediate payment of trade claims and partial payment over an extended period of the deficiency claim).
61. See Steelcase Inc. v. Johnston (In re Johnston), 21 F.3d 323 (9th Cir. 1994) (finding the reasonable, nondiscriminatory reasons that justified separate classification also to justify discriminatory treatment); In re 203 N. LaSalle St. Ltd. Partnership, 190 B.R. 567 (Bankr. N.D. Ill. 1995), aff'd, 195 B.R. 692 (N.D. Ill. 1996), aff'd, 126 F.3d 955 (7th Cir. 1997), cert. granted, 118 S. Ct. 1674 (May 4, 1998) (separately classifying the deficiency claim from other unsecured claims as required by the Seventh Circuit's decision in Woodbrook, but finding the plan's disparate treatment of the classes not unfairly discriminatory because the deficiency claim would be paid nothing in a Chapter 7 liquidation); In re HRC Joint Venture, 187 B.R. 202 (Bankr. S.D. Ohio 1995) (concluding that the plan's unequal treatment of claims was justified by the same considerations that led the court to permit separate classification); In re Rivers End Apartments, Ltd., 167 B.R. 470, 487 (Bankr. S.D. Ohio 1994) ("The reasons offered by the courts and commentaries for . . . separate classification [of a nonrecourse deficiency claim and other unsecured claims] more appropriately support differing treatment for such claims without discriminating unfairly against the nonrecourse deficiency claim.").
62. See In re Barney and Carey Co., 170 B.R. 17 (Bankr. D. Mass. 1994); In re Cranberry Hill Assocs. Ltd. Partnership, 150 B.R. 289 (Bankr. D. Mass. 1993).
63. See In re Drexel Burnham Lambert Group, Inc., 138 B.R. 714 (Bankr. S.D.N.Y. 1992), aff'd, 140 B.R. 347 (S.D.N.Y. 1992) (describing a split between courts that view § 1129(b)(1) as narrowly applicable to dissenting classes whose legal rights are intertwined with others or broadly applicable to separate classes with "similar" claims that are treated differently); In re Future Energy Corp., 83 B.R. 470 (Bankr. S.D. Ohio 1988) (stating that the courts have developed two approaches to unfair discrimination: restrictive application of the unfair discrimination requirement to cases in which claims and interests have been subordinated and a broader construction finding unfair discrimination where a plan appeared to single out a particular class for disparate treatment).
64. See Gerald F. Munitz, The Chapter 11 Plan, Confirmation, and Cram Down, in BASICS OF BANKRUPTCY AND REORGANIZATION, at 885
65. (PLI Comm. L. and Practice Course Handbook Series No. 729, 1995).
66. Professor Markell has comprehensively discussed the legislative history of cramdown. Rather than duplicate the discussion, this Article refers to his article throughout. See Markell, supra note 7, at 236-39.
67. 787 F.2d 1352 (9th Cir. 1986).
68. See id. at 1364.
69. See id. at 1365.
70. See id. at 1364.
71. Id.
72. See Markell, supra note 7, at 236-39.
73. 787 F.2d at 1364 n.18.
74. 66 B.R. 921 (Bankr. D. Mont. 1986).
75. Id. at 925.
76. See id. at 929.
77. Id. (quoting Klee, supra note 8, at 141-42).
78. See Corestates Bank, N.A. v. United Chemical Techs., Inc., 202 B.R. 33 (E.D. Pa. 1996) (citing Martin); In re Baugh, 73 B.R. 414 (Bankr E.D. Ark. 1987) (citing Acequia).
79. See In re Aztec Co., 107 B.R. 585, 588 (Bankr. M.D. Tenn. 1989) (describing, but not endorsing, the mechanical approach).
80. See id. at 588-89.
81. 102 B.R. 560 (Bankr. W.D. Tex. 1989), aff'd, 127 B.R. 138 (W.D. Tex. 1990), rev'd on other grounds, 995 F.2d 1274 (5th Cir. 1992).
82. See id. at 571.
83. Id.
84. H. at 571 n.16 (citing H.R. REP. NO. 95-595, at 416 (1977), reprinted in 1978 U.S.C.C.A.N. 5963, 6372).
85. 68 B.R. 618 (Bankr. S.D.N.Y. 1986), aff'd in part, rev'd in part, 78 B.R. 407 (S.D.N.Y. 1987), aff'd, 843 F.2d 636 (2d Cir. 1988).
86. See id. at 636. See also In re Meadow Glen, Ltd., 87 B.R. 421 (Bankr. W.D. Tex. 1988); In re Pine Lake Village Apartment Co., 19 B.R. 819 (Bankr. S.D.N.Y. 1982).
87. See In re Mortgage Inv. Co, 111 B.R. 604, 615 (Bankr. W.D. Tex. 1990); In re 222 Liberty Assocs., 108 B.R. 971, 990 (Bankr. E.D. Pa. 1990).
88. *36 (Bankr. N.D. Ill. Dec. 20, 1993).
89. See In re Freymiller Trucking, Inc., 190 B.R. 913, 916 (Bankr. W.D. Okla. 1996) (stating that determination of unfair discrimination requires "consider[ing] all aspects of the case and the totality of all the circumstances"); In re Aztec Co., 107 B.R. 585, 590 (Bankr. M.D. Tenn. 1989).
90. See Aztec, 107 B.R. at 590. Professor Markell explains why Chapter 13 case law on unfair discrimination is inapposite in Chapter 11. See Markell, supra note 7, at 244-46.
91. 107 B.R. 585 (Bankr. M.D. Tenn. 1989).
92. See id. at 588.
93. Id. at 588-89.
94. Id. at 589.
95. Id.
96. Id.
97. See id. at 590.
98. See id.
99. See id. at 591.
100. See id.
101. Id.
102. See id. at 592.
103. See, e.g., In re Freymiller Trucking, Inc., 190 B.R. 913 (Bankr. W.D. Okla. 1996); In re Mortgage Inv. Co., 111 B.R. 604 (Bankr. W.D. Tex. 1990); Aztec, 107 B.R. at 588-89.
104. For cases subscribing to the broad view, see supra cases cited in notes 83-86 and infra cases cited in note 102.
105. Professor Markell refers to the test as the "Ambanc/Aztec" test. See Markell, supra note 7, at 244.
106. For decisions applying the test and finding unfair discrimination, see, for example, In re Graphic Communications, Inc., 200 B.R. 143 (Bankr. E.D. Mich. 1996); In re Saleha, 1995 WL 128495 (Bankr. D. Idaho Mar. 10, 1995); In re Stratford Associates Limited Partnership, 145 B.R. 689 (Bankr. D. Kan. 1992); In re Creekside Landing, Ltd., 140 B.R. 713 (Bankr. M.D. Tenn. 1992); In re ARN LTD. Limited Partnership, 140 B.R. 5 (Bankr. D.D.C. 1992); In re Kemp, 134 B.R. 413 (Bankr. E.D. Cal. 1991); In re Mortgage Investment Co., 111 B.R. 604 (Bankr. W.D. Tex. 1990). For decisions applying the four-part test and finding that the challenged plans do not discriminate unfairly, see, for example, Creekstone Apartments Associates, L.P. v. Resolution Trust Corp. (In re Creekstone Apartments Associates, L.P.), 168 B.R. 639 (Bankr. M.D. Tenn. 1994); In re Apex Oil Co., 118 B.R. 683 (Bankr. E. D. Mo. 1990); In re Buttonwood Partners, Ltd., 111 B.R. 57 (Bankr. S.D.N.Y. 1990); In re Rochem, Ltd., 58 B.R. 641 (Bankr. D.N.J. 1985).
107. In re Kovich, 4 B.R. 403 (Bankr. D. Mich. 1980). After the Eighth Circuit adopted the test for Chapter 13 cases in Mickelson v. Leser (In re Leser), 939 F.2d 669, 672 (8th Cir. 1991), some courts referred to it as the "Leser test."
108. See Liberty Nat'l Enters, v. Ambanc La Mesa Ltd. Partnership (In re Ambanc La Mesa Ltd. Partnership), 115 F.3d 650, 656 (9th Cir. 1997), cert. denied, 118 S. Ct. 1039 (1998).
109. 200 B.R. 143 (Bankr. E.D. Mich. 1996).
110. See id. at 147.
111. See id.
112. See id.
113. See id. at 148-49.
114. See id. at 148.
115. See id.
116. See id. at 148-49.
117. See id. at 149.
118. See id.
119. See id.
120. See id.
121. 140 B.R. 713 (Bankr. M.D. Tenn. 1992).
122. See id. at 714.
123. See id. at 716.
124. See id.
125. Id.
126. See id.
127. 168 B.R. 639 (Bankr. M.D. Tenn. 1994).
128. See id. at 645.
129. See id. at 644.
130. See id. at 645.
131. See Markell, supra note 7, at 242-46.
132. See, e.g., In re Husted, 142 B.R. 72, 74 (Bankr. W.D.N.Y. 1992) (Chapter 13); In re Lawson, 93 B.R. 979, 982 (Bankr. N.D. Ill. 1988) (Chapter 13); In re Furlow, 70 B.R. 973, 977-78 (Bankr. E.D. Pa. 1987) (Chapter 13); In re Green, 70 B.R. 164, 166 (Bankr. W.D. Ark. 1986) (Chapter 13). The court in In re Brown, 152 B.R. 232, 237 (Bankr. N.D. Ill. 1993), rev'd sub nom., McCullough v. Brown, 162 B.R. 506 (N.D. Ill. 1993) (Chapter 13), suggests that the cases applying the four-part test are misusing In re Kovich. The Kovich court considered whether the debtor's proposed Chapter 13 plan should fail because it separately classified and fully paid obligations owed to a codebtor and a landlord, while treating other creditors less favorably. See In re Kovich, 4 B.R. 403, 405 (Bankr. W.D. Mich. 1980). After reviewing the few cases then available regarding classification and unfair discrimination in Chapter 13 of the recently-passed Bankruptcy Code, the Kovich court concluded that the fact that some creditors receive more than others does not necessarily mean that the discrimination is unfair. Id. at 407. Rather, the court concluded that each case must be decided on its own merits. Id. The court then posed four questions as typical of the questions which should be raised concerning fairness, but did not introduce them as four prongs of a test. Id. See also In re Golfer, 159 B.R. 602, 608 n.18 (Bankr. D. Me. 1993) (Chapter 13) ("The many courts that follow Kovich apply Judge Howard's four rules in quite different settings and in thoroughly unpredictable ways. It is clear that many judges use these tests simply to indulge their own views about what is fair and what is not. It is also clear that the language does not mean the same thing to any two judges and that cases often stray far from the ideas Judge Howard appeared to have in the Kovich case.").
133. See Brown, 152 B.R. at 235.
134. See id. See also Colfer, 159 B.R. at 608 n.18.
135. Furlow, 70 B.R. at 977. See, e.g., In re Buttonwood Partners, Ltd., 111 B.R. 57, 62 (Bankr. S.D.N.Y. 1990) (applying the second prong of the test, while stating that it was not required); In re Ratledge, 31 B.R. 897, 899 (Bankr. E.D. Tenn. 1983) (Chapter 13) (viewing the factors as guides to discretion); In re Harris, 62 B.R. 391, 394 (Bankr. E.D. Mich. 1986) (Chapter 13) (concluding that it was not fatal to the debtors' proposed plan that they might be able to consummate a nondiscriminatory plan).
136. See Brown, 152 B.R. at 236 (citing In re Moore, 31 B.R. 12, 17 (Bankr. D.S.C. 1983) (Chapter 13); In re Keel, 143 B.R. 915, 916-17 (Bankr. D. Neb. 1992) (Chapter 13)).
137. Furlow, 70 B.R. at 166.
138. See In re Blackwell, 5 B.R. 748, 751 (Bankr. W.D. Mich. 1980) (Chapter 13); In re Dziedzic, 9 B.R. 424, 427 (Bankr. S.D. Tex. 1981) (Chapter 13).
139. See In re Husted, 142 B.R. 72, 74 (Bankr. W.D.N.Y. 1992); Moore, 31 B.R. at 17 (Chapter 13).
140. See Husted, 142 B.R. at 74.
141. See id. at 75.
142. See In re Brown, 152 B.R. 232, 238 (Bankr. N.D. Ill.), rev'd sub nom., McCullough v. Brown, 162 B.R. 506 (N.D. Ill. 1993) (Chapter 13).
143. See id.
144. See id.
145. See id. at 239.
146. See id.
147. See In re 203 N. LaSalle St. Ltd. Partnership, 190 B.R. 567, 585 (Bankr. N.D. Ill. 1995), aff'd, 195 B.R. 692 (N.D. Ill. 1996), aff'd, 126 F.3d 955 (7th Cir. 1997), cert. granted, 118 S. Ct. 1674 (May 4, 1998).
148. See id. at 585-86. See also In re 222 Liberty Assocs., 108 B.R. 971 (Bankr. E.D. Pa. 1990) (stating that discrimination is permissible if and only if the debtor can prove a reasonable basis for the degree of discrimination contemplated by the plan).
149. See In re Jim Beck, Inc., 207 B.R. 1010 (Bankr. W.D. Va.), aff'd, 214 B.R. 305 (W.D. Va. 1997); In re Salem Suede, Inc., 219 B.R. 922, 934 (Bankr. D. Mass. 1998).
150. For cases in which plans were held not to discriminate unfairly because the claims receiving disparate treatment were sufficiently different in nature, see In re HRC Joint Venture, 187 B.R. 202 (Bankr. S.D. Ohio 1995) (determining that the difference in legal nature between a deficiency claim and the City of Cleveland's claim as landlord and governing body justified disparate treatment); In re Rivers End Apartments, Ltd., 167 B.R. 470 (Bankr. S.D. Ohio 1994) (stating that claims held by security deposit holders differ sufficiently from other unsecured claims to justify discrimination); In re The Mason & Dixon Lines Inc., 63 B.R. 176 (Bankr. M.D.N.C. 1986) (rejecting Granada Wines and holding that MPPAA withdrawal liability claims may be treated differently than other unsecured claims). For cases in which the court found unfair discrimination because the legal natures of the claims in the disparately treated classes were similar, see Granada Wines, Inc. v. New England Teamsters and Trucking Industry Pension Fund, 748 F.2d 42 (1st Cir. 1984) (holding that Multiemployer Pension Plan Amendments Act (MPPAA) withdrawal liability claims were not sufficiently different from other unsecured claims to justify different treatment); In re Oaks Partners, Ltd., 141 B.R. 453 (Bankr. N.D. Ga. 1992) (finding that unsecured claims held by the debtor's general partners were not sufficiently different from those held by general unsecured creditors). See also In re ARN LTD. Ltd. Partnership, 140 B.R. 5 (Bankr. D.D.C. 1992).
151. In re AOV Indus., Inc., 792 F.2d 1140, 1150 (D.C. Cir. 1986).
152. See In re Barney and Carey Co., 170 B.R. 17, 24 (Bankr. D. Mass. 1994); ARN, 140 B.R. at 12.
153. See Markell, supra note 7, at 257-58 (suggesting that it may be permissible to provide different recoveries to similarly situated classes where one class holds nonrecourse debt).
154. See Travelers Ins. Co. v. Bryson Properties, XVIII (In re Bryson Properties, XVIII), 961 F.2d 496 (4th Cir. 1992); Oxford Life Ins. Co. v. Tucson Self-Storage, Inc. (In re Tucson Self-Storage, Inc.), 166 B.R. 892 (B.A.P. 9th Cir. 1994); In re North Washington Ctr. Ltd. Partnership, 165 B.R. 805 (Bankr. D. Md. 1994); In re Cranberry Hill Assocs. Ltd. Partnership, 150 B.R. 289 (Bankr. D. Mass. 1993); In re Creekside Landing, Ltd., 140 B.R. 713 (Bankr. M.D. Tenn. 1992); In re Aztec Co., 107 B.R. 585 (Bankr. M.D. Tenn. 1989); In re Meadow Glen, Ltd., 87 B.R. 421 (Bankr. W.D. Tex. 1988); In re Pine Lake Village Apartment Co., 19 B.R. 819 (Bankr. S.D.N.Y. 1982).
155. See Aztec, 107 B.R. at 592.
156. Id.
157. Id.
158. See In re 203 N. LaSalle St. Ltd. Partnership, 190 B.R. 567 (Bankr. N.D. Ill. 1995), aff'd, 195 B.R. 692 (N.D. Ill. 1996), aff'd, 126 F.3d 955 (7th Cir. 1997), cert. granted, 118 S. Ct. 1674 (May 4, 1998); Creekstone Apartments Assocs., L.P. v. Resolution Trust Corp. (In re Creekstone Apartments Assocs., L.P.), 168 B.R. 639 (Bankr. M.D. Tenn. 1994); In re Rivers End Apartments, Ltd., 167 B.R. 470 (Bankr. S.D. Ohio 1994); In re Sherwood Square Assocs., 107 B.R. 872 (Bankr. D. Md. 1989).
159. 167 B.R. 470 (Bankr. S.D. Ohio 1994).
160. Id. at 487.
161. See id. at 487-88.
162. See id. at 488.
163. LaSalle, 190 B.R. at 586.
164. See 11 U.S.C. § 1129(a)(7)(A) (1994).
165. See 190 B.R. at 586. But see In re Eitemiller, 149 B.R. 626, 629 (Bankr. D. Idaho 1993) ("[T]he 'best interest of creditors' test . . . does not give the debtors license to discriminate against creditors. The reading proposed by debtors would render the unfair discrimination language of section 1129(b)(1) a nullity; unfair discrimination would turn solely upon whether the 'best interests of creditors' test were met.").
166. 748 F.2d 42 (1st Cir. 1984).
167. See id. at 47.
168. 63 B.R. 176 (Bankr. M.D.N.C. 1986).
169. See id. at 181.
170. 58 B.R. 641 (Bankr. D.N.J. 1985).
171. See id. at 642.
172. See id. at 643.
173. See id. See also In re Club Assocs., 107 B.R. 385, 401 (Bankr. N.D. Ga. 1989) (noting that deficiency claims and trade claims "differ significantly" in amount and character); Markell, supra note 7, at 260-61 (focusing on the involuntary nature, not the size, of the claim in Rochem, and concluding that the result can be justified only if the disparate payment of trade claims was necessary for a successful reorganization or to pay the tort claimants).
174. 140 B.R. 5 (Bankr. D.D.C. 1992).
175. See id. at 13.
176. Id. at 14.
177. See In re Rivers End Apartments, Ltd., 167 B.R. 470 (Bankr. S.D. Ohio 1994); In re The Landing Assocs., Ltd., 157 B.R. 791 (Bankr. W.D. Tex. 1993).
178. Rivers End, 167 B.R. at 488.
179. See John Hancock Mut. Life Ins. Co. v. Roswell-Hannover Joint Venture (In re Roswell-Hannover Joint Venture), 149 B.R. 1014 (Bankr. N.D. Ga. 1992). See also Markell, supra note 7, at 257-58 (contending that disparate treatment that unnecessarily or unjustifiably frustrates prebankruptcy expectations is unfairly discriminatory).
180. See infra cases cited in notes 181-188. See also Markell, supra note 7, at 260.
181. See infra cases cited in notes 178 and 181.
182. See Oxford Life Ins. Co. v. Tucson Self-Storage, Inc. (In re Tucson Self-Storage, Inc.), 166 B.R. 892 (B.A.P. 9th Cir. 1994) (holding that the public policy of paying for actual goods and services in full does not justify paying ten percent to the deficiency claim while paying the trade creditors in full); In re ARN LTD. Ltd. Partnership, 140 B.R. 5, 12 (Bankr. D.D.C. 1992) (stating that discrimination in favor of trade creditors cannot be justified when based on "bald speculation" that maintaining good relations with them is necessary); In re Eisenbarth, 77 B.R. 228, 235 (Bankr. D.N.D. 1987) ("While the Debtors prefer to pay local businesses in full . . . at the expense of banks and other lenders, this treatment is not sanctioned by the Bankruptcy Code."); Mutual Life Ins. Co. v. Sylvester Wieberg, Inc. (In re Wieberg), 31 B.R. 782 (Bankr. E.D. Mo. 1983) (rejecting the debtor's attempt to discriminate against a single, large secured creditor).
183. See, e.g., ARN, 140 B.R. at 12.
184. See Tucson Self-Storage, 166 B.R. at 898.
185. See, e.g., Creekstone Apartments Assocs., L.P. v. Resolution Trust Corp. (In re Creekstone Apartments Assocs., L.P.), 168 B.R. 639 (Bankr. M.D. Tenn. 1994).
186. 126 B.R. 840 (Bankr. E.D. Pa. 1991).
187. See id. at 852.
188. See id.
189. See id.
190. 149 B.R. 306 (Bankr. E.D.N.Y. 1992).
191. See id. at 309.
192. Id.
193. See In re MCorp Fin., Inc., 137 B.R. 219 (Bankr. S.D. Tex. 1992), appeal dismissed and remanded, 139 B.R. 820. (S.D. Tex. 1992) (citing Allegheny and noting lack of statutory authority for discriminating against rejecting classes); In re Allegheny Int'l, Inc., 118 B.R. 282 (Bankr. W.D. Pa. 1990) (noting absence of statutory authority in the Code for discriminating against classes that vote against a plan of reorganization); In re Mortgage Inv. Co., 111 B.R. 604 (Bankr. W.D. Tex. 1990); In re Wilhelm, 101 B.R. 120 (Bankr. W.D. Mo. 1989).
194. See In re Drexel Burnham Lambert Group, Inc., 138 B.R. 714 (Bankr. S.D.N.Y. 1992), aff'd, 140 B.R. 347 (S.D.N.Y. 1992) (distinguishing Allegheny and MCorp and pointing out that no statutory authority proscribed discrimination against rejecting classes); In re Western Real Estate Fund, Inc., 75 B.R. 580 (Bankr. W.D. Okla. 1987) (stating that to forbid preferential treatment of creditors who had settled with the debtor would discourage and remove the incentive for negotiation and resolution of differences before confirmation); In re Jartran, Inc., 44 B.R. 331 (Bankr. N.D. Ill. 1984); In re Coastal Equities, Inc., 33 B.R. 898 (Bankr. S.D. Cal. 1983).
195. See Steelcase Inc. v. Johnston (In re Johnston), 21 F.3d 323 (9th Cir. 1994); In re Rochem, Ltd., 58 B.R. 641 (Bankr. D.N.J. 1985); In re Sherwood Square Assocs., 107 B.R. 872 (Bankr. D. Md. 1989).
196. 140 B.R. 5 (Bankr. D.D.C. 1992).
197. See id. at 13.
198. In re Woodbrook Assocs., 19 F.3d 312 (7th Cir. 1994); In re Creekside Landing, Ltd., 140 B.R. 713 (Bankr. M.D. Tenn. 1992); In re Aztec Co., 107 B.R. 585 (Bankr. M.D. Tenn. 1989); In re Economy Cast Stone Co., 16 B.R. 647 (Bankr. E.D. Va. 1981). See also Markell, supra note 7, at 258-60 (applying proposed new test for unfair discrimination to cases involving disparate treatment of insiders and arm's length creditors).
199. Woodbrook, 19 F.3d at 321.
200. Aztec, 107 B.R. at 586, 591.
201. See Creekside Landing, 140 B.R. at 716. See also In re Barney and Carey Co., 170 B.R. 17, 25-26 (Bankr. D. Mass. 1994).
202. See Economy Cast Stone, 16 B.R. at 652.
203. 117 B.R. 471, 477 (Bankr. D. Minn. 1990).
204. See id.
205. 200 B.R. 143 (Bankr. E.D. Mich. 1996).
206. See id. at 147.
207. Id. at 148-49.
208. 140 B.R. 5 (Bankr. D.D.C. 1992).
209. See id. at 13.
210. Id.
211. See id.
212. See In re Oaks Partners, Ltd., 141 B.R. 453, 461-62 (Bankr. N.D. Ga. 1992).
213. *4 (Bankr. D. Idaho Mar. 10, 1995); In re Eitemiller, 149 B.R. 626, 630 (Bankr. D. Idaho 1993). In dicta, the Eitemiller court stated that its holding "should not be construed as a blanket holding that any discrimination in favor of nondischargeable debts is prohibited." Id. at 630.
214. See In re Richard Buick, Inc., 126 B.R. 840 (Bankr. E.D. Pa. 1991).
215. See In re Barney and Carey Co., 170 B.R. 17 (Bankr. D. Mass. 1994); In re Creekside Landing, Ltd., 140 B.R. 713 (Bankr. M.D. Tenn. 1992).
216. See In re Graphic Communications, Inc., 200 B.R. 143 (Bankr. E.D. Mich. 1996); ARN, 140 B.R. at 13; In re Baugh, 73 B.R. 414 (Bankr E.D. Ark. 1987).
217. See infra cases cited in notes 215 and 218.
218. See In re 203 N. LaSalle St. Ltd. Partnership, 190 B.R. 567 (Bankr. N.D. Ill. 1995), aff'd, 195 B.R. 692 (N.D. Ill. 1996), aff'd, 126 F.3d 955 (7th Cir. 1997), cert. granted, 118 S. Ct. 1674 (May 4, 1998); In re HRC Joint Venture, 187 B.R. 202 (Bankr. S.D. Ohio 1995); Creekstone Apartments Assocs., L.P. v. Resolution Trust Corp. (In re Creekstone Apartments Assocs., L.P.), 168 B.R. 639 (Bankr. M.D. Tenn. 1994).
219. See Oxford Life Ins. Co. v. Tucson Self-Storage, Inc. (In re Tucson Self-Storage, Inc.), 166 B.R. 892 (B.A.P. 9th Cir. 1994); Barney and Carey, 170 B.R. at 25; ARN, 140 B.R. at 13-14; Creekside Landing, 140 B.R. at 715-16; In re Mortgage Inv. Co., 111 B.R. 604 (Bankr. W.D. Tex. 1990); In re 222 Liberty Assocs., 108 B.R. 971 (Bankr. E.D. Pa. 1990); In re Aztec Co., 107 B.R. 585 (Bankr. M.D. Tenn. 1989); In re Meadow Glen, Ltd., 87 B.R. 421 (Bankr. W.D. Tex. 1988).
220. See In re Freymiller Trucking, Inc., 190 B.R. 913 (Bankr. W.D. Okla. 1996); LaSalle, 190 B.R. at 585-86; In re Bouy, Hall and Howard and Assocs., 141 B.R. 784 (Bankr. S.D. Ga. 1992); In re Dilts, 126 B.R. 470 (Bankr. W.D. Pa. 1991); In re Timber Tracts, Inc., 70 B.R. 773 (Bankr. D. Mont. 1987); In re Martin, 66 B.R. 921 (Bankr. D. Mont. 1986).
221. See Prudential Ins. Co. of Am. v. Monnier (In re Monnier Bros.), 755 F.2d 1336 (8th Cir. 1985); Dilts, 126 B.R. at 472; In re Buttonwood Partners, Ltd., 111 B.R. 57 (Bankr. S.D.N.Y. 1990).
222. In the following four cases, courts rejected as unfairly discriminatory plans that proposed to pay the claims of one class sooner than those of another: In re Cranberry Hill Associates Limited Partnership, 150 B.R. 289 (Bankr. D. Mass. 1993); In re Mortgage Investment Co., 111 B.R. 604 (Bankr. W.D. Tex. 1990); In re Stoffel, 41 B.R. 390 (Bankr. D. Minn. 1984); and In re Pine Lake Village Apartment Co., 19 B.R. 819 (Bankr. S.D.N.Y. 1982). One decision, In re Nelson, 133 B.R. 786 (Bankr. S.D. Miss. 1991), held that a plan proposing to pay different interest rates to different classes discriminated unfairly.
223. Under Professor Markell's proposed test for unfair discrimination, discrimination is presumptively unfair when a plan allocates to dissenting classes consideration containing risks and uncertainties materially different from those assumed under the plan by other similar assenting classes and materially different from those undertaken by that dissenting class prepetition. See Markell, supra note 7, at 249.
224. 150 B.R. 289 (Bankr. D. Mass. 1993).
225. See id. at 291.
226. See id.
227. See id. at 290.
228. 169 B.R. 104 (Bankr. E.D. Pa. 1994).
229. See id. at 109.
230. See id.
231. See id. at 110.
232. See Cranberry Hill, 150 B.R. at 291; Calvanese, 169 B.R. at 113. See also In re North Washington Ctr. Ltd. Partnership, 165 B.R. 805, 810-11 (Bankr. D. Md. 1994) (holding that a plan proposing to pay two and six-tenths percent, plus the right to future operating profits or proceeds of litigation, to the deficiency claimholder and eighty percent to general unsecured creditors discriminated unfairly because the right to future operating profits or proceeds of litigation was subordinated to the replenishment of a partnership reserve and could not be given a positive value); In re Meadow Glen, Ltd., 87 B.R. 421 (Bankr. W.D. Tex. 1988) (finding that a plan proposing to provide the deficiency claim a ten percent equity interest in the debtor, which equity did not presently exist, while proposing to pay other unsecured claims seventy-five to ninety percent of their claims, discriminated unfairly).
233. 151 B.R. 628 (Bankr. N.D. Ga. 1992).
234. See id. at 631.
235. See id. at 630.
236. See id.
237. See id.
238. Id. at 631.
239. Professor Markell's proposed test for unfair discrimination leads to the same conclusion. See Markell, supra note 7, at 261-62.
240. 129 B.R. 440 (M.D.N.C. 1991), rev'd on other grounds, 961 F.2d 496 (4th Cir. 1992).
241. See id. at 442.
242. See id.
243. Id. at 445.
244. 1994 WL 842777 (Bankr. N.D. Ohio Nov. 14, 1994).
245. *11.
246. See id.
247. See Friedman, supra note 36, at 1502. The court in In re Calvanese, 169 B.R. 104 (Bankr. E.D. Pa. 1994), questioned whether unfair discrimination applies to secured claims, opining that "comparing the treatments of two or more secured claims . . . might well be like comparing apples and oranges." Id. at 110 n.2. Likewise, Professor Markell writes that unfair discrimination applies only to claimants of equal nonbankruptcy priority. See Markell, supra note 7, at 257-58.
248. See Friedman, supra note 36, at 1502.
249. See Prudential Ins. Co. of Am. v. Monnier (In re Monnier Bros.), 755 F.2d 1336 (8th Cir. 1985); Mutual Life Ins. Co. v. Patrician St. Joseph Partners Ltd. Partnership (In re Patrician St. Joseph Partners Ltd. Partnership), 169 B.R. 669 (D. Ariz. 1994); In re Dindiyal, 1993 WL 540373 (E.D.N.Y. Sept. 30, 1993); In re Calvanese, 169 B.R. 104 (Bankr. E.D. Pa. 1994); In re Dilts, 126 B.R. 470 (Bankr. W.D. Pa. 1991) (on reconsideration); In re Nelson, 133 B.R. 786 (Bankr. S.D. Miss. 1991); In re Buttonwood Partners, Ltd., 111 B.R. 57 (Bankr. S.D.N.Y. 1990); In re Timber Tracts, Inc., 70 B.R. 773 (Bankr. D. Mont. 1987); In re Western Real Estate Fund, Inc., 75 B.R. 580 (Bankr. W.D. Okla. 1987); In re Martin, 66 B.R. 921 (Bankr. D. Mont. 1986); In re Adamson Co., 42 B.R. 169 (Bankr E.D. Va. 1984); In re Stoffel, 41 B.R. 390 (Bankr. D. Minn. 1984); In re Elijah, 41 B.R. 348 (Bankr. W.D. Mo. 1984).
250. See Calvanese, 169 B.R. at 111; Elijah, 41 B.R. at 352; Stoffel, 41 B.R. at 393.
251. See Friedman, supra note 36, at 1503.
252. **3-4; Timber Tracts, 70 B.R. at 778; Martin, 66 B.R. at 929-30. But see Calvanese, 169 B.R. at 113 (rejecting as unfairly discriminatory a plan to provide payments to the second mortgagee on the debtor's home while deferring payments to the first mortgagee until the home was sold).
253. **3-4; Dilts, 126 B.R. at 472; Timber Tracts, 70 B.R. at 778; Martin, 66 B.R. at 929-30. See also Mutual Life, 169 B.R. at 680-82 (analyzing whether extension of a real estate secured loan was fair and equitable, and finding the extension both fair and equitable and not unfairly discriminatory).
254. See Nelson, 133 B.R. at 794 (stating that because the market rates for first and second mortgages differed, paying a higher interest rate to the junior creditor was not unfairly discriminatory, as long as the interest rates provided in the plan equaled the market rates for each creditor); Dilts, 126 B.R. at 472 (finding no unfair discrimination because the plan impaired the interest rate and extended the maturity date of both secured loans); Buttonwood Partners, 111 B.R. at 63 (finding the fact that every secured claim is different because it is secured by different collateral or has a distinct priority creates the possibility of individualized treatment for secured claims and provides a reasonable basis for discrimination). See also Aetna Realty Investors, Inc. v. Monarch Beach Venture, Ltd. (In re Monarch Beach Venture, Ltd.), 166 B.R. 428 (C.D. Cal. 1993) (remanding for evaluation of the plan's interest rate structure, the basis for any discrimination, and the importance to the plan of such discrimination, where the plan provided for Aetna to received 7.5 percent during the first year while every junior creditor would receive eight percent).
255. See Nelson, 133 B.R. at 793-94; Buttonwood Partners, 111 B.R. at 63.
256. 41 B.R. 348 (Bankr. W.D. Mo. 1984).
257. See id. at 352.
258. See id.
259. See id.
260. 41 B.R. 390 (Bankr. D. Minn. 1984).
261. See id. at 392-93.
262. See id. at 393.
263. In re Western Real Estate Fund, Inc., 75 B.R. 580 (Bankr. W.D. Okla. 1987).
264. See id. at 586.
265. Obviously, a "secured" creditor must not be undersecured in the § 506 context.
266. See Prudential Ins. Co. of Am. v. Monnier (In re Monnier Bros.), 755 F.2d 1336 (8th Cir. 1985); Corestates Bank, N.A. v. United Chemical Techs., Inc., 202 B.R. 33 (E.D. Pa. 1996); In re Freymiller Trucking, Inc., 190 B.R. 913 (Bankr. W.D. Okla. 1996); In re The Landing Assocs., Ltd., 157 B.R. 791 (Bankr. W.D. Tex. 1993); In re Bouy, Hall and Howard and Assocs., 141 B.R. 784 (Bankr. S.D. Ga. 1992); In re Pullman Constr. Indus., Inc., 107 B.R. 909 (Bankr. N.D. Ill. 1990).
267. See Freymiller Trucking, 190 B.R. at 916 (stating that it was not unfairly discriminatory for Wells Fargo, "one of the nation's largest financial institutions," to wait a "a mere six months" so that the unsecured creditors, the entities that had provided the supplies allowing the debtor to run its trucking business, might realize something on their claims); The Landing, 157 B.R. at 822-23 (approving payout to unsecured claims in thirty-eight months while secured claim would be paid over ten years, on the grounds that "compar[ing] the treatment of a secured claim with that of an unsecured claim is like comparing apples to oranges: you just cannot do it and reach a meaningful conclusion"); Bouy, Hall, 141 B.R. at 792-93 (holding that preferential payout to the debtor's franchisor did not discriminate unfairly because the debtor was curing its default under its Quality Inn franchise contract and assuming that contract pursuant to § 365, which entitled the franchisor to different treatment).
268. Pullman Construction, 107 B.R. at 939-40.
269. See United Chemical, 202 B.R. at 48 (holding that rejecting secured creditor may not raise unfair discrimination on behalf of an accepting unsecured class).
270. See Markell, supra note 7, at 228-36.
271. See id. at 236-37 (citing H.R. REP. NO. 95-595, at 417 (1977), reprinted in 1978 U.S.C.C.A.N. 5963, 6373).
272. See id. at 227.
273. See id. at 227-28.
274. See id. at 243 n.75.
275. Professor Markell traces the origins of the requirement under the Act. See id. at 228-36. As he further notes, the only examples in the Code's legislative history involve contractual subordination. See id. at 236. Although the House Report presents examples of unfair discrimination involving subordinated debt, it does not state that unfair discrimination is limited to those situations. These examples are most likely no more than "unfortunate choices for explication." See id. at 238.
276. See supra text accompanying notes 61-74.
277. See supra text accompanying notes 75-82.
278. By contrast, § 1123(a)(4) states that a plan must "provide the same treatment for each claim or interest of a particular class;" it does not say that a plan must treat each claim or interest within a class "fairly." Congress could have used similar language in § 1129(b)(1).
279. See supra text accompanying notes 83-100.
280. Markell, supra note 7, at 262.
281. See supra text accompanying notes 91-94.
282. See Markell, supra note 7, at 244-46.
283. But see United States v. Santana, 6 F.3d 1, 6 (1st Cir. 1993) ("Although we recognize that formulaic tests offer administrative convenience and ease in application, we also recognize that neither life nor law can always be made convenient and easy").
284. See supra text accompanying notes 127-133. See Markell, supra note 7, at 242-46.
285. See In re 203 N. LaSalle St. Ltd. Partnership, 190 B.R. 567, 585-86 (Bankr. N.D. Ill. 1995), aff'd, 195 B.R. 692 (N.D. Ill. 1996), aff'd, 126 F.3d 955 (7th Cir. 1997), cert. granted, 118 S. Ct. 1674 (May 4, 1998).
286. See supra Part II.C.
287. See Markell, supra note 7, at 255.
288. See id. at 249.
289. See id. at 249-57, 262.
290. See id. at 260.
291. See, e.g., 11 U.S.C. § 502(b)(1) (1994) (stating that the fact that a claim is contingent or unmatured is not grounds for objection to allowance of the claim).
292. See Markell, supra note 7, at 239-40.
293. 7 KING ET AL., supra note 33, ¶ 1129.04[3], at 1129-70.
294. See Markell, supra note 7, at 240 n.64.