In re Modern Glass Specialists, Inc., Bankruptcy No. 83-02996.

• Decision Date: 26 July 1984
• Docket Number: Bankruptcy No. 83-02996.
• Citation: 42 BR 139
• Parties: In re MODERN GLASS SPECIALISTS, INC., Debtor.
• Court: U.S. Bankruptcy Court — Eastern District of Wisconsin

42 B.R. 139 (1984)

In re MODERN GLASS SPECIALISTS, INC., Debtor.

Bankruptcy No. 83-02996.

United States Bankruptcy Court, E.D. Wisconsin.

July 26, 1984.

James R. Sommers, Hunter & Sommers, Waukesha, Wis., for Coolidge Glass Co., Inc.

Raymond Burczyk, Burczyk & Burczyk, Racine, Wis., for Debtor.

Jonathan Goodman, Milwaukee, Wis., for Creditors' Committee.

DECISION AND ORDER

JAMES E. SHAPIRO, Bankruptcy Judge.

Before this Court is an objection filed by Coolidge Glass Company ("Coolidge"), the largest unsecured creditor, to a plan of reorganization submitted by Modern Glass Specialists, Inc. ("debtor").¹ The debtor is a company which has been engaged in the installation of glass since 1977. Edward and Mary Schmierer are its sole stockholders.

In support of its objection, Coolidge asserts as follows:

"1. The plan is not fair and equitable under section 1129(b)(2)(B) in that it does not provide the impaired class of unsecured creditors with an amount at or near that which the unsecured creditors would receive in the event of the liquidation of the debtor\'s estate; and

2. That section 1129 of the Bankruptcy Code does not allow the confirmation of a plan of reorganization where there is not an affirmative acceptance by at least one impaired class of creditors, there being only one impaired class of creditors herein."

In its plan, the debtor has established the following five separate classes:

                Class I   —  Costs and expenses of administration
                Class II  —  Priority claims under § 507 of the
                             Bankruptcy Code
                Class III —  Claims of all unsecured creditors in
                             the amount of $430.00 or less and
                             claims of any Class IV unsecured
                             creditor electing to be included in
                             this class by reducing its claim to
                             $430.00
                Class IV  —  Claims of all unsecured creditors
                             which exceed $430.00 and not electing
                             to be included in Class III.2
                Class V   —  Secured creditors
                

Although there are five separate classes as set forth above, there are no actual creditors within Classes II and V, leaving only Classes I, III, and IV. The debtor acknowledges that the only impaired class is Class IV.

With respect to Class IV, three ballots were received. Of these ballots, Coolidge, with a claim of $91,784.64 and Ford Motor Company, with a claim of $9,867.00, voted to reject the plan. Only Feld-Schumacher, a holder of a claim for $4,301.64, voted to accept. Because more than half of the creditors and more than two-thirds of the claims in Class IV voted to reject, Class IV has therefore rejected debtor's plan. The only other ballot received is that of Dehli Builders, which has a claim of $619.42 and elected to be treated as a Class III creditor for $430.00 and voted to accept the plan.

The debtor opposes Coolidge's objection to the plan and seeks confirmation, notwithstanding the rejections by Coolidge and Ford Motor Company, by use of the "cram down" provision under § 1129(b) of the Bankruptcy Code. "Cram down" is an expression for confirmation of a plan over the dissent of a class of holders of claims or interest. 3 Norton Bankr.L. & Prac. § 66.24 (1981). It refers to the power of a bankruptcy court to force a creditor to accept less than or something different from what that creditor was originally entitled to receive from the debtor.

Under certain given conditions, the cram down power can be invoked. These conditions are three-fold:

1. All requirements of § 1129(a) (except the requirement for acceptance by all impaired classes) must be met.

2. The plan must not discriminate unfairly.

3. The plan must be fair and equitable with respect to each class of claims or interest that are impaired and have not accepted the plan.

Section 1129(b)(2) sets forth certain requirements as to what must...