Expert: Mark J. Markus- California Bankruptcy Attorney - 9/13/2010

Question
I am thinking of filing a chapter 11 bankruptcy for my
corporation which has recently fallen into debt. I conduct a
small business. Even though there are a few unsecured
creditors that I am indebted to, the holder of a secured
claim is only one. And also, the secured claim holder (in my
case the mortgage lender) holds pretty significantly more
(in amount) than what the other classes do collectively. I
am quite sure all the unsecured creditors would easily vote
up to the plan that I would submit to the court. My question
is, would the vote of the class of unsecured claim-holders
suffice to make the court rule against the only secured
claim-holder in approval of the plan, whereas the secured
one holds significantly more in amount than all others
together?

Answer
If you have one class of impaired claims that vote in favor of your plan, you can use the "cramdown" provisions of 11 USC 1129(b) to force the other classes to accept your treatment of them, assuming in comports with the statutory requirements.  For secured debts, this essentially means that they retain their lien against the property and receive the full amount of their claim in deferred payments (with interest).   

In order for shareholders of the corporation to retain their interest in the corporation, unsecured creditors must be paid 100%.

Mark J. Markus, Attorney at Law
http://www.bklaw.com/