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dissimilar claims together. Consequently this argument will not be dealt with here as a justification for separate classification, and the reader is referred to the discussion above regarding what constitutes similarity.
The Greystone court rejected as "specious" the debtor's attempt to argue economic necessity to treat claims differently and good business reasons to maintain the good will of trade creditors, because the plan did not treat the trade debt any differently than the deficiency claim.161 The same fact was fatal in Lumber Exchange, where the court held that although there is some authority for separately classifying trade creditors and treating them more generously,162 the argument was belied by the terms of the proposed plan, which treated trade creditors less favorably than the secured creditor's deficiency claim.163
Moreover, the Fifth Circuit's Greystone opinion rejected the argument because "There is no evidence in the record of a limited market in Austin for trade goods and services. Nor is there any evidence that Greystone would be unable to obtain any of the trade services if the trade creditors did not receive preferential treatment under the plan."164 The Second and Ninth Circuits have basically concurred (albeit in upholding bankruptcy courts' factual conclusions to that effect).165
These cases nevertheless suggest that separate classification might be sustained if evidence were presented of a need to treat certain creditors more favorably to retain their services post-confirmation.166 A good example of this approach is Chateaugay167 where the Second Circuit permitted the claims held by the insurance company through subrogation to
161
948 F.2d at 141.
162
Citing Hanson v. First Bank of South Dakota, N.A., 828 F.2d 1310, 1313 (8th Cir. 1987).
163
In re Lumber Exchange Building Limited Partnership, 968 F.2d 647 (8th Cir. 1992).
164
948 F.2d at 141.
165
In re Barakat, 99 F.3d 1520 (9th Cir. 1996); In re Boston Post Road Ltd. Ptshp., 21 F.3d 477 (2d Cir. 1994), cert. denied, 115 S. Ct. 897 (1995).
166 E.g., In re Georgetown Ltd. Ptshp., 209 B.R. 763, 772 (Bankr. M.D. Ga. 1997)("Where, in order to successfully reorganize, it is necessary for a debtor to continue conducting business with certain unsecured creditors, a debtor is justified in separately classifying those creditors from other unsecured creditors. See In re AG Consultants Grain Division, Inc., 77 B.R. 665, 676 (Bankr. N.D. Ind. 1987). Here, those creditors proposed to be treated in Class 6 are trade creditors with whom Debtor intends to have a continuing business relationship. It is reasonable to predict that no continuing business relationship between Debtor and C&S Bank is possible.").
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