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by operation of the Code.235 Consequently the claim of a landlord who was paid the full amount due under the cap imposed by § 502(b)(6), after deduction of a security deposit, was unimpaired and not permitted to vote.
The legislative history of the definition of "impairment" suggests that the impairment can be of nominal financial significance, since Congress rejected both the Act's definition and the Commission's recommendation that impairment be deemed to exist only if the class is materially and adversely affected.236 This conclusion was upheld in Sun Country Development,237 where the Fifth Circuit held the plan was proposed in good faith even though it was modified to impair the unsecured creditors, apparently solely to satisfy § 1129(a)(10). However, a panel of the Fifth Circuit subsequently suggested in dictum that this might constitute bad faith.238
The Eighth Circuit held in Windsor, however, that "a claim is not impaired if the alteration of rights arises solely from the debtor's exercise of discretion."239 The accepting impaired class in Windsor was a $13,000 trade creditor class that was to be paid in full 60 days after the effective date. The Eighth Circuit held the class of unsecured creditors was a "manufactured" impaired class whose vote did not count to satisfy 1129(a)(10). The Eighth Circuit found the impairment of the trade creditors to be artificial because "simple remanipulation of the plan demonstrates" the debtor could have easily repaid the trade creditors on the effective date with some of the money to be paid to the secured creditor.240
No language in § 1129(a)(10) supports the conclusion.241 To the contrary, the focus of § 1129(a)(10) is solely on what the class will accept, not on what alternative treatment the debtor could have proposed. Nothing in the Code requires consideration of possible
235 Solow v. PPI Ent., Inc. (In re PPI Ent., Inc.), 324 F.3d 197 (3d Cir. 2003).
236
COMMISSION REPORT § 7-310(d)(1); In re Barrington Oaks General Partnership, 15 B.R. 952, 8 BCD 569, 5 CBC 2d 969 (Bankr. D. Utah 1981).
237
In re Sun Country Development, Inc., 764 F.2d 406, 408 (5th Cir. 1985).
238
In re Sandy Ridge Development Corp., 881 F.2d 1346 (5th Cir. 1989). But see In re Mortgage Investment Company of El Paso, 111 B.R. 604 (Bankr. W.D. Tex. 1990).
239 In re Windsor on the River Associates, 7 F.3d 127, 132 (8th Cir. 1993).
240 Windsor, 7 F.3d at 132.
241
In re Creekstone Apartments Associates, L.P., 1995 Bankr. LEXIS 552 (Bankr. M.D. Tenn. 1995)("the court finds no support for Windsor's interpretation of § 1129(a)(10), "Windsor rewrites § 109" and "is inconsistent with both § 1124 and bankruptcy policy."), affd, 1995 U.S. Dist. LEXIS 14876 (M.D. Tenn. 1995).
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