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§§ 1122 and 1123, dealing with classification of claims and interests and contents of a plan.29
Consequently some circuit courts have concluded that "it is doubtful that violations of Code provisions unrelated to the form and content of a plan, such as voting procedures, implicate subsection 1129(a)(l) at all."30
Not only must the plan comply with the applicable provisions of Title 11, but the proponent of a plan must also comply. § 1129(a)(2). Legislative history suggests that one primary provision to which this was meant to refer is the requirement of § 1125 that acceptances of a plan not be solicited prior to transmission of an approved disclosure statement.31 However, a more appropriate remedy for improper solicitation may be to disqualify any votes improperly solicited, because § 1126(e) provides that on request of a party in interest and after notice and hearing, the court may designate any entity whose acceptance or rejection was not solicited in accordance with the provisions of Title 11, and an acceptance or rejection of an entity so designated is not counted under § 1126(c).32 One court held that the "exclusive" remedy under the Code for an improper solicitation is to disregard the vote under § 1126(c).33
In addition to referring to the disclosure statement requirements, § 1129(a)(2) may arguably also refer to duties that the Code imposes on the plan proponent, particularly a
29 "Paragraph (1) [of subsection 1129(a)] requires that the plan comply with the applicable provisions of Chapter 11, such as §§ 1122 and 1123, governing classification and contents of plan." S. Rep. No. 95-989, 95th Cong., 2d sess. 126 (1978), reprinted in 1978 U.S. Code Congress and Administrative News 5787, 5912. See In re Cajun Elec. Power Coop, 150 F.3d 503 (5th Cir. 1998).
30
Kane v. Johns-Manville Corp., 843 F.2d 636, 649 (2d Cir. 1988). Accord, In re AOV Industries Inc., 792 F.2d 1140, 1150 (D.C. Cir. 1986); In re Commercial Western Finance Corp., 761 F.2d 1329, 1338 (9th Cir. 1985).
31
"The principal purpose of Section 1129(a) (2) is to assure that the proponents have complied with the requirements of section 1125 in the solicitation and acceptances to the plan." H.R. Rep. No. 95595, 95th Cong., 1st sess. 412 (1977); S. Rep. No. 95-989, 95th Cong., 2d sess., 126 (1978). See In re Cajun Elec. Power Coop, 150 F.3d 503 (5th Cir. 1998); In re Texaco, Inc., 84 B.R. 893, 906-07 (Bankr.
S.D.N.Y. 1988), citing In re Toy & Sports Warehouse, Inc., 37 B.R. 141, 149 (Bankr. S.D.N.Y. 1984).
See also In re Elsinore Shore Associates, 91 B.R. 238 (Bankr. D. N.J. 1988) (§ 1129(a)(2) is satisfied if the proponent satisfies the disclosure and solicitation requirements); In re Butler, 42 B.R. 777 (Bankr. E.D. Ark. 1984).
32
See, e.g., Century Glove, Inc. v. First American Bank of New York, 860 F.2d 94 (3d Cir. 1988) (although bankruptcy court invalidated votes of creditors who had received another creditor's draft plan without an accompanying disclosure statement, the Third Circuit reversed because an approved disclosure statement had previously been transmitted by the debtor).
6
