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unimpaired under the plan. § 1129(a)(8). However, the significant exception is § 1129(b), which permits confirmation notwithstanding rejection by an impaired class, known colloquially as "cram down." Thus the only real significance to § 1129(a)(8) is to make clear that the absolute priority rule and unfair discrimination prohibition of § 1129(b) do not apply to classes that are either unimpaired or accept the plan. The treatment of dissenting classes is dealt with below in Parts IV and V.
Until 1994, satisfaction of 1129(a)(8) by treating a class as unimpaired was generally not problematical if there was sufficient cash to make a full cash payment on the effective date of the plan. This was one method of nonimpairment as defined in § 1124(3), until it was repealed by the Bankruptcy Reform Act of 1994.
The other two alternatives have generated more controversy. Generally, the courts have held that any default can be cured pursuant to § 1124(2), with the result that any consequences of default can be avoided, such as payment of a higher default rate of interest. It is more debatable whether a plan can deem a claim unimpaired simply by reinstating all of its legal, equitable and contractual rights post-confirmation, under § 1124(1), without full cash payment.
The Code requires that unless each holder agrees to different treatment, the plan must provide that administrative claims and "gap claims" be fully paid in cash on the effective date of the plan. § 1129(a)(9)(A). Consequently a class vote cannot vary that treatment over a claimant's dissent. But specified priority wage claims, employee benefit claims, claims of depositors in a grain storage facility or fish produce storage or processing facility, consumer deposit claims and alimony, maintenance and support claims must be paid cash on the effective date of the plan, unless the class accepts the plan, in which case deferred cash payments can be made equal to the allowed present value of the claims. § 1129(a)(9)(B). Certain unsecured tax claims must be paid over a period not exceeding six years after the date of assessment. § 1129(a)(9)(C). This priority treatment does not apply to secured tax claims, however, such as property taxes.
