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Section 507(d) prevents this priority treatment from applying to one who asserts such a priority claim by subrogation, except for administrative and gap claims
The requirement that administrative claims be paid in full on confirmation has been called "administrative solvency," and an administratively insolvent debtor cannot confirm a plan.
If any class of claims is impaired under the plan, at least one impaired class must accept the plan, not counting acceptances by insiders. § 1129(a)(10). "Insider" is defined in § 101(30) in several nonexclusive ways depending on the nature of the debtor. Because "insider" is defined according to the relationship to the debtor, this leaves open the question of whether a plan proponent's vote should be counted in determining acceptance where the proponent is not an insider of the debtor, as would occur with a creditor's plan. There is at least one case holding that plan proponents are not per se insiders.
The accepting class requirement is the principal cause of classification issues, particularly in the single asset case. Consequently it is important to understand its historical background.
The Bankruptcy Act did not expressly require acceptance by an impaired class. Yet without statutory basis, many courts concluded cram down was not available when there was only one class of creditors, apparently on the poorly articulated rationale that acceptance by some class was inherent in the concept of a reorganization or arrangement.
In 1973, when the Commission On the Bankruptcy Laws of the United States submitted its Report recommending revision of the bankruptcy law and consolidating chapters X, XI and XII, it did not contain any provision expressly requiring an accepting class. Instead, the Commission's draft retained a structure similar to what had existed under the Act, permitting cram down treatment of dissenting classes and determining acceptance "exclusive of those creditors and equity security holders who are [so] provided for."
In 1977, however, two bankruptcy court decisions extensively analyzed the "judicial gloss" of Herweg and its progeny and concluded that it was unwarranted by the statutory
