  |
  |
  |
    
  
   |
 | |||
|
|
|
|
| |||
appropriate. For example, questions arose whether separate classes, with identical treatment, would be appropriate if some creditors also owned stock and their acceptance of a plan might be influenced by its treatment of stockholders. Such a concern would be raised on behalf of the creditors who did not own stock and might reject the plan but be outvoted by those who also owned stock.
There was weighty authority under the Act that such factors should justify separate classification of claims of equal rank, even if they received equal treatment under the plan. Chapter IX as originally enacted, like chapter X, required classification of claims "according to the nature of their respective claims," but went on specifically to require that all claims "which are payable without preference out of funds derived from the same source or sources shall be of one class." Nonetheless, even despite that statutory mandate the Supreme Court suggested and the Fifth Circuit held that separate classification would be appropriate where some such creditors also held other interests. Interestingly, under the Act the argument for flexible and possibly separate classification was made by objectors to the plan, whereas today's argument for separate classification is asserted by plan proponents.
Chapter X of the Act required claims to be classified "according to their nature." The "nature" of a claim was not defined in the Act, but a treatise writer provided the gloss that this term meant that claims of equal "rank" should be classified together and claims of different rank or secured by different collateral should be classified separately. The Seventh Circuit in Palisades noted that this may be a general rule but it must be construed in the light of the circumstances of each individual situation, yet within a relatively few years that caveat seems to have been forgotten and Gerdes' general rule adopted as the governing rule for chapter X.
As Bankruptcy Judge Leif Clark demonstrated in his Greystone opinion, the chapter X model had no place in chapter XI, which expressly contemplated separate classification of unsecured claims and did not even require that classification be based on the "nature" of the claims. Since chapter XI was drafted to deal only with unsecured claims, its classification rule necessarily contemplated classification not on the basis of "rank" or "legal nature," but
