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apparently led to the requirement.
Classification is only the first hurdle in satisfying § 1129(a)(10), however. To satisfy § 1129(a)(10), the class must also be impaired. This has created some recent debate as to what constitutes impairment, and whether it must be in "good faith."
The need to satisfy § 1129(a)(10) might cause a single asset debtor to attempt to create creditor classes prior to filing. Even the creation of unsecured debt would not suffice, however, if the deficiency claim of a secured creditor would dominate the unsecured class vote. Secured debt may be necessary; in a single asset apartment complex case, a small secured claim against a computer or furniture may provide the answer.
It can be argued that administrative expense claims, gap claims and priority unsecured tax claims may not provide the accepting impaired class because § 1123(a)(1) prohibits them from being classified in a class (although the language of § 1123(a) can alternatively be read as merely stating that classifying such claims is not required, and § 1129((a)(9)(B) does refer to certain of these tax claims as constituting a "class").
There is also case law suggesting that a class created for administrative convenience pursuant to § 1122(b) cannot provide the accepting impaired class. However, nothing in §§ 1122(b) or 1129(a)(10) expressly precludes the administrative convenience class from providing the requisite acceptance if it is left impaired. One district court decision recognized an impaired administrative convenience class as satisfying § 1129(A)(10), but without analysis.
The Third Circuit has held that the impairment must occur under the plan, not simply by operation of the Code. 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
