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"giving up" its distribution to the junior class. The opinion distinguished other cases that had allowed such a "give up" by a secured creditor in the "carve out" context.
Under the full payment alternative, the unsecured claims can be paid over time, with the length of deferral and present value computation governed by the principles discussed above with respect to secured claims. The property distributed need not be cash, provided the present value is proven. Therefore it is permissible to distribute stock or bonds provided their value can be shown to equal the allowed claims, or no junior class retains anything under the plan.
In addition, if the debtor is solvent, postpetition, preconfirmation interest must be paid on unsecured claims before junior classes can retain any property. This derives not only from the historic absolute priority rule but also from the best interests test as codified in § 1129(a)(7)(A)(ii), which essentially incorporates § 726(a)(5), as discussed above.
The paradigm for the alternative under which no class junior to unsecured creditors retains anything was probably the ordinary for-profit corporation, where the rule could be satisfied by the equity interests being distributed to the unsecured creditors. Because the purpose of the absolute priority rule is to preserve for creditors who are not being paid in full the entire going concern value or potential for future appreciation or profits, it is not sufficient for equity interest holders to argue that the equity interest they retain is of "no value." In Boyd, the Supreme Court made clear that control of the entity cannot be retained by the equity class even if it had no current value.
Even in a single asset case such a reorganization can serve the owners' broader goals, even though they lose their equity interests, and preserve jobs or other value for the community. In Briscoe, for example, the purpose of such a reorganization was to preserve low income housing.
If there is no junior equity class, a plan can be crammed down on objecting unsecured creditors without paying them full present value of their claims, so long as the best
