(1) (§9.16) Classification
The plan must designate classes of claims and interests (except classes of administrative expenses described in 11 U.S.C. § 507(a)(2), involuntary gap claims described in § 507(a)(3), or priority tax claims described in § 507(a)(8)). The plan may designate one class of claims consisting only of every unsecured claim that is less than or voluntarily reduced to an amount that the court approves as reasonable and necessary for administrative convenience (known as an “administrative convenience” class). 11 U.S.C. § 1122(b). See, e.g., In re Union Fin. Servs. Group, Inc., 303 B.R. 390 (Bankr. E.D. Mo. 2003) (Schermer, B.J.) (class of unsecured claims consisting of $5,000 or less approved as administrative convenience class). Otherwise, the plan may place a claim or interest in a particular class only if the claim or interest is “substantially similar” to the other claims or interests of that class. Section 1122(a). Claims or interests are substantially similar if they would have substantially similar rights and priorities in a liquidation under Chapter 7. Hanson v. First Bank of S.D., N.A., 828 F.2d 1310, 1313 (8th Cir. 1987). A majority of cases state that the Bankruptcy Code does not require all substantially similar claims to be placed in the same class. But see In re Stoneridge Apartments, 125 B.R. 794 (Bankr. W.D. Mo. 1991) (Koger, C.J.) (refusing to approve disclosure statement that separately classified the unsecured portion of the claim of an undersecured creditor, noting that proposed treatment of the two classes of unsecured creditors was not the same). Cf. In re Leser, 939 F.2d 669 (8th Cir. 1991) (difference in Chapter 13 plan’s treatment of unsecured child support claim held by county was
not unfair discrimination); see also In re Apex Oil Co.,
118 B.R. 683 (Bankr. E.D. Mo. 1990) (Schermer, B.J.) (allowing separate classification of punitive damage claims).
The plan must separately classify nonpriority prepetition unsecured...
