and Submitted October 25, 2017
from the United States District Court for the District of
Arizona Raner C. Collins, Chief District Judge, Presiding
D.C. Nos. 4:12-cv-00024-RCC 4:12-cv-00121-RCC
M. Neff (argued) and Eric E. Walker, Perkins Coie LLP,
Chicago, Illinois; Dean C. Waldt, Ballard Spahr LLP, Phoenix,
Arizona; for Appellant.
A. English (argued) and Christy I. Yee, English & Gloven
APC, San Diego, California; Susan G. Boswell and Brad D.
Terry, Quarles & Brady LLP, Tucson, Arizona; for
Before: J. CLIFFORD WALLACE, MILAN D. SMITH, JR., and
MICHELLE T. FRIEDLAND, Circuit Judges.
panel affirmed the district court's affirmance of the
bankruptcy court's order approving a Chapter 11
"cramdown" reorganization plan of five related
debtors had previously acquired two resorts. A lender, whose
claim was undersecured, elected to have its entire claim
treated as secured pursuant to 11 U.S.C. § 1111(b)(2).
The plan restructured the lender's loan to a term of 21
years and included a due-on-sale clause requiring the debtors
to pay the lender the outstanding balance of the loan if the
resorts were sold. The due-on-sale clause did not apply if
the debtors were to sell the resorts between years five and
panel held that an election under § 1111(b)(2) does not
require that a due-on-sale clause be included in a
panel also held that § 1129(a)(10), which requires that
at least one impaired class accept a "cramdown"
plan, applies on a "per plan" basis, rather than a
"per debtor" basis.
Judge Friedland agreed that § 1111(b)(2) does not
require that a bankruptcy plan include complete due-on-sale
protection for the creditor and that § 1129(a)(10)
applies on a "per plan" basis. She wrote separately
to acknowledge the argument of the lender that it was
unfairly deprived of the ability to object effectively to
reorganization of two of the debtors, despite being their
only creditor. Judge Friedland wrote that any unfairness
resulted not from the interpretation of § 1129
challenged by the lender, but instead from the fact that the
reorganization treated the five debtor entities as if they
had been substantively consolidated-something the lender did
not object to in the bankruptcy court.
SMITH, Circuit Judge.
2007-C1 Grasslawn Lodging, LLC (Lender) objected to the
Chapter 11 plan of five related entities (collectively,
Debtors) who previously acquired two hotels. Despite these
objections, the bankruptcy court approved a
"cramdown" reorganization plan. The Lender appealed
to the district court, but the district court concluded that
the Lender's appeal was equitably moot. In 2015, we
reversed the district court's equitable mootness
determination, and remanded to the district court for
consideration of the Lender's appeal on the merits.
See In re Transwest Resort Props., Inc., 801 F.3d
1161 (9th Cir. 2015) (Transwest I).
remand, the district court evaluated the merits of the
Lender's appeal, and concluded that (1) an election under
11 U.S.C. § 1111(b)(2) does not require that a Chapter
11 plan contain a due-on-sale clause; and (2) 11 U.S.C.
§ 1129(a)(10) applies on a "per plan, " not a
"per debtor, " basis. This appeal is limited to the
construction of 11 U.S.C. § 1111(b)(2) and 11 U.S.C.
§ 1129(a)(10). Based on the plain language of both
statutory sections, we affirm.
AND PROCEDURAL BACKGROUND
2007, the Debtors acquired the Westin Hilton Head Resort and
Spa and the Westin La Paloma Resort and Country Club
(collectively, the Resorts). The Debtors were composed of:
Transwest Hilton Head Property, LLC, and Transwest Tucson
Property, LLC (Operating Debtors);
Hilton Head II, LLC, and Transwest Tucson II, LLC (Mezzanine
Debtors); and Transwest Resort Properties, Inc. (Holding
Company Debtor). The Holding Company Debtor was the sole
owner of the Mezzanine Debtors. The Mezzanine Debtors were,
in turn, the sole owners of the two Operating Debtors, who
owned and operated the Resorts. The acquisitions were
financed by (1) a $209 million mortgage loan to the Operating
Debtors from the Lender, secured by the Resorts (the
Operating Loan); and (2) a $21.5 million loan from Ashford
Hospitality Finance, LP (Mezzanine Lender), secured by the
Mezzanine Debtors' interests in the Operating Debtors
(the Mezzanine Loan).
2010, the Debtors filed for Chapter 11 bankruptcy. The five
cases involved were jointly administered, but not
substantively consolidated. The Lender filed a claim in the
bankruptcy proceeding for $298 million, based on the
Operating Loan. The Mezzanine Lender filed a $39 million
claim based on the Mezzanine Loan. The Lender subsequently
acquired this claim from the Mezzanine Lender.
Debtors filed a joint Chapter 11 reorganization plan (the
Plan), whereby third-party investor Southwest Value Partners
would acquire the Operating Debtors for $30 million, thereby
extinguishing the ...