Unpublished Disposition, 868 F.2d 1273 (9th Cir. 1989)

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U.S. Court of Appeals for the Ninth Circuit - 868 F.2d 1273 (9th Cir. 1989)

No. 87-4078.

United States Court of Appeals, Ninth Circuit.

Before FARRIS and POOLE, Circuit Judges, and KELLEHER, District Judge.* 

MEMORANDUM** 

James and Janet Nollkamper ("Nollkampers") filed timely notice of appeal from the district court's order reversing an order of the bankruptcy court. The bankruptcy court had entered an order confirming the debtors' (Nollkampers') plan of reorganization. Two days prior to oral argument before this Court, the Nollkampers filed a motion for an order declaring the appeal moot. We deny the Nollkampers' motion to declare the appeal as moot, and we affirm the district court's order reversing the order of the bankruptcy court.

In general, an appellant may voluntarily dismiss his appeal under Federal Rule of Appellate Procedure 42(b) with the approval of the court and the payment of costs to the appellee. See Shellman v. United States Lines, Inc., 528 F.2d 675, 678 (9th Cir. 1975), cert. denied, 425 U.S. 936 (1976). However, the Nollkampers have not moved to dismiss this appeal pursuant to Federal Rule of Appellate Procedure 42(b). Instead, they seek an order from this Court declaring their appeal moot. We will dismiss an appeal as moot when events occur which prevent this Court from granting any effective relief. In re Combined Metals Reduction Co., 557 F.2d 179, 187 (9th Cir. 1977).

The Nollkampers argue that this Court cannot grant effective relief because they have proceeded with the orderly liquidation of their estate and very little remains to be liquidated for the benefit of creditors. The Nollkampers also claim that unsecured creditors will not receive a larger dividend as a result of the Court's decision in this appeal. However, the Nollkampers appear to retain substantial bankruptcy assets which are available for administration by the court and which should be liquidated for creditors. The Nollkampers also have no confirmed plan of reorganization. In order to proceed under Chapter 11 of the Bankruptcy Code, the Nollkampers must obtain court approval of a reorganization plan. Therefore, we deny the Nollkampers' motion for an order declaring the appeal moot.

This appeal is based upon a reorganization plan proposed by the Nollkampers in order to settle and discharge their indebtedness under Chapter 11 of the Bankruptcy Code, 11 U.S.C. § 101 et seq. The bankruptcy court entered an order confirming the debtors' plan under 11 U.S.C. § 1129(a), finding that the plan had been accepted in writing by the creditors whose acceptance is required by law.

Section 1129(a) provides that the court shall confirm a reorganization plan only if each of the listed requirements is met. The requirement at issue, 1129(a) (10), provides:

If a class of claims is impaired under the plan, at least one class of claims that is impaired under the plan has accepted the plan, determined without including any acceptance of the plan by any insider.

11 U.S.C.A. Sec. 1129(a) (10) (West Supp.1988). 11 U.S.C. § 1126(c) sets out the standard for determining acceptance of a plan:

A class of claims has accepted a plan if such plan has been accepted by creditors ... that hold at least two-thirds in amount and more than one-half in number of the allowed claims of such class held by creditors....

In the present case, only creditors from one impaired class voted on the plan. From this class only two of five creditors voted, one voting to accept and one voting to reject. Therefore, "more than one-half in number of the allowed claims" did not approve the plan in this class and the approval requirement of Sec. 1129(a) (10) was not met.

The Nollkampers contend that, nonetheless, the requirements of Sec. 1129(a) (10) were met because the failure of an impaired class to vote on the plan should be deemed an acceptance. The Nollkampers rely on In re Ruti-Sweetwater, 836 F.2d 1263 (10th Cir. 1988) to support their argument. In Ruti-Sweetwater, the Tenth Circuit determined that a non-voting class of impaired creditors should be deemed to have accepted a reorganization plan for purposes of Chapter 11's cram-down provisions, Secs. 1129(a) (8) and 1129(b).

We refuse to extend the reasoning of Ruti-Sweetwater to Sec. 1129(a) (10). Requirement 1129(a) (10) is distinct from requirement 1129(a) (8) because the court may confirm a reorganization plan even if the requirements of Sec. 1129(a) (8) have not been met under the cram-down provision. Requirement 1129(a) (10), however, must be met for confirmation of a plan under either method of confirmation. Section 1129(a) (10) was amended by the Bankruptcy Amendments and Federal Judgeship Act of 1984 to require affirmative acceptance of a plan by at least one impaired class of claims. The amendment was designed to prevent the use of the Sec. 1129(b) cram-down provision where no impaired class has accepted the plan. See In re Douglas Hereford Ranch, Inc., 76 B.R. 781, 783 (Bkrtcy D. Mont. 1987); 5 Collier on Bankruptcy, Sec. 1129.02 at 1129-36.10 (15th ed. 1988).

The district court properly determined that the failure of an impaired class to vote may not be deemed an acceptance to meet the requirements of Sec. 1129(a) (10).

AFFIRMED.

 *

The Hon. Robert J. Kelleher, Senior United States District Judge for the Central District of California, sitting by designation

 **

This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Circuit Rule 36-3