In a case of first impression, the Tenth Circuit Court of Appeals has held that the amendments to the Bankruptcy Code in BAPCPA did not abrogate the Absolute Priority Rule in Individual Chapter 11 Cases. Its decision in Dill Oil Company, et al v. Arvin Stephens, et al (In re Stephens), 704 F.3d 1279 (10th Cir. 2013) agreed with the reasoning of the Fourth Circuit Court of Appeals in In re Maharaj, 681 F.3d 558 (4th Cir. 2012). In its opinion, the court addressed the differing interpretations courts have provided to sections 1115(a)(1) and 1129(b)(2)(B)(ii) of the Bankruptcy Code.
Section 1129(b)(2)(B)(ii) provides that, in order for a plan to be fair and equitable as against a dissenting class, “the holder of any claim or interest that is junior to the claims of such class will not receive or retain under the plan on acct of such junior claim or interest any property, except that in a case in which the debtor is an individual, the debtor may retain property included in the estate under section 1115, subject to the requirements of subsection (a)(14) of this section.” Section 1115(a)(1)(a)(1) provides that “in a case in which the debtor is an individual, property of the estate includes, in
addition to the property specified in section 541—(1) all property of the kind specified in section 541 that the debtor acquires after the commencement of the case but before the case is closed, dismissed, or converted to a case under chapter 7, 12, or 13. . . “.