Matter of Greystone III Joint Venture

Phoenix Mutual (plaintiff) loaned $8.8 million to Greystone III (defendant), secured by a first lien, to buy an office building. After default, Phoenix began foreclosure, and Greystone filed Chapter 11. The building was valued at about $5.8 million, leaving Phoenix with a $3.5 million unsecured deficiency claim, versus far smaller unsecured claims owed to trade creditors and taxing authorities. Greystone's reorganization plan classified Phoenix's large deficiency claim separately from the smaller trade-creditor claims, apparently to secure an impaired class's approval for confirmation.

Whether unsecured claims that are otherwise substantially similar and treated the same under a proposed reorganization plan may be classified separately for the sole purpose of manipulating the plan-confirmation vote.