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In a financial rehabilitation proceeding under RA 10142, Solstice Packaging, Inc. classifies creditors into Class S (secured) and Class U (unsecured). The rehabilitation plan provides: (i) Class S will receive 35% cash now and 65% of the allowed secured claim in new secured notes due in 5 years, secured by the same collateral; (ii) Class U will receive 70% of unsecured claims in cash now and the remaining 30% to be satisfied by new equity in the reorganized debtor. The plan cures defaults, is feasible, and has the support of Class S. After a hearing, the court confirms the plan notwithstanding Class U’s objection, invoking the cram-down mechanism under RA 10142. (a) Identify the controlling doctrine and the standard for cram-down under RA 10142. (b) Apply the standard to the facts: is Class U fairly and equitably treated, and is the cram-down permissible? (c) If the plan does not meet the standard, explain how the plan could be amended to satisfy cram-down requirements and what remedies would be available.

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Clara

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