The last time we checked, Judge Riblet in Santa Barbara was firmly on the fence regarding the Absolute Priority Rule (see post here). Since then, I have had a disclosure statement hearing where she made her views very clear.
First of all, she says that she believes that the Friedman case (466 B.R. 471) is dispositive for her: she must follow it. The case comes from the 9th Circuit Bankruptcy Appellate Panel, not the 9th Circuit itself, and there is some uncertainty whether a bankruptcy judge must follow BAP precedent the same way that she would follow the circuit court. Judge Riblet admits no uncertainty here: she follows the BAP.
However, that doesn’t mean she likes it. She urged my opponent to appeal her order if and when she confirms my client’s plan, because she said she wants to see Friedman overturned and have the Absolute Priority Rule apply to individual debtors as well as business debtors.
The objecting creditor has stated that he has authority to appeal this question to the Supreme Court. Any debtors’ attorneys out there that want to help me out on this?