Memorandum of Decision Re: Classification

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Decisions
IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA
In re NORTH BAY CENTER,                                                                                              No. 95-10666      Debtor. ___________________________/
Memorandum of Decision
     The court will deny confirmation of the debtor's plan for the following reasons:      1. The unsecured portion of the claim of creditor WHBA Real Estate Limited Partnership is separately classified. This sort of separate classification is not permitted. In re Tucson Self Storage, Inc., 166 B.R. 892 (9th Cir.BAP 1994). Without this improper classification, there is no assenting class of impaired non-insider claims as required by section 1129(a)(10) of the Bankruptcy Code.      2. The plan is not fair. The current equity interests are retained, despite the fact that they are contributing nothing to the plan (or next to nothing, if the court counts their last-minute offer to contribute $100,000.00). Since there are minimal unsecured creditors and minimal employees involved, this is essentially a two-way dispute between the owners of the debtor and the principal secured creditor. With no innocent third parties involved, it is unfair not to enforce the promise the debtor made to pay its secured debt according to negotiated terms.      3. The plan is illusory and unfeasible. It calls for the payment in full of WHBA's large deficiency claim by some unspecified time in the future, when the property has increased in value. The debtor has not convinced the court that the property will ever increase in value, let alone increase enough to pay WHBA's unsecured claim within any sort of reasonable time.      For the foregoing reasons, confirmation will be denied. Counsel for WHBA shall submit an appropriate form of order.
Dated: March 4, 1996                                               _______________________                                                                                               Alan Jaroslovsky                                                                                               U.S. Bankruptcy