Administrative Convenience Class

A class of claims under a Chapter 11 plan consisting of unsecured claims that are less than (or voluntarily reduced by the claimholder to) a relatively small amount. The amount is subject to bankruptcy court approval on a showing by the plan proponent that the amount designated in the plan is reasonable and necessary for administrative convenience. Often the convenience achieved is the payment in full of the claims in the administrative convenience class on the effective date of the plan or shortly after the effective date, thereby eliminating the expense of making payments over time on numerous small claims.

Debtors sometimes impair an administrative convenience class in an attempt to satisfy the One-Impaired-Class-Must-Accept-The-Plan Rule, but some courts have been unreceptive to that idea, finding that impairment of an administrative convenience class constitutes impermissible gerrymandering designed to improperly?“manufacture” an impaired accepting class.

Bankruptcy Code §§ 1122(b), 1129(a)(10). See also Classification of Claims, Cramdown, Gerrymandering, One-Impaired-Class-Must-Accept-The-Plan Rule.

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