In Re Greate Bay Hotel & Casino, Inc.

AMENDED OPINION ON CONFIRMATION

Before the court, for consideration are two competing plans of reorganization, the Park Place Entertainment Corporation plan and the High River plan, filed jointly with the Official Committee of Unsecured Creditors. For the reasons expressed herein, I conclude that both plans are con-firmable, and that the High River plan will be confirmed.

FACTS AND PROCEDURAL HISTORY

On January 5, 1998, Greate Bay Hotel and Casino, Inc. (“GBHC”), GB Holdings, Inc. (“Holdings”), and GB Property Funding Corporation (“Funding”) filed separate voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. GBHC, a New Jersey corporation and wholly-owned subsidiary of Holdings, a Delaware corporation, is the owner of the Sands Hotel & Casino, located in Atlantic City, New Jersey, and is licensed to conduct the gaming business of the Sands. Funding is also a wholly-owned subsidiary of Holdings, incorporated for the special purposes of borrowing funds, through the issuance of certain mortgage notes, and of loaning the proceeds to GBHC.. The sole asset of Funding is the intercompany note payable from GBHC, representing the proceeds of the notes which were loaned to GBHC. Holdings is a 79% owned, indirect subsidiary of the Greate Bay Casino Corporation (“GBCC”). Holdings’ sole material asset is its stock in its subsidiaries.

As of the petition date, the debtors’ largest indebtedness was in the form of certain 10-^% First Mortgage Notes due January 15, 2004, issued by Funding in September 1993, and guaranteed by GBHC and Holdings, in the original principal amount of $185,000,000 (“Old Notes”). State Street Bank and Trust Company is the successor trustee under the Indenture. As of the date of filing, $182,500,000 in principal plus accrued interest of $9,372,000 were outstanding on the Old Notes. Post petition payments reduced the principal balance to $181,972,000. High River, representing the interests of Carl Icahn, holds approximately $62,833,000 (or 34.4%) of the Old Notes. Merrill Lynch Asset Management, L.P. and its affiliate Fund Asset Management, L.P. (collectively, “MLAM”), own approximately $70.2 million (38.5%) of the Old Notes. Park Place holds approximately $26.4 million (14.5%) of the Old Notes. The Old Notes were not in default as of the petition date.

Additional pre-petition indebtedness of the combined debtors includes approximately $6.7 million of general unsecured debt, and two Subordinated Promissory *219 Notes (“Intercompany Notes”) executed by GBHC, with an aggregate amount due as of the petition date of $15 million in principal, and approximately $3.5 million in interest. Repayment of the Intercompany Notes, now due to Greate Bay Holdings, LLC (“GBHLLC”), is made subordinate to the payment in full of the Old Notes.

The subject property, the Sands Hotel and Casino, is one of twelve operating casinos in Atlantic City, New Jersey. The Sands is located on approximately 4.8 acres of land, one-half block from the boardwalk. The Sands consists of a casino and simulcasting facility, which contains approximately 2,000 slot machines and 125 table games; a hotel with 532 rooms, six restaurants, two cocktail lounges and two private lounges; an 800-seat cabaret the-atre; retail space; an adjacent nine-story executive building; a “People Mover”, an elevated, enclosed, one-way moving sidewalk connecting the Sands to the boardwalk, and parking for about 1,750 vehicles.

The debtors continue to operate their businesses and manage their properties pursuant to sections 1107(a) and 1108 of the Bankruptcy Code as debtors-in-possession. After several extensions, the debtors’ exclusivity period in which to file a plan of reorganization terminated on January 11, 1999. The debtors continued to attempt to attract interest from outside sources to propose a plan, and continued to seek consensus among the bondholders, including MLAM and Icahn, regarding a plan framework.

The debtors filed their first joint plan of reorganization and disclosure statement on June 1, 1999. After several revisions, the third modified disclosure statement was approved on October 4, 1999. The balloting deadline was set for November 19, 1999, and confirmation was scheduled for December 17,1999.

Under debtors’ stand-alone plan, the creditors and shareholders were divided into seven classes. Class 2, the Old Notes, would receive $80 million of New Notes, bearing interest at 10%, and would receive all of the equity of the reorganized debtors, in the form of 10 million shares of the New Common Stock. Class 3, consisting solely of a $400,000 secured claim held by Ruth Lubin, would be treated by either payment in full, deferred cash payments, surrender of the collateral, or in accordance with an anticipated agreement between the debtor and the creditor. Class 4, the general unsecured claimants, would receive payments over the course of five years, amounting to a present value dividend of approximately 40%. Three other classes, those of Intercompany Notes, Subordinated Claims, and Old Common Stock, would not receive a distribution under the plan and were deemed to have rejected the plan.

Debtors’ stand-alone plan was supported by High River, but was opposed by MLAM for various reasons, including the prospect that the distribution to Old Note-holders of all the equity of the reorganized debtors would cause MLAM to hold approximately 38% of the newly issued shares of stock. MLAM, as an institutional investor in gaming securities, may not hold more than 10% of the shares of stock of a gaming enterprise in the State of New Jersey without licensure or exemption. N.J.S.A. 5:12-85(f). MLAM, as a nonoperational investor, did not intend to seek licensure in New Jersey for casino ownership, and believed that the limitation on equity ownership for institutional investor exemption by the Casino Control Commission was approximately 20%. MLAM determined to seek another plan proponent, and succeeded, in October 1999, in interesting Park Place in becoming such a proponent.

. On October 22, 1999, MLAM and Park Place agreed that Park Place would purchase at least $25 million of Old Notes on the open market, and would be the proponent of a plan, The Park Place plan contemplated the issuance of New Notes worth $120 million, and the purchase of 51% of the equity of the reorganized debt- *220 or for $80 million. Old Noteholders would receive the remaining 49% of the equity. A management contract in favor of Park Place was included, with a minimum annual fee of $2 million, plus an incremental incentive schedule based on EBITDA (earnings before income, taxes, depreciation and amortization). MLAM agreed to write the indenture, while Park Place agreed to write the governance provisions. MLAM agreed to sell, and Park Place agreed to purchase, all of the equity MLAM would otherwise receive under the plan.

The agreement between Park Place and MLAM was subsequently revised to provide for the issuance to Old Noteholders of $128 million in New Notes, plus 42.308% of the equity interests in the reorganized debtors. The exchange option, to which MLAM agreed to be bound, offered to Old Noteholders the opportunity to exchange shares of stock for new notes at the rate of $3.61 per share. 1 Park Place increased the percentage of equity it would acquire in exchange for its cash contribution of $30 million to 57.692% in order to achieve a minimum equity position in the reorganized debtors of 80%, the percentage needed to insure inclusion of the reorganized debtors on Park Place’s consolidated financial statement.

On November 3, 1999, counsel for MLAM conveyed the basic terms of the proposed Park Place plan to the debtors, requesting the debtors’ support for the plan. The debtors responded by seeking and obtaining from the court a suspension of the balloting process and confirmation hearings on their stand-alone plan, then scheduled for December 17, 1999, to allow the debtors to engage in a due diligence process. During that process, the debtors successfully encouraged the participating parties, particularly the Icahn Group and Park Place, to engage in a bidding process to maximize the return to the estate. When it became apparent that competing plans would be submitted by High River, on behalf of the Icahn Group, and by Park Place, the proponents were directed to file plans- and disclosure statements by January 18, 2000, which they did. The debtors were also directed to file a master disclosure statement, which was also provided. Following several revisions, the three disclosure statements were approved and forwarded to the creditor body. 2

Logan & Company, Inc., appointed by this court on March 24, 1998, acted as the solicitation agent for the debtors for the purposes of receiving and tabulating the ballots for the two competing plans. The creditors were offered the option to vote in favor of both plans, and to specify which plan each such creditor preferred. The voting results are appended hereto as Schedule A.

Under 11 U.S.C. § 1126(c), “A class of claims has accepted a plan if such plan has been accepted by creditors ... that hold at least two-thirds in amount and more than one-half in number of the allowed claims of such class.” Neither proponent received sufficient accepting votes for their plan from the Class 2 Old Noteholders. The High River plan was accepted by the Class 4 general unsecured claimants, and the Park Place plan was accepted by the sole Class 3 claimant, Ruth Lubin, and the Class 5 Intercompany Noteholders.

DISCUSSION

Our starting point is to determine whether either or both of the plans as presented are confirmable. The requirements for confirmation of a proposed Chapter 11 plan are listed in 11 U.S.C. *221 § 1129. The proponent bears the burden of establishing the plan’s compliance with each of these requirements. In re Gulfstar Indus., Inc., 236 B.R. 75, 77 (M.D.Fla.1999). Creditors objecting to the proposed plan bear the burden of producing evidence to support their objection. In re Shortridge, 65 F.3d 169, 1995 WL 518870 (6th Cir.1995) (Unpublished opin.); In r& Goddard, 212 B.R. 233, 239 n. 7 (D.N.J.1997). The Code imposes an independent duty upon the court to determine whether a plan satisfies each element of § 1129, regardless of the absence of valid objections to confirmation. In re Bolton, 188 B.R. 9Í3, 915 (Bankr.D.Vt.1995); In re Shadow Bay Apartments, Ltd., 157 B.R. 363, 365 (Bankr.S.D.Ohio 1993).

A consensual plan requires the proponent to demonstrate that the plan satisfies all thirteen elements of section 1129(a), in which case the plan must be confirmed. Beal Bank, S.S.B. v. Waters Edge L.P., 248 B.R. 668 (D.Mass.2000). A nonconsensual plan requires the proponent to prove all but one of thé thirteen elements, that all classes consent or are unimpaired, 11 U.S.C. § 1129(a)(8), plus the additional requirements of section 1129(b), including the requirements that the plan does not unfairly discriminate against dissenting classes and that treatment of such dissenting classes is fair and equitable. Both plans in this case are nonconsensual.

We will , address each of the requirements of section 1129(a) and (b) with respect to each plan. As a threshold matter, we note that there is no challenge to the compliance by both competing plans with subsections 1129(a)(4) (court approval of payments) 3 ; (a)(5) (disclosure .of management) 4 ; (a)(6) (rate of approval) 5 ; (a)(7) (best interest of creditors test) 6 ; (a)(9) (treatment of priority claims) 7 ; (a)(12) (28 U.S.C. § 1930 fees); and (a)(13) (retiree benefits). We note as well that the objections filed by GBCC against the High River plan, and - by Las Vegas Sands, Inc. against the Park Place plan, in connection with the Sands Trademark, have been resolved amicably among all parties.

Both the High River and Park Place plans contain non-debtor release clauses that have been objected to by the United States Trustee as violative of 11 U.S.C. § 524(e). 8 The plan proponents contend that the exculpation provisions are permissible and fully consistent with current case law.

Section 524(e) provides that a debt- or’s discharge does not, by itself, serve to discharge non-debtor third parties of their liabilities. Copelin v. Spirco, Inc., 182 F.3d 174, 182 (3d Cir.1999); First Fidelity Bank v. McAteer, 985 F.2d 114, 118 (3d *222 Cir.1993). Simply put, the “Bankruptcy Code does not explicitly authorize the release and permanent injunction of claims against non-debtors.” In re Continental Airlines, 203 F.3d 203, 211 (3d Cir.2000). In reviewing decisions from other circuits, 9 the Third Circuit, in Continental Airlines, reflected, without establishing a “blanket rule”, that even “the most flexible tests for the validity of non-debtor releases” look to certain “hallmarks of permissible non-consensual releases — fairness, necessity to the reorganization, and specific factual findings to support these conclusions.” 203 F.3d at 214.

Here, as in Continental Airlines, the proponents have failed to establish any basis to support the fairness or necessity of the non-debtor releases. The exculpation clauses are legally insupportable, and must be stricken. The objection of the United States Trustee is sustained. The exculpation provisions contained in the Park Place plan (12.2, 12.4, 12.5) and the High River plan (12.02) are invalidated and shall be severed from their respective plans. Both plans contain severance clauses which leave other provisions of the plan unaffected if a provision is invalidated. 10

We turn now to consideration of the provisions of each plan, and the § 1129 elements that remain to be resolved.

I. The High River Plan.

The High River plan is presented on behalf of the Cyprus L.L.C. and the Larch L.L.C., recently formed limited liability corporations in Delaware, hereinafter referred to collectively as “High River”. Cyprus is owned by the Starfire Holding Corporation and the Barberry Corporation, each of which is wholly owned by Carl C. Icahn. Larch is also wholly owned by Mr. Icahn. Collectively High River holds approximately $62,833,000 (or 34.4%) of the “Old Notes”.

Mr. Icahn is an active owner and' investor in various businesses, including several gaming entities. Mr. Icahn’s related entities own and operate the Stratosphere Hotel and Casino and Arizona Charley’s Inc., both located in Las Vegas, Nevada. Mr. Icahn’s related entities also hold approximately $34 million (or 40%) of the bonds of the Claridge at Park Place, Inc., as well as other gaming interests. Mr. Icahn has a personal net worth in excess of $1 billion, and confirms that he will provide adequate funding of Cyprus and Larch to consummate the High River plan.

To fund the High River plan, High River proposes to buy 46.25% of the New Common Stock for $65 million in cash. The *223 infusion of new capital will be used to consummate the plan and to implement the debtors “Global Development Plan 2000-2002”. That plan envisions, among other things, the development of a hotel tower with 200 new rooms, additional casino space and 800 additional slot machines. Under the High River plan, the Old Note-holders will receive a pro rata portion of $110 million in New Notes and 5,375,000 shares of New Common Stock (after the effect of the subordination of the Inter-company Notes). The shares of New Common Stock to be distributed to Old Noteholders represent 53.75% of the equity in the reorganized debtors. The general unsecured claims will receive between 80% and 100% of their allowed claims, depending upon the value to be received by the Old Noteholders on their unsecured deficiency claims. The secured claim of Ruth Lubin is treated in the same manner as in debtors’ stand-alone plan. 11 Inter-company Note claims, other subordinated claims, and Old Common Stock interests, which will be cancelled and extinguished, receive no distributions under the plan and are therefore deemed to have rejected the plan. 11 U.S.C. § 1126(g).

No contest has been raised regarding the compliance by High River with § 1129(a)(2) (proponent’s compliance with applicable Title 11 provisions); (a)(3) (good faith of the plan), and (a)(10) (acceptance by impaired class), 12 and I conclude that the High River plan meets these requirements. I will review the sections in dispute, including § 1129(a)(1), (a)(ll) and § 1129(b).

A. Section 1129(a)(1).

Section 1129(a)(1) provides that:

The court shall confirm a plan only if all of the following requirements are met:

(1) The plan complies with the applicable provisions of this title.

11 U.S.C. § 1129(a)(1).

The phrase “applicable provisions” is not defined. The legislative history reflects that “the applicable provisions of chapter 11 [includes sections] such as section 1122 and 1123, governing classification and contents of plan.” H.R.Rep. No. 595, 95th Cong., 2nd Sess. 412 (1977), U.S.Code Cong & Admin.News 1978 pp. 5963, 6368; S.Rep. No. 989, 95th Cong., 2d Sess. 126 (1978), U.S.Code Cong & Admin.News 1978 pp. 5787, 5912. See In re Aspen Limousine Serv., Inc., 193 B.R. 325, 340 (D.Colo.1996); In re Texaco Inc., 84 B.R. 893, 905 (Bankr.S.D.N.Y.), appeal dismissed, 92 B.R. 38 (S.D.N.Y.1988). Two objectors to the High River plan, Merrill Lynch and GBHLLC, have expressed classification concerns.

Merrill Lynch claims that High River has improperly classified the deficiency claims of Old Noteholders by placing both the secured and unsecured deficiency portions of the Old Noteholder’s claims in the same class (Class 2), and the claims of the trade creditors in a separate unsecured class (Class 4).

Section 1123(a)(1) and (a)(4) mandate, in pertinent part, that “a plan shall — designate, subject to section 1122 of this title, classes of claims,” and shall “provide the same treatment for each claim or interest of a particular class, unless the holder of a particular claim or interest agrees to a less favorable treatment.” Section 1122(a) permits the placement of a claim or interest in a particular class “only if such claim or interest is substantially similar to the other claims or interests of such class.” Neither section addresses the opportunity to separately classify similar claims.

*224 While most courts agree that a proponent has “considerable discretion to classify claims and interests according to the facts and circumstances of the case.” In re Holywell Corp., 913 F.2d 873, 880 (11th Cir.1990), that discretion is tempered by the caveat that a proponent may “not classify similar claims differently in order to gerrymander an affirmative vote on a reorganization plan.” In re Briscoe Enters., Ltd., II, 994 F.2d 1160, 1167 (5th Cir.), cert. denied, 510 U.S. 992, 114 S.Ct. 550, 126 L.Ed.2d 451 (1993). See also In re Boston Post Road L.P., 21 F.3d 477 (2d Cir.1994), cert. denied, 513 U.S. 1109, 115 S.Ct. 897, 130 L.Ed.2d 782 (1995); In re Lumber Exch. Bldg. L.P., 968 F.2d 647, 650 (8th Cir.1992) (affirming, as improper, separate classification that was “a thinly veiled attempt to manipulate the vote to assure acceptance of the plan by an impaired class and meet the requirements of 11 U.S.C. § 1129(a)(10)”); In re Daly, 167 B.R. 734, 736 (Bankr.D.Mass.1994 ) (finding impaired claim “was plainly contrived and engineered solely to create an accepting impaired class”); In re 11,111, Inc., 117 B.R. 471, 476 (Bankr.D.Minn.1990) (acknowledging “potential for abuse when the debtor has the power to classify creditors in a manner to assure that at least one class of impaired creditors will vote for the plan, thereby making it eligible for the cram down provisions”); In re Club Assocs., 107 B.R. 385, 401 (Bankr.N.D.Ga.1989) (disallowing “[a]n alteration [that] is clearly intended only to create an impaired class to vote in favor of a plan so that a debtor can effectuate a cramdown”).

Some courts have been receptive to “good business reasons to support separate classification. The determination of ‘whether there were any good business reasons to support the debtor’s separate classification is a question of fact.’ ” In re New Midland Plaza Assocs., 247 B.R. 877, 893 (Bankr.S.D.Fla.2000) (quoting In re Greystone III Joint Venture, 948 F.2d 134, 141 n. 7 (5th Cir.1991)).

Separate classification of similar claims has been found to be permissible where the classification is offered in good faith, does not foster an abuse of the classification system, and promotes the rehabilitative goals of Chapter 11. In re 11,111, Inc., 117 B.R. at 476 (finding that “§ 1122 authorizes flexibility in classification consistent with- the rehabilitative purposes of chapter 11”); In re Meadow Glen, Ltd., 87 B.R. 421, 425 (Bankr.W.D.Tex.1988) (permitting separate classification that is “fair and equitable, non-discriminatory, ... in ‘good faith’ ” or “not an abuse of classification system”).

The question of separate classification of similar claims has been addressed by the Third Circuit Court of Appeals in John Hancock Mutual Life Insur. Co. v. Route 37 Business Park Assocs., 987 F.2d 154, 158 (3d Cir.1993) and In re Jersey City Medical Center, 817 F.2d 1055 (3d Cir.1987). In Route 37, the unsecured deficiency claim of the mortgagee was classified separately from other unsecured debt. The plan called for identical payments to each of the two classes of unsecured claims of 5% of their claims payable over two years. The court invalidated the classification scheme as an improper gerrymandering of the creditor class with no valid justification. Nevertheless, the Court confirmed the Jersey City Medical Center holding that a plan may place similar claims in separate classes, if the classification is reasonable, Id., subject to a reasonableness assessment that is “informed by the two purposes that classification serves under the Code: voting to determine whether a plan can be confirmed and treatment of claims under the plan.” Id. at 159.

Thus, where, ... the sole purpose and effect of creating multiple classes is to mold the outcome of the voting, it follows that the classification scheme must provide a reasonable method for counting votes. In a “cram down” case, this means that each class must represent a voting interest that is sufficiently dis *225 tinct and weighty to merit a separate voice in the decision whether the proposed reorganization should proceed. Otherwise, the classification scheme would simply constitute a method for circumventing the requirement set out in 11 U.S.C. § 1129(a)(10).

Id.

In this case, there is a vastly different factual landscape than was presented in Route 37. In contrast to the identical treatment of the deficiency claimants and the other general unsecured creditors in Route 37, in the form of cash payments over time, here, the Old Note Holders are receiving a package of securities, including debt and equity, while the general unsecured creditors are receiving cash on the effective date of the plan. The business justification for the disparate treatment is readily apparent. The only opportunity of a proponent to offer the entire enterprise value of the debtors to the deficiency claimants, holding claims of over $80 million, is to offer them the equity in the reorganized debtor. In contrast, the cash payout to unsecured creditors contemplated by the plan to unsecured creditors, holding claims totaling approximately $6.7 million, is achievable and in line with the expectations of all parties in interest.

It must be recalled that the High River classification scheme to which MLAM objects is the identical scheme utilized in the debtors’ stand-alone plan, and in each of the competing plans. The scheme was initially formulated by the debtors when they first presented their stand-alone plan in June 1999. 13 When MLAM succeeded, in October 1999, in soliciting Park Place’s interest in proposing a plan, MLÁM agreed to draft the plan of reorganization for Park Place. The classification scheme employed by MLAM for the Park Place plan is the same classification scheme to which they now object. At the time the competing plans of Park Place and High River were submitted, Park Place and MLAM were confident that the Class 4 general unsecured creditors, many of whom were vendors who provided goods and services to Park Place’s other Atlantic City properties, would either vote to accept the Park Place plan and to reject the High River plan, or would be deadlocked, potentially leaving the High River plan without an accepting impaired class for § 1129(a)(10) purposes. In that context, MLAM’s plan for Park Place simply adopted the debtors’ previous classification formulation, as did High River.

MLAM’s objection to the High River plan, with the underlying suggestion that the scheme was engineered solely to mold or manipulate the outcome of the voting or otherwise improperly gerrymander the voting process, cannot be sustained. There should be no question that the voting interest of the Old Noteholders as a whole, versus the voting interest of the trade creditors, are “sufficiently distinct and weighty to merit a separate voice” in these proceedings. Id. 987 F.2d at 159.

GBHLLC, which now holds the Class 5 Intercompany Notes, also objects to the High River plan, contending that the plan improperly classifies the Class 5 claims separately from Class 4 general unsecured creditors. The High River plan proposes to allocate 995,079 shares of New Common Stock to Class 5 Intercompany Notes, which would then be distributed to holders of the Old Notes pursuant to applicable subordination agreements between GBHLLC and the debtors. In pertinent part, the subordination agreements contained in the promissory notes evidencing *226 the debtors’ indebtedness provide that the holders of the Old Notes “shall be entitled to receive payment in full of all amounts due ... before Lender [now GBHLLC] is entitled to receive any payment on account of this Note” and that the Old Noteholders are entitled to receive “any payment or distribution ... which may be payable or deliverable in respect of this Note.”

A contractual subordination agreement is enforceable in bankruptcy “to the same extent that such agreement is enforceable under applicable nonbankruptcy law.” 11 U.S.C. § 510(a). See In re Southeast Banking Corp., 156 F.3d 1114, 1121-22 (11th Cir.1998) (section 510(a) requires subordination agreements to be enforced on par with other nonbankruptcy contracts). Enforcement of the subordination agreement in the context of the High River plan mandates that the proposed distribution on account of the Intercompany Notes be added to the distribution to be received by Class 2 Old Noteholders.

As reflected above, section 1122(a) permits the placement of a claim or interest in a particular class “only if such claim or interest is substantially similar to the other claims or interests in that class.” 11 U.S.C. § 1122(a). The Intercompany Notes are not substantially similar to Class 4 general unsecured claims, because no distribution can be received by the In-tercompany Noteholders prior to payment in full of the Old Notes. 14 The High River plan will not satisfy the Old Noteholders in full. The classification scheme, treating Class 5 Intercompany notes separately, is proper.

I conclude that the High River plan complies with § 1129(a)(1).

B. Section 1129(a)(ll).

Section 1129(a)(ll) requires a demonstration by the proponent of a plan that:

Conflrmation of the plan is not likely to be followed by the liquidation, or the need for further financial reorganization, of the debtor or any successor to the debtor under the plan, unless such liquidation or reorganization is proposed in the plan.

11 U.S.C. § 1129(a)(ll).

This section imposes a “feasibility” requirement for confirmation. Although the standards for determining feasibility are not rigorous, In re Orfa Corp. of Philadelphia, 129 B.R. 404, 410 (Bankr.E.D.Pa.1991), the court is obligated to independently evaluate the plan and determine whether it offers a reasonable probability of success. In re Monnier Bros., 755 F.2d 1336, 1341 (8th Cir.1985); In re Sovereign Oil Co., 128 B.R. 585, 586 (Bankr.M.D.Fla.1991).

The proponent must present evidence to sufficiently demonstrate that the plan has a reasonable chance of succeeding. In re Acequia, Inc., 787 F.2d 1352, 1364 (9th Cir.1986). “Guaranteed success in the stiff winds of commerce without the protections of the Code is not the standard under [this section].... All that is required is that there be a reasonable assurance of commercial viability.” In re Prudential Energy Co., 58 B.R. 857, 862 (Bankr.S.D.N.Y.1986).

One court listed several factors to consider in determining whether a plan is feasible. They include:

(1) the adequacy of the debtor’s capital structure;

(2) the earning power of its business;

(3) economic conditions;

(4) the ability of the debtor’s management;

(5) the probability of the continuation of the same management; and

*227 (6) any other related matters which determine the prospects of a sufficiently successful operation to enable performance of the provisions of the plan.

In re Temple Zion, 125 B.R. 910, 915 (Bankr.E.D.Pa.1991); In re Landmark at Plaza Park, Ltd., 7 B.R. 653, 659 (Bankr.D.N.J.1980).

As to the High River plan, all of the experts who testified agreed that the initial capitalization of the debtor, including $65 million of cash and $110 million of debt, offers a reasonable capital structure as a basis for the debtor’s financial prospects going forward. The cash available for capital improvements and the relatively low debt are particularly important for the Sands, which has been “a relatively underprivileged property in terms of capital improvements” in the Atlantic City environment, in which capital improvements are critical. The anticipation of significant development in Atlantic City requires significant investment in the property to maintain a competitive role. The cash infusion proposed by the High River plan provides that opportunity.

As to the earning power of the reorganized debtors under the High River plan, the debtors revised their projections for performance in the year 2000 in January, 2000. These projections, contemplating the achievement of an EBITDA of $32.473 million dollars, 15 appear to be achievable. The debtors’ Chief Executive Officer, Alfred J. Luciani, a highly experienced casino operator who came to the Sands in November 1999, testified that the debtors are ahead of projections on an operating basis and on budget on a gross basis.. The projections were prepared in January 2000 based upon the implementation of certain cost savings initiated by the new CEO, including the consolidation of mailings, cost controls with regard to certain purchases and revision of the entertainment program to reduce risks. Notwithstanding the disruption of the recent construction of a new Pacific Avenue entrance, as well as the introduction of new design elements in connection with the new entrance, the property has been able to remain “reasonably close” to projections. Additional innovations, including the improvement of food and beverage offerings, a marketing initiative based on the Sands slot data acquisition system, and the introduction of the first live musical buffet in Atlantic City, have begun. The “fair share” numbers for the Sands during the last 12 months, reflecting the percentage of gaming revenues enjoyed by the Sands based on the number of tables and slots, have decreased, from 95.2% to 92.2%. Nevertheless, the fair share numbers reflect only gross revenues, during the Chapter 11 reorganization, and do not reflect fully the recent improvements initiated by the new CEO.

The EBITDA projections for the year 2000 do not take into account the plans of current management, which are in process, to decrease the number of tables and to increase the number of slot machines. Several witnesses for 'both proponents agreed that the “direction of the marketplace” is to focus on slot machines, which are more profitable than gaming tables. Approximately 75% to 85% of the revenues in Atlantic City are generated from slot machines. Current management is planning to increase the number of slot machines by approximately 200, to a total of 2,200, by August 2000.

On the issue of the contemplated management for the reorganized debtors, under the former parent organization controlling the Sands, previous management had achieved some success in the early 1990’s, through 1995, reaching EBITDA after management fees of approximately $37 million. Since then, the Sands has struggled through several management changes, dipping to an EBITDA of approximately $11 million in 1996, and remaining in the range of $21 million to $23 million from 1997 through 1999. The High River *228 plan contemplates the retention of present management, under the control of a new Board of Directors headed by Carl Icahn.

There is ample basis to believe that the High River plan offers a reasonable probability of success going forward. Various measurements of feasibility, including debt to cash flow, beginning cash and year-end excess cash, are favorable. The development plan formulated by the debtors, contemplating the construction of a hotel tower, the addition of public space and the addition of 800 slot machines, is sketchy, and the cash infusion is insufficient to support the projects. 16 . Nevertheless, the significant cash infusion of $65 million, combined with the reduced debt obligation, will offer flexibility to the reorganized debtors to make capital improvements and to meet ongoing obligations. As well, the Icahn Group has received Interim Casino Authorization, issued May 10, 2000 by the Casino Control Commission, to operate the Sands.

C. 1129(b) Cram Down.

Where, as here, at least one impaired class of claims has not consented to the proposed plan, the “cram down” provisions of 11 U.S.C. § 1129(b)(1) come into play. The cram down provisions require confirmation “if the plan does not discriminate unfairly, and is fair and equitable” with respect to each impaired non-consenting' plan. 11 U.S.C. § 1129(b)(1). ■ Each of these requirements as to the High River plan are reviewed herein.

1. Unfair Discrimination.

The concept of unfair discrimination is not defined under the Bankruptcy Code. Various standards have been developed by the courts to test whether or not a plan unfairly discriminates. In re Dow Corning Corp., 244 B.R. 705, 710 (Bankr.E.D.Mich.1999). See also G. Eric Brunstad, Jr. and Mike Sigal, “Competitive Choice Theory and the Unresolved Doc-' trines of Classification and Unfair Discrimination in Business Reorganizations Under the Bankruptcy Code”, 55 Bus.Law 1, 46-48 (Nov.1999) (describing various tests). The hallmarks of the various tests have been whether there is a reasonable basis for the discrimination, and whether the debtor can confirm and consummate a plan without the proposed discrimination. See, e.g., In re Ambanc La Mesa L.P., 115 F.3d 650, 656 (9th Cir.1997), cert. denied, 522 U.S. 1110, 118 S.Ct. 1039, 140 L.Ed.2d 105 (1998); In re Jim Beck, Inc., 214 B.R. 305, 307 (W.D.Va.1997), aff'd, 162 F.3d 1155 (4th Cir.1998); In re Salem Suede, Inc., 219 B.R. 922, 933 (Bankr.D.Mass.1998) (“if the plan protects the legal rights of a dissenting class in a manner consistent with the treatment of other classes whose legal rights are intertwined with those of the dissenting class, then the plan does not discriminate unfairly”) (quoting Kenneth N. Klee, “All You Ever Wanted to Know About Cram Down under the New Bankruptcy Code”, 53 Am.Bankr.L.J. 133, 142 (1979)); In re Crosscreek Aparts., Ltd., 213 B.R. 521, 537 (Bankr.E.D.Tenn.1997) (“at a minimu