                                                                   FILED
                                                                     DEC 11 2015
 1
                                                                SUSAN M. SPRAUL, CLERK
 2                                                                U.S. BKCY. APP. PANEL
                                                                  OF THE NINTH CIRCUIT

 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )       BAP No. EC-14-1550-DJuF
                                   )
 6   CITY OF STOCKTON, CALIFORNIA, )      Bk. No. 12-32118-CMK
                                   )
 7                   Debtor.       )
     ______________________________)
 8                                 )
     FRANKLIN HIGH YIELD TAX-FREE )
 9   INCOME FUND; FRANKLIN         )
     CALIFORNIA HIGH YIELD         )
10   MUNICIPAL FUND,               )
                                   )
11                   Appellants,   )
                                   )
12   v.                            )       OPINION
                                   )
13                                 )
     CITY OF STOCKTON, CALIFORNIA, )
14                                 )
                     Appellee.     )
15   ______________________________)
16
17                  Argued and submitted on November 19, 2015
                            at Sacramento, California
18
                            Filed - December 11, 2015
19
               Appeal from the United States Bankruptcy Court
20                 for the Eastern District of California
21        Hon. Christopher M. Klein, Bankruptcy Judge, Presiding
22
23   Appearances:     James C. Johnston, Jones Day, appeared and argued
                      on behalf of Appellants Franklin High Yield Tax-
24                    Free Income Fund and Franklin California High
                      Yield Municipal Fund.
25
                       Marc A. Levinson, Orrick, Herrington & Sutcliffe
26                     LLP, appeared and argued on behalf of the Appellee
                       City of Stockton, California.
27
28   Before:   DUNN, JURY AND FARIS, Bankruptcy Judges.
 1   DUNN, Bankruptcy Judge:
 2
 3         Franklin High Yield Tax-Free Income Fund and Franklin
 4   California High Yield Municipal Fund (collectively, “Franklin”)
 5   appeal the bankruptcy court’s order (“Confirmation Order”)
 6   confirming the City of Stockton, California’s (“City”) first
 7   amended plan of adjustment (“Plan”) in chapter 9.1    We DISMISS,
 8   as equitably moot, Franklin’s appeal of the Confirmation Order
 9   generally and otherwise AFFIRM the Confirmation Order’s treatment
10   of Franklin’s general unsecured claim under the Plan.
11                        I.   FACTUAL BACKGROUND2
12   A.   Events prior to bankruptcy
13         The financial problems that drove the City to seek chapter 9
14   relief did not arise overnight.     The City was an epicenter of the
15   subprime mortgage default crisis that arose in conjunction with
16
17
           1
              Unless otherwise indicated, all chapter and section
18   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
19   all “Rule” references are to the Federal Rules of Bankruptcy
     Procedure, Rules 1001-9037.
20
           2
              Historical background facts are taken primarily from the
21   City’s modified disclosure statement, filed on November 21, 2013
22   (“Disclosure Statement”), and the bankruptcy court’s published
     opinion on the City’s eligibility for chapter 9 relief in In re
23   City of Stockton, California, 493 B.R. 772 (Bankr. E.D. Cal.
     2013). Franklin only included portions of the Disclosure
24
     Statement in their excerpts of record. We have exercised our
25   discretion to review the entire Disclosure Statement and certain
     other documents in the electronic record of the City’s main
26   chapter 9 case. See O’Rourke v. Seaboard Sur. Co. (In re E.R.
27   Fegert, Inc.), 887 F.2d 955, 957-58 (9th Cir. 1988); Atwood v.
     Chase Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9
28   (9th Cir. BAP 2003).

                                       -2-
 1   the recession that began in 2007-08.   During this period, real
 2   estate values, both commercial and residential, in the City
 3   declined by around 50%, and unemployment grew to about 22%.     The
 4   median home price in the City dropped from $397,000 in 2006 to
 5   $109,000 in 2012, a decline of 72%.    Disclosure Statement, at 17.
 6   The City had one of the highest foreclosure rates in the country.
 7   Consequently, property tax, sales tax and other public revenues
 8   declined precipitously.
 9         Two self-inflicted factors worked to exacerbate
10   significantly the City’s financial problems:   1) As noted by the
11   bankruptcy court,
12         In better times, [the City] committed its general fund
           to back long-term bonds to finance development projects
13         based on an overly-sanguine “if-you-build-it-they-will-
           come” mentality. They did not come. Hence project
14         revenues were insufficient to pay project bills.
15   City of Stockton, 493 B.R. at 779.
16         2) In addition, the City had a history of compensating its
17   employees at above-market levels.
18         Among other things, the City paid for generous health
           care benefits to which employees did not contribute,
19         including lifetime health care regardless of length of
           service. It permitted, to an unusual degree, so-called
20         “add-pays” for tasks that allowed nominal salaries to
           be increased to totals greater than those prevailing
21         for other municipalities. And there were pre-
           determined automatic annual cost-of-living pay
22         increases not tied to the state of the economy or local
           finances. . . . Pensions were allowed to be based on
23         the final year of compensation, which compensation
           could include essentially-unlimited accrued vacation
24         and sick leave. This led to a phenomenon of so-called
           “pension-spiking” in which a pension could be
25         substantially greater than the retiree’s actual final
           salary. Nor were individual employees required to
26         contribute to their pensions.
27   Id.
28         The City’s financial problems were obscured by faulty

                                     -3-
 1   management and accounting practices.    “City accounts were in such
 2   disarray that it has taken literally years to unscramble them.”
 3   Id.   However, ultimately, the City’s fiscal excesses,
 4   particularly in light of the recession, proved unsustainable.
 5         Beginning in 2008, the City declared a series of financial
 6   emergencies and took certain unilateral actions to try to get its
 7   fiscal house in order.   The City reduced its work force “by 25%
 8   from 1,886 on July 1, 2008 to 1,420 on December 31, 2011.”     Id.
 9   at 780.   “[S]worn police officers were cut by 25%, non-sworn
10   police staffing by 20%, fire staffing by 30%, and non-safety
11   staffing by 43%.”    Disclosure Statement, at 9.    Compensation to
12   City employees was reduced by $52 million, and staffing and
13   service levels were cut by $38 million, “for an overall General
14   Fund budget reduction of approximately $90 million during fiscal
15   years 2009-10, 2010-11, and 2012-13.”   Id.    Unfortunately, these
16   actions were not enough to solve the City’s fiscal problems.
17         As of June 30, 2012, the City’s general fund budget for the
18   2012-13 fiscal year was projected to be $25.9 million under
19   water, with funding potentially not available to cover July 2012
20   payroll, unless drastic action was taken.     Id.   Accordingly, the
21   City Manager and Stockton’s City Council took steps to initiate
22   the neutral evaluation process under California Government Code
23   (“Cal. Gov. Code”) § 53760 as a prelude to a chapter 9 filing.
24   City of Stockton, 493 B.R. at 780-81.
25         Former bankruptcy judge Ralph Mabey was selected as the
26   neutral evaluator.   Thereafter, the neutral evaluation process
27   continued for ninety days, as authorized by Cal. Gov. Code
28   § 53760.3(r), and some positive results were achieved: Agreements

                                      -4-
 1   were negotiated to adjust all unexpired collective bargaining
 2   agreements with City employees, and substantial progress was made
 3   in negotiations with some other stake holders.      Id. at 783.
 4   However, no agreements were reached with any capital markets/bond
 5   creditors, including Franklin.   Id. at 782-83.
 6   B.   Chapter 9 filing and events prior to confirmation
 7         The City filed its petition for relief under chapter 9 on
 8   June 28, 2012.   From the outset, proceedings in the City’s
 9   bankruptcy case were contentious.      The capital markets/bond
10   creditors contested eligibility, and “only after many months of
11   costly discovery, briefing, legal maneuvering, and ultimately a
12   trial” did the bankruptcy court determine that the City was
13   entitled to relief in chapter 9.       The order for relief was
14   entered on April 1, 2013, and the bankruptcy court’s opinion
15   stating its findings and conclusions as to the City’s eligibility
16   for chapter 9 relief was entered on June 12, 2013.      See City of
17   Stockton, 493 B.R. 776-98 (Bankr. E.D. Cal. 2013).       The
18   bankruptcy court’s eligibility decision was not appealed and is
19   final.
20         In the meantime, the bankruptcy court had appointed Oregon
21   bankruptcy judge Elizabeth L. Perris as mediator on July 12,
22   2012, and negotiations continued between the City and interested
23   parties under her auspices, with the goal of reaching agreement
24   on the terms for a consensual plan of adjustment.      These
25   negotiations were protracted and proceeded in fits and starts,
26   but over time, they were largely successful, with definitive
27   settlements reached with the following creditors and creditor
28   groups:

                                      -5-
 1         1) The Stockton Police Officers’ Association – the only
 2   labor organization with which the City had not reached agreement
 3   prepetition;
 4         2) The Official Committee of Retirees – which represented
 5   2,100 retirees with pension benefits, of which approximately
 6   1,100 also claimed rights to lifetime health benefits (“Retiree
 7   Health Benefit Claims”);
 8         3) California Public Employees’ Retirement System
 9   (“CalPERS”) – which administers the City’s pensions;
10         4) Assured Guaranty Corp. and Assured Guaranty Municipal
11   Corp. (collectively, “Assured”) – which insured the City’s
12   pension bonds;
13         5) National Public Finance Guarantee Corporation (“NPFG”) –
14   which insured an aggregate of approximately $93.8 million in 2004
15   and 2006 City bonds, secured in part by parking structures, among
16   other things.
17         6) Ambac Assurance Corporation (“Ambac”) – which insured
18   approximately $13.3 million in 2003 City certificates of
19   participation; and
20         7) Wells Fargo Bank (“Wells Fargo”) – which served as the
21   indenture trustee for a number of the City’s bond issues.
22         In fact, the only major creditor group with which no
23   settlement was negotiated was Franklin.
24   C.   Plan provisions and confirmation proceedings
25         The Plan submitted by the City for confirmation classified
26   claims, incorporating the mediated settlements with creditor
27   constituencies, including the following:
28   1) Claims of CalPERS and pension plan participants (Class 15):

                                     -6-
 1   The claims of pension plan participants and CalPERS were treated
 2   as unimpaired because the City settled with them on the basis
 3   that it would remain bound to honor their legal, equitable and
 4   contract rights unaltered.   (The quid pro quo for the City’s
 5   settlement was that it would be relieved of liability to pay
 6   Retiree Health Benefit Claims, except for $5,100,000, to be paid
 7   as provided for general unsecured claims in Class 12.)
 8   2) Claims of Assured (Classes 5 and 6): Assured’s claims were
 9   treated as impaired, entitling Assured to vote both as Class 5
10   and Class 6.   Under the Plan, the City agreed to transfer fee
11   title to its interest in an office building located at 400 E.
12   Main Street in Stockton (“400 E. Main”), its planned replacement
13   for city hall, to Assured in exchange for the extinguishment of
14   the City’s obligations under 2007 lease obligation bonds.   Lease
15   arrangements with respect to 400 E. Main were to be altered to
16   provide that the City would lease space in 400 E. Main from
17   Assured for eight years at below-market rates, with four one-year
18   options to renew.   As part of their settlement, the City and
19   Assured agreed that the City’s obligations under pension bonds
20   would be reduced to 52%, but allowed for contingent full
21   repayment of the bond obligations if the City’s revenues out-
22   performed certain baseline projections.
23   3) Claims of NPFG (Classes 2, 3 and 4): NPFG’s 2004 parking
24   structure bonds were to be paid through a new Parking Authority,
25   to be created by the City, that would take ownership of all
26   downtown Stockton parking facilities.   The payment obligation for
27   the bonds would be shifted from the General Fund to the Parking
28   Authority, removing the obligation from the General Fund ledger.

                                      7
 1   NPFG’s 2004 arena-related bonds were secured by both a lease of
 2   the arena and a pledge of certain restricted tax revenues.    The
 3   bonds were to be restructured to provide debt service savings and
 4   make it more likely that the restricted tax revenues would be
 5   sufficient to service the debt.   A ceiling on General Fund
 6   liability was negotiated as part of this settlement.   Finally,
 7   NPFG’s 2006 bonds were secured by a lease on the Stewart
 8   Eberhardt Building, which houses the City’s departments of Human
 9   Resources, 911 Dispatch, Police Investigations and Crime Lab, and
10   Public Works.   Because the Stewart Eberhardt Building was
11   constructed to meet California’s “essential services” building
12   standards, it would be very expensive to replace.   Accordingly,
13   the settlement provided that the obligations of the City under
14   NPFG’s 2006 bonds would not be altered.   NPFG’s claims in Classes
15   2, 3 and 4 were treated as impaired.
16   4)   Claims of Ambac (Classes 1A and 1B): Ambac’s claims were
17   secured by leases of the City’s main police station, two fire
18   stations, and a library branch.   The Plan did not purport to
19   alter the amounts due to holders of the 2003 City certificates of
20   participation, but the Plan provided for a reduction of the
21   General Fund’s liability with respect to Ambac’s claims and for
22   future flexibility to extend payments, if necessary, such that
23   Ambac would have rights to vote as “impaired” in both Classes 1A
24   and 1B under the Plan.
25   5)   General Unsecured Claims (Class 12): Included in class 12
26   were “Golf Course/Park Unsecured Claim” (Franklin’s unsecured
27   claim); Retiree Health Benefit Claims; Leave Buyout Claims; the
28   claim filed by Michael A. Cobb; and miscellaneous Other

                                       8
 1   Postpetition Claims and General Unsecured Claims.   The mediated
 2   agreement with the Official Committee of Retirees provided that
 3   the Retiree Health Benefit Claimants would receive an aggregate
 4   payment of $5,100,000 in full satisfaction of their allowed
 5   claims.   All other creditors in Class 12 would receive a
 6   percentage of the allowed amounts of their respective claims
 7   equal to the percentage that the Retiree Health Benefit Claimants
 8   would recover (based on the $5,100,000 payment).
 9        As noted above, the City did not reach a settlement with
10   Franklin, but the City offered Franklin the opportunity to share
11   pro rata in contingent funds promised to Assured if a deal could
12   be made with respect to treatment of Franklin’s claims.
13        Franklin objected to confirmation of the Plan.     Following
14   extensive pre-hearing briefing by the parties, the bankruptcy
15   court conducted a five-day trial of confirmation issues.     At the
16   same time, the bankruptcy court heard evidence to determine the
17   amount of Franklin’s secured claim in a pending adversary
18   proceeding.   The bankruptcy court received and considered
19   multiple post-hearing submissions and heard a day of post-hearing
20   argument.
21        At a hearing on July 8, 2014, the bankruptcy court announced
22   its findings as to the value of Franklin’s collateral, consisting
23   of two golf courses, a community center associated with one of
24   the golf courses, and an ice skating rink.   The bankruptcy court
25   found the aggregate value of Franklin’s security to be
26   $4,052,000.   Franklin has not appealed that finding.   Thereafter,
27   the City amended the Plan to provide for treatment of Franklin’s
28   secured claim as Class 20, specifying that Franklin’s allowed

                                      9
 1   secured claim in the amount of $4,052,000 would be paid in full
 2   on the effective date of the Plan.
 3        At a hearing (“Hearing”) on October 30, 2014, the bankruptcy
 4   court stated orally on the record its findings and conclusions
 5   with respect to confirmation of the Plan.   The first thing the
 6   bankruptcy court did was incorporate the findings and conclusions
 7   from its eligibility determination.   See City of Stockton, 493
 8   B.R. at 776-98.    It noted the outstanding objections to
 9   confirmation from Franklin, focusing on Franklin’s challenges to
10   the City’s good faith in proposing the Plan and its argument that
11   its claim should be separately classified from the general
12   unsecured class.   The bankruptcy court further noted that one of
13   the requirements for implementation of the Plan was that the
14   City’s voters approve a tax increase to fund Plan obligations,
15   and the City’s voters had done so.
16        The bankruptcy court quoted § 1122(a)’s requirement that,
17   “[A] plan may place a claim or an interest in a particular class
18   only if such claim or interest is substantially similar to the
19   other claims or interests of such class.”   It then observed that
20   bond claims, other than Franklin’s, were all separately
21   classified, “and that’s appropriate because each one has its own
22   legal rights and status.”
23        The bankruptcy court noted that § 1123(a)(4) “requires that
24   there be the same treatment of each claim or interest of a
25   particular class unless the holder of a claim or interest agrees
26   to less favorable treatment.”   It then stated that it had
27   examined the treatment of all of the classes of claims in the
28   Plan, with particular focus on Class 12's treatment of general

                                      10
 1   unsecured claims, and found “there is equal treatment with
 2   respect to all of the claims that are general unsecured claims.”
 3   Accordingly, it concluded that the requirements of § 1123(a)(4)
 4   had been satisfied.   In addition, later on during the Hearing,
 5   the bankruptcy court determined the aggregate amount of the
 6   Retiree Health Benefit Claims to be $545 million.
 7        The bankruptcy court further noted § 1129(a)(3)’s
 8   requirement that “the Plan must have been proposed in good faith
 9   and not by any means forbidden by law.”   It considered Franklin’s
10   objection that it was unfairly discriminatory to treat Franklin’s
11   unsecured claim as provided for in Class 12 while not altering
12   the treatment of the City’s pension obligations.    However, it
13   rejected Franklin’s argument.
14        The general reduction in compensation has an indirect
          effect on pensions. The reduction in . . . number of
15        employees has a significant effect to pensions. There
          are fewer people entitled to pensions in the first
16        place. Also, the City has a plan for new employees in
          which pensions are less generous than the existing
17        pensions, and those have all been approved and signed
          off in the collective bargaining agreements.
18
19   Hr’g Tr. Oct. 30, 2014, at 35:9-16.    In addition, the bankruptcy
20   court pointed out that, “[O]ne of the features of the agreements
21   with other capital market creditors is a contingent fund that is
22   available in a number of years down the Plan that is designed to
23   provide for additional payment if the finances of the City
24   prosper and that . . . more than 20 percent of that was reserved
25   for Franklin Funds if it wished to take advantage of it before
26   the time of confirmation,” but Franklin elected not to accept
27   that option.   Id. at 36:13-20.    Based on those findings, the
28   bankruptcy court concluded that the Plan had been proposed in

                                       11
 1   good faith and not by any means forbidden by law.
 2        The bankruptcy court, after reiterating its understanding
 3   that Franklin had challenged the classification of its unsecured
 4   claim under the Plan, noted that all impaired classes had voted
 5   to accept the Plan, and, thus, the requirements of §§ 1129(a)(8)
 6   and 1129(a)(10) were satisfied.3
 7        The bankruptcy court then moved on to consider whether the
 8   requirements for confirmation of a plan of adjustment in chapter
 9   9 under § 943(b) were satisfied and so found.   In particular, it
10   found that “[a]ll amounts to be paid by the debtor or any person
11   for services or expenses in the case or incident to the Plan have
12   been fully disclosed and are reasonable.”   Accordingly, the
13   requirements of § 943(b)(3) were satisfied.
14        The bankruptcy court further found that, in light of the
15   City voters’ approval of the sales tax increase necessary to fund
16   the Plan, the requirements of § 943(b)(6) were satisfied.
17        Finally, the bankruptcy court considered § 943(b)(7), which
18   requires that the Plan be in the best interests of creditors and
19   be feasible.   It noted that the “best interests” test in chapter
20   9 is necessarily different from the test in chapter 11, which
21   requires that creditors receive at least as much as they would
22   receive in a chapter 7 liquidation.   “[I]t goes without saying
23
          3
            Toward the end of the hearing, counsel for the City
24
     pointed out that one impaired class, Class 14, tort claimants
25   against the City, had voted in favor of the Plan in terms of the
     majority in amount required under the Bankruptcy Code, but not in
26   number. The bankruptcy court did not make further findings with
27   respect to Class 14 at the Hearing, but as no member of Class 14
     has appealed the Confirmation Order, we do not consider this
28   matter further.

                                     12
 1   that a municipality cannot be liquidated, so it’s kind of hard to
 2   figure out what a hypothetical liquidation would be.”    Hr’g Tr.
 3   Oct. 30, 2014, at 40: 20-23.
 4        Having considered carefully the provisions of the Plan and
 5   available alternatives, including starting over to construct a
 6   new chapter 9 plan at great additional cost, the bankruptcy court
 7   found that the Plan was “the best that can be done in terms of
 8   the restructuring and adjustments of the debts of the City” and
 9   concluded that the requirements of § 943(b)(7) were satisfied.
10   Accordingly, the Plan would be confirmed.
11        Franklin filed a motion to alter or amend findings of fact
12   and conclusions of law (“Motion to Amend Findings”), arguing that
13   the Retiree Health Benefit Claims should be discounted to present
14   value, which would reduce those claims below the $545 million
15   amount found by the bankruptcy court at the Hearing.     The
16   bankruptcy court addressed the Motion to Amend Findings at a
17   hearing on December 10, 2014.   It first noted that no
18   objection(s) had been filed to the Retiree Health Benefit Claims,
19   and accordingly, under § 925, they were deemed allowed.    It then
20   noted that, even if it discounted the Retiree Health Benefit
21   Claims to present value, the lowest aggregate amount argued for
22   the claims was $261.9 million, as advocated by Franklin, and
23   using that number would not change the Class 12 voting outcome
24   for the Plan.
25        The bankruptcy court then discussed the parties’
26   presentations as to appropriate discount rates, and after
27   analyzing their presentations and applicable authorities,
28   including § 502, it characterized the Retiree Health Benefit

                                     13
 1   Claims as an entirely unfunded benefit as of the filing date and
 2   determined that it was not required to discount the Retiree
 3   Health Benefit Claims to present value.    Accordingly, the
 4   bankruptcy court denied the Motion to Amend Findings.
 5        Franklin filed a notice of appeal and a motion for stay
 6   pending appeal (“Stay Motion”).    After hearing argument from the
 7   parties, the bankruptcy court announced its decision on the Stay
 8   Motion at a hearing on January 20, 2015.   Noting that the City’s
 9   chapter 9 case had unfolded over a period of two and a half
10   years, the bankruptcy court went over its rationale for
11   confirming the Plan, enunciated in greater detail in its oral
12   findings and conclusions at the Hearing.   It then addressed the
13   standards for the imposition of a stay pending appeal.
14        In light of the history of the case, the issues raised, and
15   the relatively deferential standard of review as to its fact
16   findings, the bankruptcy court concluded that Franklin’s
17   likelihood of success on the merits on appeal was low.    Noting
18   that Franklin’s counsel stated in argument that “only money” was
19   at issue, and “I’m confident that the City is going to be around,
20   and it’s still going to have the citizenry of a couple hundred
21   thousand people,” the bankruptcy court did not see how
22   significant or irreparable harm would come to Franklin in the
23   absence of a stay.   On the other hand, it found that imposing a
24   stay pending appeal would impose substantial harm on the City and
25   its other creditors, including retirees.   Finally,
26        there is the public interest. And, of course,
          municipal insolvency is a very complicated issue of
27        great public interest, and the estate and municipality
          and just the overall system, capital market system,
28        really are served by some definitive resolution of

                                       14
 1        cases so that people understand the rules of the game
          and know exactly what they’re facing. . . . [T]he
 2        public interest is served by actually being able to
          implement a plan on which people can rely.
 3
 4   Hr’g Tr. Jan. 20, 2015, at 23:2-8 and 16-18.    Accordingly, the
 5   public interest militated against imposing a stay.
 6        Based on these findings and conclusions, the bankruptcy
 7   court denied the Motion for Stay.
 8        On February 27, 2015, the bankruptcy court issued an
 9   “Amended Opinion Regarding Confirmation and Status of CalPERS”
10   (“Amended Opinion”), supplementing its oral findings and
11   conclusions at the Hearing.   One of the purposes of the Amended
12   Opinion was to clarify the status and amounts of Franklin’s
13   secured and unsecured claims:
14        Franklin’s unsecured claim is $30,480,190.00. The
          judicially-determined secured claim is $4,052,000.00,
15        which is being paid in full. And, Franklin receives
          $2,071,435.15 from a “Reserve Fund” funded by bond
16        proceeds and held by the indenture trustee under
          section 5.05 of the bond indenture. While the parties
17        differ about how to characterize the Reserve Fund, they
          agree that Franklin ends up with $6,123,435.15 (secured
18        claim + Reserve Fund), plus nearly 1% on its
          $30,480,190.00 unsecured claim. Hence, Franklin’s
19        total recovery from all sources is about 17.5% (not
          12%).
20
21   Amended Opinion, at 1 n.1.    Otherwise, the Amended Opinion
22   focused on Franklin’s objection argument that the City’s pensions
23   could be modified and, in light of that premise, the Plan should
24   not be confirmed if they were not modified –   a premise that the
25   bankruptcy court ultimately rejected.   The bankruptcy court
26   reinforced its findings that City employees and retirees, the
27   beneficiaries of the City’s pension plans, “shared the pain” with
28   the capital markets/bond creditors.   It reiterated that the City

                                      15
 1   terminated its lifetime retiree health benefits program through
 2   the Plan and that City pension liabilities were indirectly but
 3   substantially reduced “as a result of curtailed pay and curtailed
 4   future pay increases in the renegotiated collective bargaining
 5   agreements.”   Amended Opinion, at 51.      To fund the Plan, City
 6   voters “approved a sales tax increase in the greatest amount and
 7   for the longest period permitted by California law.”      Id. at 53.
 8   The bankruptcy court restated its conclusions that the standards
 9   for confirmation of the Plan in chapter 9 had been met and that
10   the Plan would be confirmed.
11        On the same day, the bankruptcy court entered the
12   Confirmation Order.   Franklin’s previously filed notice of appeal
13   is deemed timely under Rule 8002(a)(2).
14        During the briefing in this appeal, the City filed a motion
15   to dismiss the appeal as equitably moot (“Motion to Dismiss”).
16   Franklin filed an opposition to the Motion to Dismiss, to which
17   the City replied.   By order entered on October 14, 2015, the
18   Motion to Dismiss was taken under advisement and referred to this
19   panel for decision in conjunction with its disposition of the
20   appeal.
21                         II.    JURISDICTION
22        The bankruptcy court had jurisdiction under 28 U.S.C.
23   §§ 1334 and 157(b)(2)(A), (B) and (L).      Except as otherwise
24   stated below, we have jurisdiction under 28 U.S.C. § 158.
25                         III.   ISSUES
26        1.   Is this appeal equitably moot insofar as Franklin seeks
27   reversal of confirmation of the Plan?
28        2.   Is it possible to provide a remedy to Franklin in terms

                                        16
 1   of increasing the payout on its unsecured claim under the Plan?
 2        3.   Did the bankruptcy court err in concluding that the Plan
 3   was “proposed in good faith” for purposes of § 1129(a)(3)?
 4        4.   Did the bankruptcy court err in concluding that the
 5   classification of Franklin’s unsecured claim was not “unfairly
 6   discriminatory” for purposes of §§ 1122(a) and 1123(a)(4)?
 7        5.   Did the bankruptcy court err in concluding that the Plan
 8   satisfied the “best interests of creditors” test in § 943(b)(7)?
 9        6.   Did the bankruptcy court err in concluding that it was
10   not required to discount the Retiree Health Benefit Claims to
11   present value?
12                        IV.   STANDARDS OF REVIEW
13        We review our own jurisdiction, including questions of
14   equitable mootness, de novo.    Ellis v. Yu (In re Ellis), 523 B.R.
15   673, 677 (9th Cir. BAP 2014).   We review the bankruptcy court’s
16   decision to confirm the Plan for an abuse of discretion.
17   Marshall v. Marshall (In re Marshall), 721 F.3d 1032, 1045 (9th
18   Cir. 2013); Computer Task Group, Inc. v. Brotby (In re Brotby),
19   303 B.R. 177, 184 (9th Cir. BAP 2003) (“The ultimate decision to
20   confirm a reorganization plan is reviewed for an abuse of
21   discretion.”).   We review the bankruptcy court’s findings of fact
22   for clear error and its conclusions of law de novo.   Bronitsky v.
23   Bea (In re Bea), 533 B.R. 283, 285 (9th Cir. BAP 2015).     De novo
24   means that we review a matter anew, as if no decision previously
25   had been rendered.   Dawson v. Marshall, 561 F.3d 930, 933 (9th
26   Cir. 2009).
27        We must affirm the bankruptcy court’s fact findings unless
28   we determine that those findings are “(1) ‘illogical,’

                                      17
 1   (2) ‘implausible,’ or (3) without ‘support in inferences that may
 2   be drawn from the facts in the record.’”   United States v.
 3   Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009) (en banc).
 4         A bankruptcy court abuses its discretion if it applies an
 5   incorrect legal standard or misapplies the correct legal
 6   standard, or if its fact findings are illogical, implausible or
 7   not supported by evidence in the record.   TrafficSchool.com, Inc.
 8   v. Edriver Inc., 653 F.3d 820, 832 (9th Cir. 2011).
 9         We may affirm the decision of the bankruptcy court on any
10   basis supported by the record.    See ASARCO, LLC v. Union Pac.
11   Co., 765 F.3d 999, 1004 (9th Cir. 2014); Shanks v. Dressel, 540
12   F.3d 1082, 1086 (9th Cir. 2008).
13                         V.   DISCUSSION
14   A.   Equitable mootness
15         In the Motion to Dismiss, the City argues that we should
16   dismiss Franklin’s appeal as equitably moot.   Franklin initially
17   responds that we should not even consider the Motion to Dismiss
18   for two reasons that we address in turn.
19   1.   Waiver
20         First, Franklin argues that the City waived its equitable
21   mootness argument because it could and should have raised it
22   earlier.    In support of its argument, it cites familiar authority
23   to the effect that an argument not made in a party’s opening
24   brief is deemed waived.    See, e.g., Miller v. Fairchild Indus.,
25   Inc., 797 F.2d 727, 738 (9th Cir. 1986) (“The Court of Appeals
26   will not ordinarily consider matters on appeal that are not
27   specifically and distinctly argued in the [party’s] opening
28   brief.”).

                                       18
 1        The City responds that it properly raised the equitable
 2   mootness issue by motion.   See Rule 8013(a)(1) (“A request for an
 3   order or other relief is made by filing a motion . . . .”); Ninth
 4   Circuit Rule 27-11; Rev Op Group v. ML Manager LLC (In re
 5   Mortgages Ltd.) (“Mortgages I”), 771 F.3d 1211, 1214 (9th Cir.
 6   2014) (“ML Manager is also entitled to move to dismiss in this
 7   court based on equitable mootness, regardless of the decisions of
 8   the courts being reviewed.”); Motor Vehicle Cas. Co. v. Thorpe
 9   Insulation Co. (In re Thorpe Insulation Co.), 677 F.3d 869, 879
10   n.3 (9th Cir. 2012) (“Appellees’ contention on equitable mootness
11   is not asserted within its appellate brief, but was the subject
12   of a separate motion to dismiss the appeal as moot . . . .”).
13        Franklin does not argue that it was prejudiced or harmed by
14   the City’s raising the equitable mootness issue in the Motion to
15   Dismiss, and we do not perceive any prejudice to Franklin.    As
16   requested in the last section of Franklin’s opposition, we are
17   considering the Motion to Dismiss in conjunction with our overall
18   disposition of this appeal.   Franklin and the City both have
19   taken the opportunity for extensive further exposition of their
20   arguments in the papers filed in support of and in opposition to
21   the Motion to Dismiss, thus supplementing the already substantial
22   papering of this appeal through the parties’ oversized briefs.
23   And, even if we believed that the City had waived the issue, we
24   note that equitable mootness raises jurisdictional questions that
25   we have an independent duty to consider sua sponte.   See, e.g.,
26   Sahagun v. Landmark Fence Co., Inc. (In re Landmark Fence Co.,
27   Inc.), 801 F.3d 1099, 1102 (9th Cir. 2015); Hunt v. Imperial
28   Merchant Servs., Inc., 560 F.3d 1137, 1141 (9th Cir. 2009),

                                     19
 1   quoting Demery v. Arpaio, 378 F.3d 1020, 1025 (9th Cir. 2004).
 2         In these circumstances, we are not persuaded that the City
 3   waived equitable mootness as an issue by raising it through the
 4   Motion to Dismiss rather than in its answering brief.
 5   2.   Application of equitable mootness in chapter 9
 6         Franklin next argues that the equitable mootness doctrine
 7   should not apply to appeals in chapter 9 cases because “[i]n the
 8   event of reversal of confirmation, the City always will be able
 9   to provide at least some ‘fractional’ relief without unduly or
10   inequitably impairing the rights of others.”   Appellants’
11   Objection to Motion to Dismiss the Appeal as Equitably Moot
12   (“Objection”), at 2.    Thus, Franklin argues that equitable
13   mootness should not apply in chapter 9 appeals as a matter of
14   law, supporting its argument with a fact-based rationale, and
15   therein lies the rub.
16         In support of its argument, Franklin cites the opinion of
17   the district court for the Northern District of Alabama on appeal
18   in Bennett v. Jefferson County, Alabama, 518 B.R. 613 (N.D. Al.
19   2014).   In Jefferson County, the court was concerned that “one of
20   the costs of finality [through application of equitable mootness]
21   is to allow a non-Article III court to decide important
22   constitutional questions that place substantial future
23   obligations on the citizens of Jefferson County without
24   representation.”   Id. at 637.   Undercutting its own rationale,
25   the court recognized and agreed “that some part or parts of the
26   Confirmation Order may be impossible to reverse,” but it
27   nevertheless concluded that the constitutional issues raised with
28   respect to the county’s ceding authority to set sewer rates could

                                      20
 1   not be cut off through the application of equitable mootness.
 2   Id.   Its ultimate conclusion was, “In light of the public and
 3   political interests at stake in any Chapter 9 proceedings, the
 4   court will deny the County’s appeals to equity to allow allegedly
 5   unconstitutional provisions of the Confirmation Order to stand
 6   without review.”   Id. at 638.
 7         The district court for the Eastern District of Michigan came
 8   to exactly the opposite conclusion in the appeal in Darrah v.
 9   City of Detroit, Michigan (In re City of Detroit, Michigan), 2015
10   WL 5697779 (E.D. Mich, S.D. Sept. 29, 2015).   After surveying the
11   limited applicable authorities, the City of Detroit court
12   concluded:
13         [T]he [equitable mootness] doctrine is not concerned
           with the specific chapter under which the debtor’s case
14         was brought. Rather, what matters is whether hearing
           the bankruptcy appeal could unravel the debtor’s plan
15         and disturb the reliance interests created by it.
           Because the underlying equitable considerations of
16         promoting finality and good faith reliance on a
           judgment [apply] with equal force to a Chapter 9
17         bankruptcy appeal, the Court sees no reason why the
           doctrine should not be applied to avoid disturbing a
18         Chapter 9 plan of adjustment.
19   Id. at *4.   It specifically considered and rejected the
20   conclusion of the Jefferson County court.
21         [T]he interests of the City [of Detroit], its over
           100,000 creditors, and its nearly 700,000 residents in
22         relying on a final judgment cannot be marginalized and
           dismissed in the broad brush manner adopted by the
23         Jefferson County court. If the interests of finality
           and reliance are paramount to a Chapter 11 private
24         business entity with investors, shareholders, and
           employees, then these interests surely apply with
25         greater force to the City’s Chapter 9 Plan, which
           affects thousands of creditors and residents.
26
27   Id. at *5.
28         This panel and the Ninth Circuit applied equitable mootness

                                      21
 1   in a chapter 9 appeal in Lionel v. City of Vallejo, California
 2   (In re City of Vallejo, California), 551 Fed. Appx. 339 (9th Cir.
 3   Dec. 31, 2013).
 4        We are persuaded by the reasoning of the court in City of
 5   Detroit that equitable mootness has a legitimate role to play in
 6   bankruptcy reorganization cases of all types, chapter 11, chapter
 7   13 and chapter 9 and follow the course set in In re City of
 8   Vallejo.   This appeal arguably presents a paradigm case for
 9   considering application of equitable mootness in a chapter 9
10   context because the constitutional and political concerns that
11   troubled the court in Jefferson County are not present: The
12   City’s voters approved the sales tax increase necessary to fund
13   the Plan in advance of confirmation.   Those who voted for
14   approval of the tax increase did so in reliance on the City’s
15   efforts to confirm the Plan to safeguard the provision of future
16   municipal services.    As the bankruptcy court noted in its Amended
17   Opinion:
18        By the time the [City’s chapter 9] case was filed, the
          City had been pared down to core functions and [had]
19        been reduced to a situation in which such essential
          services as police and fire were being operated below
20        sustainable standards. The murder rate had soared.
          Police responded only to crimes in progress. A wrecker
21        had to accompany fire engines on emergency calls.
22   Amended Opinion, at 51.   Several hundred thousand residents
23   depend on the City to provide future services, including police
24   and fire protection.   They have a legitimate concern for finality
25   that is served by appropriate application of equitable mootness.
26   And, we note that Franklin is raising no constitutional issues in
27   this appeal, such as bedeviled the court in Jefferson County.
28   For all of these reasons, we conclude, as a matter of law, that

                                      22
 1   the equitable mootness doctrine can appropriately be applied in
 2   chapter 9 cases generally and in this appeal specifically.
 3   3.   Standards for application of equitable mootness
 4           Fortunately, in considering the application of equitable
 5   mootness, we benefit from the analysis in a number of recent
 6   Ninth Circuit decisions.    “An appeal is equitably moot if the
 7   case presents ‘transactions that are so complex or difficult to
 8   unwind’ that ‘debtors, creditors, and third parties are entitled
 9   to rely on [the] final bankruptcy court order.’”    Mortgages I,
10   771 F.3d at 1215, quoting In re Thorpe Insulation Co., 677 F.3d
11   at 880.    Accordingly, the equitable mootness doctrine focuses on
12   the reliance and finality concerns of interested parties in a
13   bankruptcy appeal, whether participating in the appeal or not.
14           “Equitable mootness occurs when a ‘comprehensive change of
15   circumstances’ has occurred so ‘as to render it inequitable for
16   this court to consider the merits of the appeal.’”     In re Thorpe
17   Insulation Co., 677 F.3d at 880, quoting Trone v. Roberts Farms,
18   Inc. (In re Roberts Farms, Inc.), 652 F.2d 793, 798 (9th Cir.
19   1981).    “Unlike Article III mootness, which causes federal courts
20   to lack jurisdiction and so to have an inability to provide
21   relief, equitable mootness is a judge-created doctrine that
22   reflects an unwillingness to provide relief.”     JPMCC 2007-C1
23   Grasslawn Lodging, LLC v. Transwest Resort Props., Inc. (In re
24   Transwest Resort Props., Inc.), 801 F.3d 1161, 1167 (9th Cir.
25   2015) (emphasis in original).
26           The Ninth Circuit applies a four-factor test to determine
27   whether an appeal from the order confirming a plan is equitably
28   moot:

                                       23
 1        [1]We will look first at whether a stay was sought, for
          absent that a party has not fully pursued its rights.
 2        [2]If a stay was sought and not gained, we then will
          look at whether substantial consummation of the plan
 3        has occurred. [3]Next, we will look to the effect a
          remedy may have on third parties not before the court.
 4        [4]Finally, we will look at whether the bankruptcy
          court can fashion effective relief without completely
 5        knocking the props out from under the plan and thereby
          creating an uncontrollable situation for the bankruptcy
 6        court.
 7   In re Thorpe Insulation Co., 677 F.3d at 881.    We examine each of
 8   those four factors as follows.
 9   i) Seeking a stay
10        As noted above, Franklin filed its Stay Motion after the
11   bankruptcy court orally announced its findings and conclusion
12   that the Plan would be confirmed at the Hearing but before the
13   Confirmation Order was entered.    The bankruptcy court held a
14   hearing on the Stay Motion and heard argument from counsel for
15   the parties.   At a hearing on January 20, 2015, the bankruptcy
16   court stated detailed oral findings on the record addressing the
17   four factors for considering a stay pending appeal as discussed
18   in Nken v. Holder, 556 U.S. 418 (2009), and determined that
19   granting the Stay Motion was not warranted.   In its reply in
20   support of the Stay Motion, Franklin conceded that “if no stay is
21   issued, Franklin will not be irreparably harmed.”    (Emphasis in
22   original.)
23        Based on this record, whether Franklin has pursued “with
24   diligence all available remedies to obtain a stay” of the
25   Confirmation Order, In re Roberts Farms, Inc., 652 F.2d at 798,
26   is arguable, but at least, Franklin has not “flunked this first
27   step.”   Id.
28

                                       24
 1   ii) Substantial consummation of the Plan
 2        Section 1101(2) defines “substantial consummation” as:
 3        (A) transfer of all or substantially all of the
          property proposed by the plan to be transferred;
 4        (B) assumption by the debtor or by the successor to the
          debtor under the plan of the business or of the
 5        management of all or substantially all of the property
          to be dealt with by the plan; and
 6        (C) commencement of distribution under the plan.4
 7        The City argues that there can be no dispute that the Plan
 8   has been substantially consummated based on the following
 9   actions: 1) The City has paid the $5.1 million required to be
10   paid on Retiree Health Benefit Claims, and all but one of the
11   payment checks had been cashed by retirees.   2) The new lease and
12   assignments between Assured and the City with respect to the 400
13   E. Main property have been implemented.    3) Agreements and
14   documentation to memorialize the settlements between the City and
15   NPFG have been finalized and signed.   4) The City and Ambac have
16   executed an amended and restated stipulation and settlement
17   agreement.   5) The City executed a new agreement with the
18   California Department of Boating and Waterways.    6) The City
19   executed new agreements with two minor league sports teams.      The
20   City asserts that all mandated payments and transactions to
21   implement the Plan have been completed.
22        In its Objection, Franklin admits that, “The Plan became
23   effective and was consummated in February 2015.”
24
25
26        4
              Although § 901 does not incorporate § 1101(2) for
27   chapter 9 cases, the definition still is useful in the equitable
     mootness analysis as no analogous definition is set forth in
28   § 902 “Definitions for this chapter.”

                                     25
 1   iii) The third and fourth factors
 2        “The third consideration in the test for equitable mootness
 3   is whether the relief sought would bear unduly on innocent third
 4   parties.”   In re Transwest Resort Props., Inc., 801 F.3d at 1169,
 5   citing In re Thorpe Insulation Co., 677 F.3d at 882; and Rev Op
 6   Group v. ML Manager LLC (In re Mortgages Ltd.) (“Mortgages II”),
 7   771 F.3d 623, 629 (9th Cir. 2014).    In analyzing this factor, we
 8   must determine “whether it is possible to [alter the Plan] in a
 9   way that does not affect third party interests to such an extent
10   that the change is inequitable.”     In re Thorpe Insulation Co.,
11   677 F.3d at 882.   “The fourth, and most important, consideration
12   . . . is whether the bankruptcy court could fashion equitable
13   relief without completely undoing the plan.”    In re Transwest
14   Resort Props., Inc., 801 F.3d at 1171.     “Where equitable relief,
15   though incomplete, is available, the appeal is not moot.”    In re
16   Thorpe Insulation Co., 677 F.3d at 883.
17        The City argues that reversal of the Confirmation Order
18   would undermine the settlements that were so painstakingly
19   negotiated over a period of years with the City’s labor unions,
20   CalPERS and the City’s pension plan participants and retirees,
21   and the other capital markets/bond creditors, frustrating the
22   expectations of creditor constituencies not participating in this
23   appeal and not before this panel.    It further would require
24   revisiting the City’s Long Range Financial Plan (“LRFP”), which
25   provided substantial evidence to support the feasibility of the
26   Plan, consequently calling into question the “economic
27   underpinnings of the Plan” and, ultimately, jeopardizing the
28   City’s recovery.   Motion to Dismiss, at 16.    In other words,

                                     26
 1   reversal of the Confirmation Order would unleash chaos before the
 2   bankruptcy court and make the process for reconstructing a
 3   confirmable plan of adjustment for the City unmanageable.
 4         In its Objection, Franklin assures us that “[t]he relief
 5   that Franklin seeks on appeal – greater payment from the City [on
 6   its unsecured claim] – would not impact any other constituency.”
 7   Objection, at 12.   “A fundamental premise of this appeal is that
 8   the City can pay more to Franklin without altering recoveries of
 9   other creditors or otherwise unraveling the Plan.”   Objection, at
10   1.   We take Franklin at its word.
11         The Ninth Circuit has repeatedly emphasized that where a
12   creditor is appealing confirmation of a plan, but is seeking
13   “only money” (as in this appeal), it is generally not impossible
14   to provide a remedy.   See, e.g., In re Transwest Resort Props.,
15   Inc., 801 F.3d at 1173 (“[W]e see no reason why, if the court
16   were to devise a remedy that required Reorganized Debtors to pay
17   Lender one dollar, for example, the plan would be undone.”); In
18   re Thorpe Insulation Co., 677 F.3d at 883;   Platinum Capital,
19   Inc. v. Sylmar Plaza, L.P. (In re Sylmar Plaza, L.P.), 314 F.3d
20   1070, 1074 (9th Cir. 2002) (“Even if the plan has been
21   substantially consummated, because Platinum’s claim is only for
22   monetary damages against solvent debtors, this is not a case in
23   which it would be impossible to fashion effective relief.”).
24         In its findings in support of its decision to deny the Stay
25   Motion, the bankruptcy court considered what remedies might be
26   available on remand in this case:
27         The question is, could an [appropriate] remedy be
           fashioned that would not require reeling back in, for
28         example, all the payments to retirees, and I have no

                                     27
 1        difficulty perceiving the possibility of any number of
          likely solutions . . . in the event of a reversal on
 2        appeal. Those solutions . . . most certainly would
          involve more money for Franklin . . . . [W]ith its
 3        finances on more stable footing, it’s conceivable that
          some additional funds could be made available to
 4        Franklin if the appellate court put the matter back to
          me, and that could be done without disturbing in any
 5        way the payments to retirees; that is, the payments to
          the other unsecured creditors.
 6
 7   Hr’g Tr. Jan. 20, 2015, at 20:14-18; 21:3-8.
 8        Article XII, Section 3 of the Plan provides that the
 9   bankruptcy court retains and has exclusive jurisdiction “to
10   determine any and all . . . contested or litigated matters . . .
11   that are instituted by any holder of a Claim before or after the
12   Effective Date concerning any matter based upon, arising out of,
13   or relating to the Chapter 9 case . . . .”   Article XII, Section
14   8 of the Plan provides that the bankruptcy court retains and has
15   exclusive jurisdiction “to consider any modifications of this
16   Plan . . . .”   Article XIV, Section B of the Plan provides:
17        If any term or provision of this Plan is held by the
          Bankruptcy Court or any other court having
18        jurisdiction, including on appeal, if applicable, to be
          invalid, void, or unenforceable, the Bankruptcy Court,
19        in each such case at the election of and with the
          consent of the City, shall have the power to alter and
20        interpret such term or provision to make it valid or
          enforceable to the maximum extent practicable,
21        consistent with the original purpose of the term or
          provision held to be invalid, void, or unenforceable,
22        and such term or provision shall then be applicable as
          altered or interpreted. Notwithstanding any such
23        holding, alteration, or interpretation, the remainder
          of the terms and provisions of this Plan shall remain
24        in full force and effect and shall in no way be
          affected, impaired, or invalidated by such holding,
25        alteration, or interpretation.
26   Plan, at 58, 59 and 62.   The confirmed Plan gives the bankruptcy
27   court all of the tools it would need on remand to consider a
28   modification to the Plan to increase payments to Franklin on its

                                     28
 1   unsecured claim.
 2        The City argues that those provisions of the confirmed Plan
 3   are subject, among other things, to § 904, which provides that,
 4   “Notwithstanding any power of the court, unless the debtor [i.e.,
 5   the City] consents, . . . the court may not, by any stay, order,
 6   or decree, in the case or otherwise, interfere with – (1) any of
 7   the political or governmental powers of the debtor; (2) any of
 8   the property or revenues of the debtor; or (3) the debtor’s use
 9   or enjoyment of any income-producing property.”   In other words,
10   on remand, the bankruptcy court could not order the City to pay
11   any more money to Franklin without the City’s consent.
12        That is a given in light of § 904’s requirements.    But § 904
13   applied throughout the process of negotiations between the City
14   and its creditors that resulted in the settlements incorporated
15   in the Plan that required the City to make multi-million dollar
16   payments to its creditors from its revenues.   We do not perceive
17   that fundamental statutory limitation as precluding a remand to
18   provide equitable relief in terms of an adjustment of payments to
19   Franklin.    The City could consent or not to such an adjustment(s)
20   at various points in further negotiations with Franklin as it
21   determined to be appropriate in the exercise of its sovereign
22   authority.
23        Based on our review of the record and the Motion to Dismiss,
24   the Objection and the City’s reply, we conclude that Franklin
25   attempted to obtain a stay of the Confirmation Order pending
26   appeal, but the Stay Motion was denied, and the Plan has been
27   substantially consummated.   To reverse the Confirmation Order at
28   this point would have a potentially devastating impact on

                                      29
 1   creditor constituencies whose settlements with the City were
 2   incorporated in the Plan and who are not appearing before us in
 3   this appeal.   Reversing the Confirmation Order would knock “the
 4   props out from under the” Plan and would leave the bankruptcy
 5   court with an unmanageable situation on remand.    Accordingly, we
 6   conclude that Franklin’s appeal of the Confirmation Order
 7   generally is equitably moot and must be dismissed.
 8         However, we further conclude that to the extent Franklin
 9   seeks through its appeal only a greater payment on its unsecured
10   claim, as it concedes in the Objection, an effective remedy is
11   theoretically possible, and that claim is not equitably moot.
12   Accordingly, we will proceed to consider the issues that Franklin
13   raises with respect to the payout on its unsecured claim.5
14   B.   The requirement that the Plan be proposed in “good faith”
15         Section 1129(a)(3), specifically incorporated for chapter 9
16   cases in § 901(a), requires that a plan of adjustment “has been
17   proposed in good faith and not by any means forbidden by law.”     A
18   plan is proposed in good faith “where it achieves a result
19   consistent with the objectives and purposes of the [Bankruptcy]
20   Code.”    In re Sylmar Plaza, L.P.,   314 F.3d at 1074, citing Ryan
21   v. Loui (In re Corey), 892 F.2d 829, 835 (9th Cir. 1989); In re
22
23         5
              We do not consider Franklin’s argument that the
     bankruptcy court erred in its forward looking interpretation of
24
     § 943(b)(3), which provides that “all amounts to be paid by the
25   debtor or by any person for services or expenses in the case or
     incident to the plan have been fully disclosed and are
26   reasonable.” (Emphasis added.) That issue has nothing to do
27   with the payment on Franklin’s unsecured claim provided for in
     the Plan.
28

                                      30
 1   Madison Hotel Assocs., 749 F.2d 410, 425 (7th Cir. 1994).
 2   Whether the Plan was proposed in good faith is a fact finding in
 3   the “totality of the circumstances” reviewed for clear error.
 4   Marshall v. Marshall (In re Marshall), 721 F.3d 1032, 1046 (9th
 5   Cir. 2013) (citations omitted); In re Sylmar Plaza, L.P., 314
 6   F.3d at 1074; Stolrow v. Stolrow’s, Inc. (In re Stolrow’s, Inc.),
 7   84 B.R. 167, 172 (9th Cir. BAP 1988).
 8        At the outset, the record reflects that the Plan was the
 9   product of extended negotiations over a period of years pre- and
10   postpetition resulting in multiple collective bargaining
11   agreements and settlements with creditor constituencies.
12   Franklin objected to confirmation on good faith grounds, arguing
13   that the Plan was not proposed in good faith based on the fact
14   that it was receiving essentially a 1% payout on its unsecured
15   claim when unsecured pension benefit claims were not being
16   altered.
17        The bankruptcy court began its good faith analysis with its
18   conclusion that Franklin’s objection was based on a faulty
19   premise: The Plan had a substantial indirect impact on pensions
20   in that 1) employee compensation on which pension benefits were
21   calculated had been reduced; 2) the reductions in numbers of City
22   employees had a significant effect on pensions, as there were
23   “fewer people entitled to pensions in the first place;” and 3)
24   pension benefits for new City employees had been reduced, with
25   those reductions incorporated in the City’s collective bargaining
26   agreements.
27        [T]he assertion that pensions are not affected by the
          [Plan] incorrectly suggests that employees and retirees
28        are not sharing the pain with capital markets

                                    31
 1        creditors. To the contrary, the reality is that the
          value of what employees and retirees lose under the
 2        [Plan] is greater than what capital markets creditors
          lose.
 3
 4   Amended Opinion, at 50.   It further took “particular note” of the
 5   “obviously intensive arms-length negotiations” that occurred
 6   during the case over a period in excess of two years to arrive at
 7   material provisions of the Plan and reflected that “significant
 8   concessions have been made by virtually all of the various
 9   parties in interest, not only on the labor side but also on the
10   capital market side of the equation.”    Hr’g Tr. Oct. 30, 2014, at
11   36:1-9.
12        The bankruptcy court also noted that “one of the features of
13   the agreements with other capital market creditors is a
14   contingent fund that is available in a number of years down the
15   Plan that is designed to provide for additional payment if the
16   finances of the City prosper and . . . more than 20 percent of
17   that was reserved for Franklin Funds if it wished to take
18   advantage of it before the time of confirmation.    It elected not
19   to do that . . . .”   Id. at 36:13-20 (emphasis added).   Based on
20   those findings, the bankruptcy court found that the Plan had been
21   proposed in good faith and not by any means forbidden by law.
22        On appeal, Franklin argues that the treatment of its
23   unsecured claim was unfairly discriminatory, and the City
24   gerrymandered the Class 12 general unsecured class to minimize
25   Franklin’s vote against confirmation of the Plan.   Section
26   1122(a) provides that “a plan may place a claim . . . in a
27   particular class only if such claim is substantially similar to
28   the other claims . . . of such class.”   Franklin’s general

                                     32
 1   unsecured claim was placed in the class of general unsecured
 2   claims, Class 12, consistent with the plain language of
 3   § 1122(a), and the treatment of its claim was the same as the
 4   treatment of the claims of all other creditors in Class 12.      The
 5   Ninth Circuit has concluded that, “[T]he fact that a debtor
 6   proposes a plan in which it avails itself of an applicable
 7   [Bankruptcy] Code provision does not constitute evidence of bad
 8   faith.”   In re Sylmar Plaza, L.P., 314 F.3d at 1075, quoting In
 9   re PPI Enter. (U.S.), Inc., 228 B.R. 339, 347 (Bankr. D. Del.
10   1998).
11          Mindful that we must affirm the bankruptcy court’s fact
12   findings so long as any support for those findings can be found
13   in inferences that can be drawn from the record, we conclude that
14   the bankruptcy court did not clearly err in its finding that the
15   Plan was proposed in good faith and not by any means forbidden by
16   law.
17   C.   Classification of claims
18          As noted above, § 1122(a) provides that claims can only be
19   included in a particular class in a reorganization plan if they
20   are “substantially similar” to the claims of other class members.
21   Section 1123(a)(4) provides that the treatment for each claim in
22   a particular class under a reorganization plan must be the same
23   “unless the holder of a particular . . . claim agrees to a less
24   favorable treatment.”   As with § 1129(a)(3), § 901(a)
25   specifically incorporates §§ 1122 and 1123(a)(4) for chapter 9
26   cases.    “The bankruptcy court’s finding that a claim is or is not
27   substantially similar to other claims, constitutes a finding of
28   fact reviewable under the clearly erroneous standard.”    Barakat

                                      33
 1   v. Life Ins. Co. (In re Barakat), 99 F.3d 1520, 1523 (9th Cir.
 2   1996), citing Steelcase Inc. v. Johnston (In re Johnston), 21
 3   F.3d 323, 327 (9th Cir. 1994).
 4        Franklin’s argument with respect to classification of its
 5   unsecured claim starts from the proposition that a plan proponent
 6   does not have unfettered discretion to classify similar claims
 7   separately, recognizing that equality of treatment among like-
 8   situated creditors is one of the primary objectives of the
 9   Bankruptcy Code.   See Begier v. Internal Revenue Service, 496
10   U.S. 53, 58 (1990) (“Equality of distribution among creditors is
11   a central policy of the Bankruptcy Code.   According to that
12   policy, creditors of equal priority should receive pro rata
13   shares of the debtor’s property.”).   Franklin cites to us
14   authorities finding error in the separate classification of
15   claims with similar liquidation priorities.   See, e.g., In re
16   Barakat, 99 F.3d at 1526; Phoenix Mutual Life Ins. Co. v.
17   Greystone III Joint Venture (In re Greystone III Joint Venture),
18   995 F.2d 1274, 1279 (5th Cir. 1992) (“[T]hou shalt not classify
19   similar claims differently in order to gerrymander an affirmative
20   vote on a reorganization plan.”); Oxford Life Ins. Co. v. Tucson
21   Self-Storage, Inc. (In re Tucson Self-Storage, Inc.), 166 B.R.
22   892, 898 (9th Cir. BAP 1994).    However, what Franklin finds
23   objectionable in this case is that its unsecured claim was not
24   separately classified but instead was included in a class of
25   general unsecured creditors where it was out-voted.
26        Contrary to Franklin’s argument that the bankruptcy court
27   “disregarded statutory protections” (Appellants’ Opening Brief,
28   at 1), the bankruptcy court began its analysis of Franklin’s

                                      34
 1   classification issues by quoting the language of § 1122(a).    Hr’g
 2   Tr. Oct. 30, 2014, at 31:11-13.    “Generally, § 1122 allows plan
 3   proponents broad discretion to classify claims and interests
 4   according to the particular facts and circumstances of each
 5   case.”   In re City of Colo. Springs Spring Creek Gen. Improvement
 6   Dist., 187 B.R. 683, 687 (Bankr. D. Colo. 1995).
 7        The bankruptcy court found that the capital markets/bond
 8   claims were all separately classified, and “that’s appropriate
 9   because each one has its own unique legal rights and status.”
10   Hr’g Tr. Oct. 30, 2014, at 31:14-15.   Franklin characterizes the
11   unsecured claims of other capital markets/bond creditors as
12   “similarly situated” (Appellants’ Opening Brief, at 64-65), but
13   its argument glosses over the facts that Assured, NPFG and Ambac
14   all had different collateral securing at least parts of the
15   City’s respective obligations to them, and the City ultimately
16   entered into global settlements with all three.    “[A]s a general
17   rule each holder of an allowed claim secured by a security
18   interest in specific property of the debtor should be placed in a
19   separate class.”   7 Collier on Bankruptcy ¶ 1122.03[3][c] (Alan
20   N. Resnick & Henry J. Sommer eds., 16th ed.).   By settling with
21   the capital markets/bond creditors other than Franklin, the City
22   avoided a number of potentially protracted, expensive and risky
23   valuation proceedings with respect to City properties that
24   presented problematic valuation issues, including the Stewart
25   Eberhardt Building, the City’s main police station, two fire
26   stations and a library branch.    Through a combination of
27   different disposition arrangements for their collateral and
28   different payment terms for the secured and unsecured portions of

                                       35
 1   the City’s debts to each bond creditor, including different
 2   percentage recoveries, separate classification of the bond
 3   creditor claims made legitimate business and economic sense.      See
 4   In re Barakat, 99 F.3d at 1526.    The bankruptcy court did not
 5   clearly err in so finding.
 6        The bankruptcy court further found that general unsecured
 7   claims, including not only the Retiree Health Benefit Claims and
 8   Franklin’s unsecured claim but also leave buyout claims, the
 9   claim of Michael A. Cobb and other miscellaneous unsecured
10   claims, “were all in the same spot” and were properly included in
11   Class 12.6   Franklin grudgingly admits that “the Plan’s treatment
12   of Class 12 claims superficially is the same [for all class
13   members] – a meager payment of less than one penny on the
14   dollar,” but argues that treatment of Retiree Health Benefit
15   Claims under Class 12 cannot be analyzed separately from the
16   treatment of CalPERS and pension plan participants (unimpaired,
17   100% payment) in Class 15.   We disagree for the following
18
          6
19           Franklin argues that because its unsecured claim could
     have been paid “at least in part from restricted PFF’s,” its
20   unsecured claim is not “substantially similar” to the Retiree
     Health Benefit Claims for § 1122(a) purposes. “PFF’s” are
21   charges levied on new developments to defray a portion of
22   infrastructure expenses. See Cal. Gov’t Code §§ 66000 et seq.
     While the City potentially could have used PFF’s to pay debt
23   service to Franklin, it had no legal obligation to use PFF’s to
     pay Franklin, which Franklin does not contest. Accordingly,
24
     Franklin’s citations to Wells Fargo Bank, N.A. v. Loop 76, LLC
25   (In re Loop 76, LLC), 465 B.R. 525 (9th Cir. BAP 2012) (where the
     subject creditor had a third party guarantee source of recovery
26   for its unsecured claim), and Steelcase, Inc. v. Johnston (In re
27   Johnston), 140 B.R. 526 (9th Cir. BAP 1992) (where the subject
     creditor had a secured claim against the assets of another entity
28   to pay its unsecured claim in the debtor’s case), are inapposite.

                                       36
 1   reasons.
 2           First, the group of Retiree Health Benefit Claimants and the
 3   entire group of the city’s pension plan participants are not the
 4   same.    The 1,100 fully retired City employees with Retiree Health
 5   Benefit Claims were represented in the City’s chapter 9 case by
 6   the Official Committee of Retirees.    Current City employees were
 7   represented by their respective unions to negotiate or
 8   renegotiate collective bargaining agreements.    CalPERS
 9   administered the City’s pension plans.    While the interests of
10   all of these parties converged with respect to the treatment of
11   the City’s pensions, the group with Retiree Health Benefit Claims
12   in Class 12 was not congruent with the larger group of claimants
13   in Class 15.
14           Second, while the City’s obligations to 1) pay its current
15   employees; 2) provide health care benefits to current and retired
16   employees; and 3) provide pension benefits to its current and
17   retired employees may have arisen under the same contracts, the
18   Plan negotiations dealt with all such issues on related but
19   separate tracks.    In considering Franklin’s objections to Plan
20   confirmation based on the difference between the treatment of its
21   unsecured claim and the treatment of pension benefits, the
22   bankruptcy court made the following findings:
23           I know that in those collective bargaining agreements
             there were considerable changes and concessions that
24           the unions made regarding compensation and conditions
             of employment in terms of matters relating to
25           retirement. There was a new retirement plan agreed to
             for new employees. There was – the employees’ portion,
26           the contributions to retirement plans which the City
             had previously been picking up and paying in excess of
27           six percent, was shifted back to the employees.
28   Hr’g Tr. Oct. 30, 2014, at 13:18-25.

                                       37
 1        One of the major financial problems of the City was the
          Retiree Health Plan. The City’s plan beforehand was a
 2        “pay as you go” plan, in which the City paid 100
          percent of health benefits for retirees and their
 3        dependents. This, through the years, started to
          hemorrhage funds. The City imposed right at the outset
 4        of the case a new Retiree Health Plan that came in . .
          . several segments, but the net result is that there is
 5        now a much less generous Retiree Health Plan, and the
          retirees are required to contribute funds to pay a
 6        portion of the expense of that plan.
 7   Id., at 14:12-21.
 8        [T]he City has declined to reject the [CalPERS]
          contract, saying it exercises its business judgment to
 9        conclude that the pension contract – that CalPERS is,
          in effect, the low cost provider of the City’s
10        pensions, and that it would, under any theory, cost
          more to use some other pension provider . . . .
11
12   Id., at 18:10-15.
13        I have collective bargaining agreements that cover most
          of the employees that have been hammered out in part
14        through this – well, hammered out over time and then
          reworked as part of this Chapter 9 case, and it has
15        been made clear that the negotiations in those
          particular contractual negotiations were on a basis of
16        the employees and their representatives saying, all
          right, we will give up certain aspects of our basic
17        compensation, but we do not want any of the pensions
          touched. So all of the concessions that were made –
18        and there are quite substantial concessions – were made
          on the income side, the direct income side, not on the
19        pension side.
20   Id., at 21:11-22.
21        Consistent with those findings, the record reflects that the
22   City had to take into account a number of legitimate business and
23   economic considerations in negotiating the differential Plan
24   arrangements for dealing with pensions, employee compensation and
25   health care benefits for its current employees and retirees.
26   Based on those considerations, we conclude that the bankruptcy
27   court did not clearly err in finding that the Plan satisfied the
28   requirements of § 1122(a) in its classification scheme.


                                    38
 1         Within Class 12 itself, all creditors received the same
 2   percentage payout on their allowed unsecured claims as $5,100,000
 3   represented to the allowed aggregate amount of the Retiree Health
 4   Benefit Claims.    The bankruptcy court found that “there is equal
 5   treatment with respect to all of the claims that are general
 6   unsecured claims” included in Class 12 and accordingly concluded
 7   that the requirements of § 1123(a)(4) had been satisfied.    Again,
 8   we perceive no clear error in the fact findings that supported
 9   that conclusion.
10         The bankruptcy court noted Franklin’s contrary vote but
11   found that the general unsecured creditor class, Class 12, voted
12   in favor of the Plan.   Franklin is merely a dissenting creditor
13   in the accepting class of general unsecured creditors.   In these
14   circumstances, “cramdown” analysis under § 1129(b) is not
15   required, and we do not consider further Franklin’s “unfair
16   discrimination” argument based on § 1129(b).    See, e.g., In re
17   City of Colo. Springs Spring Creek Gen. Improvement Dist., 187
18   B.R. at 690.
19   D.   Best interests of creditors
20         Franklin argues that the bankruptcy court misapplied the
21   “best interests of creditors” test in this case because it
22   applied that test collectively, rather than individually and
23   particularly with respect to Franklin’s unsecured claim.
24   Analyzing this issue requires consideration of the differences
25   between chapters 9 and 11, both in terms of specific Bankruptcy
26   Code provisions and the very different nature of the entities
27   that seek to reorganize their affairs under each chapter.
28         Section 1129(a)(7)(A)(ii) provides that


                                        39
 1        With respect to each impaired class of claims
          . . .
 2        (A) each holder of a claim . . . of such class –
          . . .
 3        (ii) will receive . . . under the plan on account of
          such claim . . . property of a value, as of the
 4        effective date of the plan, that is not less than the
          amount that such holder would so receive . . . if the
 5        debtor were liquidated under chapter 7 of this title on
          such date.7
 6
 7   (Emphasis added.)   Under § 901, § 1129(a)(7) does not apply to
 8   chapter 9 cases.    Instead, chapter 9 includes its own “best
 9   interests” test in § 943(b)(7): “The court shall confirm the plan
10   if – (7) the plan is in the best interests of creditors and is
11   feasible.”   (Emphasis added.)
12        By their terms, the “best interests” tests in chapters 9 and
13   11 are different, and only in chapter 11 is particular
14   consideration of the best interests of individual creditors
15   specified.   By its terms, the “best interests” test in chapter 9
16   is collective rather than individualized, and that interpretation
17   is supported by the very context of chapter 9.
18        Franklin cites two decisions of the Supreme Court, American
19   United Mutual Life Ins. Co. v. City of Avon Park, Florida, 311
20   U.S. 138 (1940), and Kelley v. Everglades Drainage Dist., 319
21   U.S. 415 (1943), and one Ninth Circuit decision, Fano v. Newport
22   Heights Irr. Dist., 114 F.2d 563 (9th Cir. 1940), under the
23   former Bankruptcy Act in support of its “best interests of
24
25        7
             Although this chapter 11 provision does not contain the
26   phrase “best interests of creditors,” it is colloquially known as
     the “best interests” test. See, e.g., Bank of Am. Nat’l Tr. &
27   Sav. Assn. v. 203 N. LaSalle St. P’ship, 526 U.S. 434, 441 n.13
     (1999); Sec. Farms v. Gen. Teamsters, Warehousemen & Helpers
28   Union, Local 890 (In re Gen. Teamsters, Warehousemen & Helpers
     Union, Local 890), 265 F.3d 869, 877 (9th Cir. 2001).

                                      40
 1   creditors” arguments.   The relevant provision of the Bankruptcy
 2   Act, § 83(e), 11 U.S.C. § 403(e), provided that a required
 3   finding to support the approval of a plan of composition for a
 4   municipal authority was that the plan was “fair, equitable, and
 5   for the best interests of the creditors and does not discriminate
 6   unfairly in favor of any creditor or class of creditors.”
 7   (Emphasis added.)   In other words, § 83(e) of the Bankruptcy Act
 8   included a provision which, by its terms, protected the rights of
 9   individual creditors, i.e., the prohibition against unfair
10   discrimination “in favor of any creditor . . . .”   But this does
11   not mean that all of the provisions of § 83(e) protected
12   individual creditors rather than creditors collectively.    None of
13   the cited Bankruptcy Act decisions held that the “best interests”
14   test under the Bankruptcy Act protected individual creditor
15   rights.
16        The Supreme Court did state in Avon Park that, “The fact
17   that the vast majority of security holders may have approved a
18   plan is not the test of whether that plan satisfies the statutory
19   standard.   The former is not the substitute for the latter.   They
20   are independent.”   311 U.S. at 148.   However, that principle is
21   reflected in the separate requirements in chapter 9 of the
22   Bankruptcy Code with respect to class voting and acceptance in
23   §§ 1126(c) and 1129(a)(8), both incorporated under § 901(a), and
24   the “best interests of creditors” test in § 943(b)(7).
25        The concerns that caused the Supreme Court to grant
26   certiorari in Avon Park regarding administration of the municipal
27   reorganization process in light of the city’s fiscal agent
28   participating as a creditor in the case and purchasing other


                                     41
 1   creditors’ claims at a discount to insure the required majority
 2   votes for approval of the plan are not present in this case.     The
 3   “best interests of creditors” test is neither discussed nor
 4   analyzed in Avon Park.
 5        Kelley was decided per curiam based on the Supreme Court’s
 6   determination that inadequate findings supported approval of the
 7   subject plan.   In Fano, the Ninth Circuit concluded that the
 8   district court clearly erred in determining that the irrigation
 9   district was insolvent “in the bankruptcy sense.”     Fano, 114 F.2d
10   at 565-66.   We do not find any of the decisions in Avon Park,
11   Kelley or Fano dispositive or particularly persuasive in
12   resolving the “best interests of creditors” questions presented
13   in this appeal.
14        As noted by the bankruptcy court in its oral findings,
15   applying the chapter 11 concept of “best interests” in chapter 9
16   is problematic “because it goes without saying that a
17   municipality cannot be liquidated.”     Hr’g Tr. Oct. 30, 2014, at
18   40:20-21.    Franklin recognizes in its reply brief that “a city
19   cannot go out of business” but argues that the Plan betrayed the
20   purpose of a chapter 9 plan of adjustment “to preserve the
21   municipality so that it can generate revenues for future services
22   and payment of creditor claims.”      Appellants’ Reply Brief, at 10
23   (emphasis in original).
24        The bankruptcy court’s determination that the Plan satisfied
25   the “best interests of creditors” test is a finding of fact that
26   is reviewed for clear error.   United States v. Arnold and Baker
27   Farms (In re Arnold and Baker Farms), 177 B.R. 648, 653 (9th Cir.
28   BAP 1994), citing Kane v. Johns-Manville Corp., 843 F.2d 636, 649


                                      42
 1   (2d Cir. 1988).
 2        Recognizing that “[a] municipality cannot be liquidated, its
 3   assets sold, and the proceeds used to pay its creditors,” Collier
 4   suggests the “best interests of creditors” test in chapter 9
 5   “should be interpreted to mean that the plan must be better than
 6   the alternative the creditors have. . . .   Creditors cannot
 7   expect that all excess cash go to the payment of their claims.
 8   The debtor must retain sufficient funds with which to operate and
 9   to make necessary improvements in and to maintain its facilities.
10   [Courts] must apply the test to require reasonable effort by the
11   municipal debtor that is a better alternative to its creditors
12   than dismissal of the case.”   6 Collier on Bankruptcy ¶
13   943.03[7][a] (Alan N. Resnick & Henry J. Sommer eds., 16th ed.),
14   citing In re City of Detroit, Michigan, Case No. 13-53846, “Oral
15   Opinion on the Record,” at 22-25 (Bankr. E.D. Mich. Nov. 7,
16   2014).   The bankruptcy court in the City of Detroit case
17   similarly described the chapter 9 “best interests of creditors”
18   standard in its written opinion on confirmation issues: “Courts
19   generally agree that the best interests of creditors test in
20   § 943(b)(7) requires ‘that a proposed plan provide a better
21   alternative for creditors than what they already have.’”    In re
22   City of Detroit, 524 B.R. 147, 213 (Bankr. E.D. Mich. 2014),
23   quoting In re Pierce County Housing Auth., 414 B.R. 702, 718
24   (Bankr. W.D. Wa. 2009), and In re Mount Carbon Metro. Dist., 242
25   B.R. 18, 34 (Bankr. D. Colo. 1999).   As noted by the bankruptcy
26   court in In re Mount Carbon Metro. Dist.:
27        This is often easy to establish. Since creditors
          cannot propose a plan; cannot convert to Chapter 7;
28        cannot have a trustee appointed; and cannot force sale

                                     43
 1        of municipal assets under state law, their only
          alternative to a debtor’s plan is dismissal.
 2
 3   242 B.R. at 34.
 4        In this case, the bankruptcy court clearly wrestled with
 5   these concepts in its oral findings at the Hearing:
 6        The case law that is involved says, in effect, that
          [the Plan] must be the best possible plan under the
 7        circumstances and must be doing the best that is
          available under the circumstances. So I have looked
 8        long and hard at the history of this case and the
          responses that have been made and considered the
 9        alternatives, including the alternative of putting the
          whole situation back to square one, which is what would
10        be required [if confirmation of the Plan were denied],
          and . . . running up many more millions of dollars in
11        terms of expenses for the City for what I view as
          probably not likely very much difference, and that’s
12        because this Plan, I’m persuaded, is about the best
          that can be done – or is the best that can be done in
13        terms of the restructuring and adjustments of the debts
          of the City . . . .
14
15   Hr’g Tr. Oct. 30, 2014, at 40:24-25; 41:1-11.   Accordingly, the
16   bankruptcy court concluded that the “best interests of creditors”
17   test in § 943(b)(7) was satisfied.
18        Franklin argues that the bankruptcy court erred in its “best
19   interests” determination essentially on two grounds. First,
20   Franklin argues, how can the Plan serve the “best interests of
21   creditors” when it receives an approximate 1% distribution on its
22   unsecured claim and other creditors receive higher percentages on
23   their claims?   Franklin’s argument ignores the 100% payout it
24   received on its allowed secured claim on the effective date of
25   the Plan and the approximately $2 million distribution it is
26   entitled to receive from the Reserve Fund held by its bond
27   indenture trustee.   The bottom line is Franklin received the same
28   payment treatment on its unsecured claim afforded to all of the

                                     44
 1   other general unsecured claimants in Class 12.   The bankruptcy
 2   court found that Franklin’s “17.5 percent overall return is not
 3   so paltry or unfair as to undermine the legitimacy of
 4   classification in the [Plan] or the good faith of the plan
 5   proponent.”   Amended Opinion, at 54.   Franklin’s complaints
 6   about the asserted better treatment afforded to creditors in
 7   other classes under the Plan invite us to make the apples to
 8   oranges to lemons to kumquats comparisons of Franklin’s treatment
 9   to the treatments of creditors with widely varying security
10   interests and settlement arrangements with the City.    We decline
11   the invitation.
12        Second, Franklin complains about implications from the
13   evidence presented to the bankruptcy court in terms of future
14   projections as to the City’s evolving financial situation,
15   focusing on the LTFP.   In particular, Franklin questions the
16   necessity for subsidies for “entertainment venues” and the
17   enhanced reserves under the LTFP “for the proverbial ‘rainy day’
18   or ‘prolonged downturn.’”   Appellants’ Reply Brief, at 13-14.
19   “The [LTFP] increases the City’s general fund cash reserve from
20   its 5% historical average and 10% official policy to 16.67% of
21   its budgeted annual expenses and then layers on a duplicative $2
22   million annual ‘contingency.’” Id. at 14.   Of course, the City’s
23   pre- and postpetition history, as reflected in the record in this
24   case, confirms that whatever historical or aspirational reserves
25   the City maintained in past budgets were not enough to protect
26   the City from the fiscal ravages it experienced since the
27   inception of the recession in 2007.
28        Ultimately, the question as to whether the Plan was the

                                     45
 1   “best” available proposal for the City to pay its creditors while
 2   maintaining its capacity over time to provide essential services
 3   to its citizens as opposed to any alternative, including
 4   dismissal of the chapter 9 case, was a factual finding for the
 5   bankruptcy court to make in light of the evidence before it.      The
 6   bankruptcy court, after considering the evidence presented by the
 7   City and Franklin, determined that the Plan before it was “the
 8   best that can be done.”    We conclude that the “best interests”
 9   test in chapter 9 considers the collective interests of all
10   concerned creditors in a municipal plan of adjustment rather than
11   focusing on the claims of individual creditors.    In light of that
12   conclusion, we do not perceive any clear error in the bankruptcy
13   court’s determination that the City satisfied the “best interests
14   of creditors” test under § 943(b)(7).
15   E.   Not discounting Retiree Health Benefit Claims to present
16   value
17           Franklin asserts that the bankruptcy court erred in not
18   discounting the Retiree Health Benefit Claims in Class 12 to
19   present value.    The City argued that the Retiree Health Benefit
20   Claims should be allowed in the aggregate amount of $545 million,
21   as determined by the Segal Company (“Segal”), “a nationally-
22   recognized actuarial and consulting firm with expertise in public
23   sector benefits.”    Appellee’s Brief, at 17.   Franklin argues that
24   Segal arrived at that number postpetition by “changing its
25   methodology during the bankruptcy case only because the City
26   instructed it to do so.”    Appellants’ Reply Brief, at 35.
27   Franklin has advocated for an aggregate amount for the Retiree
28   Health Benefit Claims of $261.9 million, based again on Segal’s

                                       46
 1   calculations and included in the City’s audited financial
 2   statements.8
 3           At the Hearing, the bankruptcy court determined the amount
 4   of the Retiree Health Benefit Claims as $545 million but stated,
 5   “[i]t’s fair game for a Rule 52(b) Motion to try to get me to
 6   adjust that number.”      Hr’g Tr. Oct. 30, 2014, at 47: 22-24.
 7   Franklin accordingly filed the Motion to Amend Findings that the
 8   bankruptcy court addressed at its hearing on December 10, 2014.
 9           At the hearing, the bankruptcy court first noted that the
10   amount to be paid to the retiree health benefit claimants under
11   the Plan was fixed and that no objection to the Retiree Health
12   Benefit Claims had been made, so they were deemed allowed.        It
13   further noted that even if it accepted the $261.9 million number
14   suggested by Franklin, Class 12 acceptance of the Plan would not
15   be altered.
16           In analyzing the discounting issue, the bankruptcy court
17   characterized the Retiree Health Benefit Claims as “an entirely
18   unfunded benefit” because there were no funds available to pay
19   them.       It recognized that in applying a discount rate, “the lower
20   the discount rate, the bigger the claim” and that determining an
21   appropriate discount rate was a matter of much debate among
22   economists.      However, in reviewing case authorities and the
23   language of § 502 “in the context of Chapter 9,” the bankruptcy
24
25
             8
             We have done the math. Substituting $261.9 million for
26   $545 million as the allowed aggregate of Retiree Health Benefit
27   Claims would increase Franklin’s distribution on its Class 12
     unsecured claim from approximately $285,000 (0.93578%) to
28   approximately $593,540 (1.9473%).

                                         47
 1   court concluded that the Bankruptcy Code did not require it to
 2   discount the Retiree Health Benefit Claims to present value.
 3   Accordingly, it denied the Motion to Amend Findings and stood pat
 4   with its finding that the aggregate amount of the Retiree Health
 5   Benefit Claims was $545 million.
 6        Section 502(b) provides that if an objection to a claim is
 7   made, “the [bankruptcy] court shall determine the amount of such
 8   claim . . . as of the date of the filing of the petition
 9   . . . .”9   The question for us to determine is, did the
10   bankruptcy court err as a matter of law in interpreting § 502(b)
11   as not requiring it to discount the Retiree Health Benefit Claims
12   to present value?
13        Franklin cites a number of decisions in support of its
14   argument that § 502(b) plainly requires that claims with future
15   payouts, like the Retiree Health Benefit Claims, be discounted to
16   present value.   See, e.g., Pension Benefit Guar. Corp. v.
17   Belfance (In re CSC Indus., Inc.), 232 F.3d 505 (6th Cir. 2000);
18   Pension Benefit Guar. Corp. v. CF&I Fabricators of Utah, Inc. (In
19   re CF&I Fabricators of Utah, Inc.), 150 F.3d 1293 (10th Cir.
20   1998); Gas Power Machinery Co. V. Wisconsin Trust Co. (In re
21
          9
22           Technically, Franklin objected to the amount of the
     Retiree Health Benefit Claims proposed by the City, rather than
23   directly to any claims filed by Retiree Health Benefit Claimants.
     However, at the Hearing, counsel for the City advised the
24
     bankruptcy court that Franklin, the City and the Official
25   Committee of Retirees had agreed that “rather than force Franklin
     to file 1100 objections to claim, [the issue] would be handled as
26   a matter of pure law as part of the confirmation process.” Hr’g
27   Tr. Oct. 30, 2014, at 46:14-16. We are comfortable in these
     circumstances that § 502(b) applies.
28

                                     48
 1   Wisconsin Engine Co.), 234 F. 281 (7th Cir. 1916) (pre-Bankruptcy
 2   Code decision); Pereira v. Nelson (In re Trace Int’l Holdings,
 3   Inc.), 284 B.R. 32 (Bankr. S.D.N.Y. 2002); In re Loewen Group
 4   Int’l, Inc., 274 B.R. 427 (Bankr. D. Del. 2002); Kucin v. Devan,
 5   251 B.R. 269 (D. Md. 2000); In re Thomson McKinnon Sec., Inc.,
 6   149 B.R. 61 (Bankr. S.D.N.Y. 1992); LTV Corp. v. Pension Benefit
 7   Guar. Corp. (In re Chateaugay Corp.), 115 B.R. 760 (Bankr.
 8   S.D.N.Y. 1990); and In re O.P.M. Leasing Serv., Inc., 79 B.R. 161
 9   (S.D.N.Y. 1987).
10        The City counters that some of the authorities cited by
11   Franklin (In re CSC Indus., Inc., CF&I Fabricators of Utah, Inc.,
12   and In re Chateaugay Corp.) are neither helpful nor persuasive
13   because they involve ERISA claims, and “ERISA, unlike the
14   Bankruptcy Code, explicitly requires discounting to present
15   value.”   Appellee’s Brief, at 96.   Some of the authorities
16   Franklin cites are no longer viable, i.e., In re Loewen Group
17   Int’l, Inc. (overruled); In re Chateaugay Corp. (vacated).     In
18   addition, the City argues that Franklin and many of the
19   authorities it cites ignore the distinction in the Bankruptcy
20   Code that where a present value determination is required, the
21   term “value” rather than “amount” is used.   See, e.g.,
22   §§ 1129(a)(7), (9) and (15); 1129(b)(2); 1173(a)(2); 1225(a)(4)
23   and (5); 1325(a)(4) and (5); and 1328(b)(2).   Congress’ use of
24   the different term “amount” in § 502(b) does not entail a
25   discount to present value overlay.
26        Both parties cite the decision of the Third Circuit in In re
27   Oakwood Homes Corp., 449 F.3d 588 (3d Cir. 2006), in support of
28   their arguments.   In Oakwood Homes, the question presented was

                                     49
 1   whether the bankruptcy court properly discounted the principal
 2   amounts of promissory note claims to present value after it
 3   already had discounted the claims for unmatured interest, as
 4   provided for in § 502(b)(2).    The Third Circuit held that such
 5   further discounting was not appropriate based on its
 6   interpretation of the language of § 502(b):
 7           Stated simply, 11 U.S.C. § 502(b) speaks in terms of
             determining the “amount” of a claim “as of” the
 8           petition date. However, given that the remainder of
             the Bankruptcy Code uses the term “value, as of” to
 9           signify discounting to present value, and “amount” and
             “value” are not synonymous, we cannot say that § 502(b)
10           clearly and unambiguously requires discounting to
             present value in all situations.
11
12   Id. at 595.    The Third Circuit noted that neither “amount” nor
13   “value” are defined in the Bankruptcy Code and focused on
14   appellee’s concession at oral argument that those terms do not
15   “mean the same thing.”    Id. at 597.
16           “Amount” is defined by one dictionary as “the total
             number or quantity; a principal sum and the interest on
17           it.” Webster’s Third New Int’l Dictionary (unabr.
             1965). “Value,” in contrast, is defined as “the
18           monetary worth or price of something; the amount of
             goods, services, or money that something will command
19           in an exchange.” Black’s Law Dictionary (8th ed.
             2004).
20
21   Id. at 597 n.8.    But, “[w]here the [Bankruptcy] Code speaks of
22   discounting cash streams to present value, it speaks in terms of
23   ‘value, as of’ a certain date.    It does not use ‘amount . . . as
24   of.’”    Id. at 598.   The Third Circuit ultimately concluded,
25   “Viewing the Bankruptcy Code holistically, we cannot say that the
26   language of 11 U.S.C. § 502(b) clearly and unambiguously requires
27   the same discounting to present value as is required in other
28   sections of the [Bankruptcy] Code.”     Id.

                                       50
 1           We realize from the cases cited to us that there is a line
 2   of authority to the effect that if an interested party objects to
 3   a claim, the bankruptcy court is to determine the amount of the
 4   claim “as of the petition date,” and, accordingly, “[a]ny portion
 5   of the claim that is unmatured as of the petition date must,
 6   therefore, be discounted to its value as of the petition date.”
 7   In re Trace Int’l Holdings, Inc., 284 B.R. at 38.       See, e.g., In
 8   re O.P.M. Leasing Serv., Inc., 79 B.R. at 164-65.       However,
 9   contrary authority also exists that interprets § 502(b)’s
10   requirement that the amount of a claim be determined “as of the
11   date of the filing of the petition” as making clear that § 502
12   only applies to prepetition claims.       See 4 Collier on Bankruptcy
13   ¶ 502.03[1][b] (Alan N. Resnick and Henry J. Sommer eds., 16th
14   ed.).
15           We are persuaded by the Third Circuit’s careful analysis and
16   interpretation of § 502(b) in Oakwood Homes and conclude that the
17   bankruptcy court did not err as a matter of law in determining
18   that the Bankruptcy Code did not require it to discount the
19   Retiree Health Benefit Claims to present value.
20                           CONCLUSION
21           For the foregoing reasons, we DISMISS Franklin’s appeal of
22   the Confirmation Order generally as equitably moot and otherwise
23   AFFIRM the bankruptcy court’s decisions with respect to the
24   treatment of Franklin’s unsecured claim under the Plan.
25
26
27
28

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