                 FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


IN THE MATTER OF                      No. 16-16221
TRANSWEST RESORT
PROPERTIES, INC.,                      D.C. Nos.
                    Debtor,       4:12-cv-00024-RCC
                                  4:12-cv-00121-RCC

JPMCC 2007-C1
GRASSLAWN LODGING,                        OPINION
LLC,
              Appellant,

            v.

TRANSWEST RESORT
PROPERTIES INCORPORATED;
SWVP LA PALOMA LLC;
SWVP HILTON HEAD LLC,
                Appellees.



     Appeal from the United States District Court
              for the District of Arizona
    Raner C. Collins, Chief District Judge, Presiding

        Argued and Submitted October 25, 2017
              San Francisco, California

                 Filed January 25, 2018
2       IN RE TRANSWEST RESORT PROPERTIES

 Before: J. CLIFFORD WALLACE, MILAN D. SMITH,
  JR., and MICHELLE T. FRIEDLAND, Circuit Judges.

            Opinion by Judge Milan D. Smith, Jr.;
              Concurrence by Judge Friedland


                          SUMMARY *


                           Bankruptcy

    The panel affirmed the district court’s affirmance of the
bankruptcy court’s order approving a Chapter 11
“cramdown” reorganization plan of five related debtors.

    The debtors had previously acquired two resorts. A
lender, whose claim was undersecured, elected to have its
entire claim treated as secured pursuant to 11 U.S.C.
§ 1111(b)(2). The plan restructured the lender’s loan to a
term of 21 years and included a due-on-sale clause requiring
the debtors to pay the lender the outstanding balance of the
loan if the resorts were sold. The due-on-sale clause did not
apply if the debtors were to sell the resorts between years
five and fifteen.

    The panel held that an election under § 1111(b)(2) does
not require that a due-on-sale clause be included in a
reorganization plan.



    *
      This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
       IN RE TRANSWEST RESORT PROPERTIES                      3

    The panel also held that § 1129(a)(10), which requires
that at least one impaired class accept a “cramdown” plan,
applies on a “per plan” basis, rather than a “per debtor” basis.

    Concurring, Judge Friedland agreed that § 1111(b)(2)
does not require that a bankruptcy plan include complete
due-on-sale protection for the creditor and that § 1129(a)(10)
applies on a “per plan” basis. She wrote separately to
acknowledge the argument of the lender that it was unfairly
deprived of the ability to object effectively to reorganization
of two of the debtors, despite being their only creditor.
Judge Friedland wrote that any unfairness resulted not from
the interpretation of § 1129 challenged by the lender, but
instead from the fact that the reorganization treated the five
debtor entities as if they had been substantively
consolidated—something the lender did not object to in the
bankruptcy court.


                         COUNSEL

David M. Neff (argued) and Eric E. Walker, Perkins Coie
LLP, Chicago, Illinois; Dean C. Waldt, Ballard Spahr LLP,
Phoenix, Arizona; for Appellant.

Donald A. English (argued) and Christy I. Yee, English &
Gloven APC, San Diego, California; Susan G. Boswell and
Brad D. Terry, Quarles & Brady LLP, Tucson, Arizona; for
Appellees.
4       IN RE TRANSWEST RESORT PROPERTIES

                            OPINION

M. SMITH, Circuit Judge:

    JPMCC 2007-C1 Grasslawn Lodging, LLC (Lender)
objected to the Chapter 11 plan of five related entities
(collectively, Debtors) who previously acquired two hotels.
Despite these objections, the bankruptcy court approved a
“cramdown” reorganization plan. The Lender appealed to
the district court, but the district court concluded that the
Lender’s appeal was equitably moot. In 2015, we reversed
the district court’s equitable mootness determination, and
remanded to the district court for consideration of the
Lender’s appeal on the merits. See In re Transwest Resort
Props., Inc., 801 F.3d 1161 (9th Cir. 2015) (Transwest I).

    On remand, the district court evaluated the merits of the
Lender’s appeal, and concluded that (1) an election under
11 U.S.C. § 1111(b)(2) does not require that a Chapter 11
plan contain a due-on-sale clause; and (2) 11 U.S.C.
§ 1129(a)(10) applies on a “per plan,” not a “per debtor,”
basis. This appeal is limited to the construction of 11 U.S.C.
§ 1111(b)(2) and 11 U.S.C. § 1129(a)(10). 1 Based on the
plain language of both statutory sections, we affirm.

    FACTUAL AND PROCEDURAL BACKGROUND

   In 2007, the Debtors acquired the Westin Hilton Head
Resort and Spa and the Westin La Paloma Resort and
Country Club (collectively, the Resorts). The Debtors were
composed of: Transwest Hilton Head Property, LLC, and
Transwest Tucson Property, LLC (Operating Debtors);

     1
       Unless otherwise noted, subsequent statutory references are to
Title 11 of the United States Code.
        IN RE TRANSWEST RESORT PROPERTIES                           5

Transwest Hilton Head II, LLC, and Transwest Tucson II,
LLC (Mezzanine Debtors); and Transwest Resort Properties,
Inc. (Holding Company Debtor). The Holding Company
Debtor was the sole owner of the Mezzanine Debtors. The
Mezzanine Debtors were, in turn, the sole owners of the two
Operating Debtors, who owned and operated the Resorts.
The acquisitions were financed by (1) a $209 million
mortgage loan to the Operating Debtors from the Lender,
secured by the Resorts (the Operating Loan); and (2) a $21.5
million loan from Ashford Hospitality Finance, LP
(Mezzanine Lender), secured by the Mezzanine Debtors’
interests in the Operating Debtors (the Mezzanine Loan).

    In 2010, the Debtors filed for Chapter 11 bankruptcy.
The five cases involved were jointly administered, but not
substantively consolidated. 2 The Lender filed a claim in the
bankruptcy proceeding for $298 million, based on the
Operating Loan. The Mezzanine Lender filed a $39 million
claim based on the Mezzanine Loan.             The Lender
subsequently acquired this claim from the Mezzanine
Lender.

    The Debtors filed a joint Chapter 11 reorganization plan
(the Plan), whereby third-party investor Southwest Value
Partners would acquire the Operating Debtors for $30
million, thereby extinguishing the Mezzanine Debtors’
ownership interest in the Operating Debtors.

    The Lender, whose claim was undersecured, elected to
have its entire claim treated as secured pursuant to 11 U.S.C.
§ 1111(b)(2). The Plan restructured the Lender’s loan to a
term of 21 years, and required monthly interest payments,

    2
      The Lender never objected to or argued that the bankruptcy court
was treating the case as if substantive consolidation had occurred.
6       IN RE TRANSWEST RESORT PROPERTIES

and a balloon principal payment at the end of the term. The
Plan included a due-on-sale clause requiring the Debtors to
pay the Lender the outstanding balance of the restructured
loan in the event the Resorts were sold. However, the due-
on-sale clause did not apply if the Debtors were to sell the
Resorts between Plan years five and fifteen. The Lender
voted against the Plan. Several other impaired classes voted
to approve the Plan.

    The Lender objected to two aspects of the Plan. 3 First,
the Lender objected to the ten-year exception in the due-on-
sale clause. It contended that the exception in the due-on-
sale clause would allow the Debtors to partially negate the
benefit of the Lender’s section 1111(b)(2) election. Second,
the Lender asserted that section 1129(a)(10), which requires
that at least one impaired class accept the Plan, applies on a
“per debtor,” not a “per plan,” basis. Because the Lender is
the only class member for the Mezzanine Debtors and did
not vote to approve the Plan, the Lender argued that the Plan
did not satisfy section 1129(a)(10). Despite the Lender’s
objections, the bankruptcy court approved the Plan.

    Following an unsuccessful emergency motion for a stay
pending appeal, the district court dismissed the Lender’s
appeal as equitably moot. In 2015, we reversed this
dismissal and remanded to the district court with instructions
to evaluate the Lender’s objections on the merits. Transwest
I, 801 F.3d at 1173. On remand, the district court ruled that
an election under section 1111(b)(2) does not require that a
due-on-sale clause be included in the Plan, and that section
1129(a)(10) applies on a “per plan” basis. The district court


    3
      The Lender raised other objections to the Plan, but the parties
previously resolved those objections.
       IN RE TRANSWEST RESORT PROPERTIES                     7

thereby affirmed the bankruptcy court’s confirmation of the
Plan. The Lender timely appealed to our court.

   JURISDICTION AND STANDARD OF REVIEW

    We have jurisdiction over this appeal pursuant to
28 U.S.C. § 158(d)(1). Because the Lender appeals from the
district court’s conclusions of law and interpretations of the
Bankruptcy Code, we review de novo. See Smith v. Arthur
Andersen LLP, 421 F.3d 989, 1006 (9th Cir. 2005); In re
Barakat, 99 F.3d 1520, 1523 (9th Cir. 1996).

                        ANALYSIS

I. 11 U.S.C. § 1111(b)

    The Lender first challenges the district court’s
conclusion that a due-on-sale clause need not be included in
the Plan when an undersecured creditor elects to have its
claim treated as secured pursuant to section 1111(b)(2). This
section must be read in context. Pursuant to section 506(a),
an undersecured creditor’s claim is bifurcated into: (1) “a
secured claim equal to the value of the collateral” and (2) “an
unsecured claim equal to the remainder of the obligation
owing to the creditor as of the petition date.” In re
Weinstein, 227 B.R. 284, 291–92 (B.A.P. 9th Cir. 1998).
The undersecured creditor may elect to have its entire claim
treated as secured pursuant to section 1111(b)(2). Id. at 293;
see 11 U.S.C. § 1111(b)(2). The effect of such an election
is that the undersecured creditor obtains certain benefits
reserved for secured, but not unsecured, creditors. See, e.g.,
11 U.S.C. § 1129(b)(2)(A)–(B) (distinguishing between the
“fair and equitable” requirements for secured and unsecured
claims). The Lender contends that the absence of a due-on-
sale clause covering sales of the Resorts occurring between
years five and fifteen of the loan term partially diminishes
8      IN RE TRANSWEST RESORT PROPERTIES

the benefits of its section 1111(b)(2) election, thereby
violating section 1111(b)(2).

    “The starting point for our interpretation of a statute is
always its language.” United States v. Fei Ye, 436 F.3d
1117, 1120 (9th Cir. 2006) (quoting Cmty. for Creative Non-
Violence v. Reid, 490 U.S. 730, 739 (1989)). We must
consider “the language itself, the specific context in which
that language is used, and the broader context of the statute
as a whole.” Robinson v. Shell Oil Co., 519 U.S. 337, 341
(1997); see also King v. Burwell, 135 S. Ct. 2480, 2489
(2015) (“[W]hen deciding whether the language is plain, we
must read the words ‘in their context and with a view to their
place in the overall statutory scheme.’” (citation omitted)).
Only where the statutory text is ambiguous do we “look to
other interpretive tools, including the legislative history,” in
order to determine the statute’s meaning. See Exxon Mobil
Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 567 (2005).

    Section 1111(b) provides, in pertinent part:

       (1)(A) A claim secured by a lien on property
       of the estate shall be allowed or disallowed
       under section 502 of this title the same as if
       the holder of such claim had recourse against
       the debtor on account of such claim, whether
       or not such holder has such recourse,
       unless—

           (i) the class of which such claim is a party
           elects, by at least two-thirds in amount
           and more than half in number of allowed
           claims of such class, application of
           paragraph (2) of this subsection;
       IN RE TRANSWEST RESORT PROPERTIES                      9

           ....

       (2) If such an election is made, then
       notwithstanding section 506(a) of this title,
       such claim is a secured claim to the extent
       that such claim is allowed.

11 U.S.C. § 1111(b). The Lender’s position that section
1111(b)(2) requires a due-on-sale clause to be included in
the Plan finds no support in the text of the statute, nor does
the language of the statute implicitly require the inclusion of
such a clause.

    The broader statutory context of Chapter 11 further
undermines the Lender’s position. Section 1123 describes
the required contents of a Chapter 11 plan. See 11 U.S.C.
§ 1123. Nothing in section 1123 requires the inclusion of a
due-on-sale clause in a plan, let alone following a section
1111(b)(2) election. Instead, section 1123(b)(5) indicates
that a plan may “modify the rights of holders of secured
claims.” This would include the ability to determine whether
to include a due-on-sale clause in the documentation of any
secured        creditors’    claims.         Further,   section
1129(b)(2)(A)(i)(I) requires that in order for a plan to be fair
and equitable, the holder of a claim must retain the lien
securing that claim even when “the property subject to such
liens is . . . transferred to another entity.” Thus, the statute
expressly allows a debtor to sell the collateral to another
entity so long as the creditor retains the lien securing its
claim, yet the statute does not mention any due-on-sale
requirement, further undermining the Lender’s position that
a due-on-sale clause must be included in the Plan.

   Our conclusion is consistent with the reasoning of the
Seventh Circuit in In re Airadigm Commc’ns, Inc., 519 F.3d
10       IN RE TRANSWEST RESORT PROPERTIES

640 (7th Cir. 2008). There, FCC regulations required that,
under certain circumstances, a due-on-sale clause be
included in the documentation when a licensee transfers a
license to a non-qualifying entity. Id. at 653. A licensee
filed a reorganization plan, which a bankruptcy court
approved even though it did not contain a due-on-sale clause.
Id. at 646. The FCC objected to the plan because it “did not
keep the FCC’s due-on-sale rights.” Id. at 646, 653. While
the FCC did not make an election under section 1111(b), the
Seventh Circuit concluded that a due-on-sale provision was
not a “lien that the bankruptcy court had to ‘retain’ in order
to approve the plan pursuant to § 1129.” Id. at 654. Instead,
the provision is merely a mechanism “regarding the terms of
payment for the debt.” Id. at 655. The same reasoning
applies in this case—a due-on-sale clause is a mechanism
regarding the terms of payment of a debt, not a substantive
right of creditors making an election pursuant to section
1111(b)(2).

    Neither the plain language of section 1111(b)(2) nor the
broader context of Chapter 11 requires that a plan involving
an electing creditor contain a due-on-sale clause. We need
not address the Lender’s remaining arguments because the
statutory text renders the Lender’s other arguments
meritless. See Satterfield v. Simon & Schuster, Inc.,
569 F.3d 946, 951 (9th Cir. 2009). We therefore hold that
section 1111(b)(2) does not require that a plan involving an
electing creditor contain a due-on-sale clause. 4


     4
       This holding does not imply that “due-on-sale” protection is
irrelevant to whether a plan is “fair and equitable” under section 1129(b).
Although the Lender here waived any argument that the Plan was not
“fair and equitable,” the availability of due-on-sale protection may
inform whether a plan is confirmable in other reorganizations. Cf. In re
        IN RE TRANSWEST RESORT PROPERTIES                      11

II. 11 U.S.C. § 1129(a)(10)

    The Lender next challenges the district court’s
conclusion that section 1129(a)(10) applies on a “per plan”
basis. Generally, a bankruptcy court may confirm a plan
only if each class of impaired creditors consents. 11 U.S.C.
§ 1129(a)(8).     However, in certain instances, a plan
proponent can confirm a “cramdown” Chapter 11 plan over
the objections of one or more of the creditors. RadLAX
Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. 639,
641–42 (2012); see 11 U.S.C. § 1129(b). Section 1129 lists
the requirements for approval of a cramdown plan, and
“contains a number of safeguards for secured creditors who
could be negatively impacted by a debtor’s reorganization
plan.” In re The Vill. at Lakeridge, LLC, 814 F.3d 993, 1000
(9th Cir. 2016). One such safeguard is in section
1129(a)(10), which requires that at least one impaired
creditor has accepted the plan. See 11 U.S.C. § 1129(a)(10).

    According to the Lender, a complication arises when
there is a jointly administered plan consisting of multiple
debtors. The Lender argues that in such a situation, a “per
debtor” approach that requires plan approval from at least
one impaired creditor for each debtor involved in the plan is
necessary. In contrast, the Debtors argue that the plain
language of the statute contemplates a “per plan” approach
in which a plan only requires approval from one impaired
creditor for any debtor involved. As a matter of first
impression among the circuit courts, we hold that section
1129(a)(10) applies on a “per plan” basis.


Monarch Beach Venture, Ltd., 166 B.R. 428, 436 (Bankr. C.D. Cal.
1993) (“[T]o be fair and equitable, a plan of reorganization cannot
unfairly shift the risk of a plan’s failure to the creditor.”).
12     IN RE TRANSWEST RESORT PROPERTIES

    As with section 1111(b)(2), we begin our analysis of
section 1129(a)(10) with its plain language. See In re HP
Inkjet Printer Litig., 716 F.3d 1173, 1180 (9th Cir. 2013).
Section 1129(a) provides that a court may confirm a plan
only if a number of requirements are met. Section
1129(a)(10) details one such requirement: “If a class of
claims is impaired under the plan, at least one class of claims
that is impaired under the plan has accepted the plan,
determined without including any acceptance of the plan by
any insider.” 11 U.S.C. § 1129(a)(10).

     The plain language of the statute supports the “per plan”
approach. Section 1129(a)(10) requires that one impaired
class “under the plan” approve “the plan.” It makes no
distinction concerning or reference to the creditors of
different debtors under “the plan,” nor does it distinguish
between single-debtor and multi-debtor plans. Under its
plain language, once a single impaired class accepts a plan,
section 1129(a)(10) is satisfied as to the entire plan.
Obviously, Congress could have required plan approval
from an impaired class for each debtor involved in a plan,
but it did not do so. It is not our role to modify the plain
language of a statute by interpretation. See King, 135 S. Ct.
at 2489 (“If the statutory language is plain, we must enforce
it according to its terms.”).

    The statutory context of section 1129(a)(10) does not aid
the Lender’s argument. The Lender, citing the only court
that has applied the “per debtor” approach, argues that
section 102(7) requires that section 1129(a)(10) apply on a
“per debtor” basis. See In re Tribune Co., 464 B.R. 126,
182–83 (Bankr. D. Del. 2011). We disagree. Section
102(7), a rule of statutory construction, provides that “the
singular includes the plural.” 11 U.S.C. § 102(7). This rule
of construction does not change our analysis. Section 102(7)
       IN RE TRANSWEST RESORT PROPERTIES                   13

effectively amends section 1129(a)(10) to read: “at least one
class of claims that is impaired under the plans has accepted
the plans.” The “per plan” approach is still consistent with
this reading. Therefore, section 102(7) does not undermine
our view that section 1129(a)(10) applies on a “per plan”
basis.

    Nor do other subsections in section 1129(a) indicate that
section 1129(a)(10) must apply on a “per debtor” basis. The
court in Tribune concluded that section 1129(a)(10) must
apply on a “per debtor” basis because other subsections
apply on a “per debtor” basis. 464 B.R. at 182–83. For
example, section 1129(a)(3) requires that “[t]he plan has
been proposed in good faith.” 11 U.S.C. § 1129(a)(3). This
argument fails for two reasons. First, as with subsection ten,
nothing in the plain text of subsection three indicates that it
applies on a “per debtor” basis. See BedRoc Ltd. v. United
States, 541 U.S. 176, 183 (2004) (holding a court presumes
that Congress says in the statute what it means). Second,
while a statute must be “read as a whole,” King v. St.
Vincent’s Hosp., 502 U.S. 215, 221 (1991), the Lender
provides no support for its position that all subsections must
uniformly apply on a “per debtor” basis, especially when the
Bankruptcy Code phrases each subsection differently.
Instead, the Lender’s argument is essentially a regurgitation
of a summary of the Tribune decision unsupported by
argument or other case law. These deficiencies defeat the
Lender’s argument that section 1129(a)(10) unambiguously
applies on a “per debtor” basis based on other subsections in
section 1129(a).

    The Lender also argues that while the Plan states it is a
jointly administered plan, it was, in effect, a substantive
consolidation. The Lender’s argument faces two hurdles.
First, the Lender never objected to the Plan on this basis. As
14     IN RE TRANSWEST RESORT PROPERTIES

the Lender’s counsel concedes, the only issue before us is
the construction of sections 1111(b)(2) and 1129(a)(10).
These are the objections the Lender raised before the
bankruptcy court, the objections it appealed to the district
court, and the issues we previously identified. See
Transwest I, 801 F.3d at 1166–67. Therefore, whether the
parties and the bankruptcy court dealt with the Plan approval
as if it were a substantive consolidation is not properly
before us on appeal. Second, to the extent the Lender argues
that the “per plan” approach would result in a parade of
horribles for mezzanine lenders, such hypothetical concerns
are policy considerations best left for Congress to resolve.
See Henson v. Santander Consumer USA Inc., 137 S. Ct.
1718, 1726 (2017) (stating that “the proper role of the
judiciary” in statutory interpretation is “to apply, not amend,
the work of the People’s representatives”).

     Because the plain language of section 1129(a)(10)
indicates that Congress intended a “per plan” approach, we
need not to look to the statute’s legislative history or address
the Lender’s remaining policy concerns. See Tahara v.
Matson Terminals, Inc., 511 F.3d 950, 953 (9th Cir. 2007)
(citing SEC v. McCarthy, 322 F.3d 650, 655 (9th Cir. 2003)).
We therefore hold that section 1129(a)(10) applies on a “per
plan” basis.

                      CONCLUSION

    For the foregoing reasons, we affirm the district court’s
conclusions that 11 U.S.C. § 1111(b) does not require the
inclusion of a due-on-sale clause in the Plan, and that
11 U.S.C. § 1129(a)(10) applies on a “per plan” basis.

       AFFIRMED.
       IN RE TRANSWEST RESORT PROPERTIES                    15

FRIEDLAND, Circuit Judge, concurring:

    I agree that 11 U.S.C. § 1111(b)(2) does not require that
a bankruptcy plan include complete due-on-sale protection
for the creditor. And although I think the statutory language
is somewhat ambiguous, I further agree that the better
reading of 11 U.S.C. § 1129(a)(10) is that it applies on a “per
plan,” rather than “per debtor,” basis. I write separately,
however, to acknowledge the argument advanced by
JPMCC 2007-C1 Grasslawn Lodging, LLC (“Lender”) that
it was unfairly deprived of the ability to object effectively to
reorganization of the Mezzanine Debtors, despite being their
only creditor. While Lender’s concern is not unfounded, I
believe any unfairness resulted not from the interpretation of
§ 1129 that Lender challenged in this appeal, but instead
from the fact that this particular reorganization treated the
five Debtor entities as if they had been substantively
consolidated—something Lender did not object to in the
bankruptcy court.

    Joint administration and substantive consolidation are
both mechanisms to facilitate multi-debtor reorganizations.
Joint administration is a tool of convenience; “[t]here is no
merging of assets and liabilities of the debtors,” and
“[c]reditors of each debtor continue to look to that debtor for
payment of their claims.” In re Parkway Calabasas Ltd.,
89 B.R. 832, 836 (Bankr. C.D. Cal. 1988). By contrast,
substantive consolidation replaces “two or more debtors,
each with its own estate and body of creditors,” with “a
single debtor, a single estate with a common fund of assets,
and a single body of creditors.” Id. at 836–37; see also In re
Bonham, 229 F.3d 750, 764 (9th Cir. 2000). Accordingly,
“consolidation depends on substantive considerations and
affects the substantive rights of the creditors of the different
estates.” In re Bonham, 229 F.3d at 762 (quoting Fed. R.
16     IN RE TRANSWEST RESORT PROPERTIES

Bankr. P. 1015 advisory committee’s note). Here, the cases
of the five Debtors were jointly administered pursuant to
Federal Rule of Bankruptcy Procedure 1015, but neither
party moved for substantive consolidation.

    Nevertheless, I think Lender is correct that the
distribution scheme adopted by the Plan involved a degree
of substantive consolidation.           Debtors’ respective
bankruptcy estates may technically have remained separate,
but the Plan treated Debtors as a single entity. Specifically,
by subordinating the Mezzanine Loan claims to the
Operating Loan claims, the creditors for different Debtors all
drew from the same pool of assets. And had the Mezzanine
Lender voted to accept the Plan, its claims would have been
paid from the assets of the reorganized Operating Debtors,
demonstrating that the Plan did not differentiate based on the
recipient of a particular creditor’s loan. As the bankruptcy
court itself explained, this arrangement treated the
Mezzanine Lender’s claims as if the cases had been
substantively consolidated.

    In many cases involving a reorganization plan that
effectively merges the assets and liabilities of multiple
debtors, “the constituents in the chapter 11 proceeding either
reach this result by consensus, or, no objection is made by
any creditor or party in interest.” In re Tribune, 464 B.R.
126, 183 (Bankr. D. Del. 2011). The plan can thus proceed
under a “de facto” substantive consolidation, absent a formal
assessment of whether substantive consolidation is
appropriate. Here, however, two classes of creditors
objected to the Plan: (1) the class consisting of Lender’s
secured claim, which arose from the mortgage loan secured
by the resorts, and (2) the class consisting of the secured and
unsecured mezzanine claims, which arose from the
mezzanine loan originally provided by Ashford Hospitality
       IN RE TRANSWEST RESORT PROPERTIES                   17

Finance, LP, and subsequently purchased by Lender.
Because there was no consensus over these bankruptcy
proceedings, there should have been an evaluation of
whether substantive consolidation was appropriate before it
(effectively) occurred.

     To determine whether substantive consolidation is
appropriate, a bankruptcy court evaluates “(i) whether
creditors dealt with the entities as a single economic unit and
did not rely on their separate identity in extending credit; or
(ii) whether the affairs of the debtors are so entangled that
consolidation will benefit all creditors.” FDIC v. Colonial
Realty Co., 966 F.2d 57, 61 (2d Cir. 1992) (quoting In re
Augie/Restivo Baking Co., Ltd., 860 F.2d 515, 518 (2d Cir.
1988)) (internal quotation marks omitted); see also In re
Bonham, 229 F.3d at 766 (adopting the Second Circuit’s test
for substantive consolidation). The “sole aim” of this
analysis is “fairness to all creditors.” In re Bonham,
229 F.3d at 765 (quoting Colonial Realty, 966 F.2d at 61).
Assessing whether substantive consolidation was
appropriate here would thus have required the bankruptcy
court to consider whether consolidation was fair to Lender,
among other creditors.

    According to Lender, its treatment under the Plan was
unfair, and the root of the potential unfairness is that
§ 1129(a)(10) was interpreted as applying on a “per plan,”
rather than a “per debtor,” basis. Section 1129(a)(10)
requires that at least one impaired class of creditors accept a
plan in order for it to be confirmed. Under the “per plan”
approach, this provision was satisfied here as soon as any
one impaired class from any of the five Debtors accepted the
Plan. But if this provision had been applied on a “per debtor”
basis, then one impaired class for each of the five Debtors
would have had to accept the Plan. Because Lender was the
18     IN RE TRANSWEST RESORT PROPERTIES

only creditor for the Mezzanine Debtors following its
purchase of the mezzanine claims, under the “per debtor”
interpretation of § 1129(a)(10) Lender’s objection would
have prevented the Plan from being confirmed. Lender
argues that use of the “per plan” approach had the same
effect as substantive consolidation because one impaired
class of creditors for one Debtor was able to bind all of the
involved creditors, nullifying the leverage Lender would
have otherwise had in the confirmation process under the
“per debtor” approach.

    Lender thus characterizes the “per plan” approach as “de
facto” substantive consolidation. But this characterization is
correct only to the extent that the “per plan” approach
allowed for confirmation of a Plan that effectively merged
the Debtor entities. The root of Lender’s objection is that
the reorganization here was governed by a single plan that
did not delineate among separate debtor-creditor
relationships.      Had the Debtors—and thus their
reorganization plans—remained separate, there would have
been no need to invoke the “per debtor” approach to preserve
the effectiveness of any objection Lender had.

    Although Lender’s “per debtor” interpretation would
have allowed Lender to object and thereby block
confirmation of the Plan, the problem in my view is not the
interpretation of the statute, but rather that the Plan
effectively merged the Debtors without an assessment of
whether consolidation was appropriate. Such an assessment
would have required the bankruptcy court to evaluate
whether it was fair to proceed on a consolidated basis. In re
Bonham, 229 F.3d at 765. Had the court taken this step of
“balanc[ing] the benefits that substantive consolidation
would bring against the harms that it would cause,” id., it
       IN RE TRANSWEST RESORT PROPERTIES                    19

might have alleviated concerns about whether consolidation
of the proceedings was in fact unfair.

     Given that Lender asserts now that de facto substantive
consolidation was inappropriate, it is unclear why Lender
did not challenge the Plan on that basis prior to confirmation.
It is possible that, if there had been an objection raising the
question, Debtors’ single-purpose entity structure would
have defeated any request for substantive consolidation. The
original loan documents required maintaining the Operating
Debtors and the Mezzanine Debtors as separate entities. As
a result, the bankruptcy court might have concluded that
creditors treated Debtors as separate entities, and further that
the special-purpose entity structure prevented their assets
from becoming entangled—thus rendering substantive
consolidation unavailable under this circuit’s test. See id. at
765–66. If so, the court could have required altering the
distribution scheme to maintain entity separateness, thus
preserving Lender’s leverage over the Plan.

    If, however, the bankruptcy court had instead determined
that this case was a candidate for substantive consolidation,
then an appeal of that determination would have involved an
evaluation of this particular Plan on its facts and resulting
equities—rather than a challenge to the interpretation of a
statute that governs all Chapter 11 reorganizations. But
because Lender focused solely on the statute, the substantive
consolidation objection is now waived.

    In sum, I am not unsympathetic to Lender’s argument
that it was deprived of an opportunity to object to
confirmation of the Plan, and I have concerns that entangling
various estates in a complex, multi-debtor reorganization
diminishes the protections afforded to creditors by the
Bankruptcy Code. But I do not believe bolstering these
20     IN RE TRANSWEST RESORT PROPERTIES

protections requires the blanket statutory solution that
Lender proposes. Rather, if a creditor believes that a
reorganization improperly intermingles different estates, the
creditor can and should object that the plan—rather than the
requirements for confirming the plan—results in de facto
substantive consolidation. Such an approach would allow
this issue to be assessed on a case-by-case basis, which
would be appropriate given the fact-intensive nature of the
substantive consolidation inquiry. See In re Bonham,
229 F.3d at 765 (“[O]nly through a searching review of the
record, on a case-by-case basis, can a court ensure that
substantive consolidation effects its sole aim: fairness to all
creditors.” (quoting Colonial Realty, 966 F.2d at 61)).
