## Facts

- U.S. Truck Company, Inc., a Michigan intrastate trucking company, filed for Chapter 11 reorganization in June 1982.
- The bankruptcy court authorized U.S. Truck to reject an existing collective bargaining agreement (CBA) with Teamsters-affiliated unions under 11 U.S.C. § 365.
- The CBA rejection generated an unsecured claim for damages held by the Teamsters National Freight Industry Negotiating Committee (Teamsters).
- U.S. Truck proposed a plan of reorganization that separately classified the Teamsters’ unsecured rejection-damages claim (Class IX) apart from a broader class of general unsecured claims over $200, including other executory contract rejection claims (Class XI).
- The Teamsters objected to confirmation, arguing the debtor improperly split substantially similar unsecured claims to obtain a favorable vote for confirmation.
- Due to the resignation of the bankruptcy judge, the district court conducted confirmation proceedings, overruled the objection, and confirmed the plan.
- The Teamsters appealed the confirmation order to the Sixth Circuit.

## Issues

1. Whether separately classifying the Teamsters’ unsecured claim from other general unsecured claims violated 11 U.S.C. § 1122 and/or the confirmation requirements of 11 U.S.C. § 1129 by impermissibly manipulating creditor voting.
2. Whether the plan, given the challenged classification, satisfied § 1129’s good-faith and related confirmation standards.

## Decision

- The Sixth Circuit affirmed the order confirming the Chapter 11 plan.
- The court held that the plan permissibly classified the Teamsters’ unsecured claim separately because the Teamsters’ interests were substantially different from those of the general unsecured creditors.
- The court rejected the argument that the classification scheme constituted improper “gerrymandering” designed solely to secure an accepting impaired class.
- The court concluded the plan satisfied the relevant confirmation requirements, including the acceptance-by-an-impaired-class requirement and the good-faith requirement.

## Legal Principles

- Under 11 U.S.C. § 1122(a), claims may be placed in the same class only if they are substantially similar; the statute does not, by its terms, require that all substantially similar claims be placed in a single class.
- Separate classification of unsecured claims is permissible when supported by legitimate differences in creditor rights or interests; courts should disallow artificial classification used solely to manipulate voting outcomes under § 1129.
- Unsecured claims arising from rejection of a collective bargaining agreement may present materially different creditor interests due to the labor-relations context and the creditor’s continuing relationship to the debtor, supporting separate classification.
- A plan is not proposed in bad faith under § 1129(a)(3) merely because separate classification incidentally facilitates confirmation; the controlling inquiry is whether the classification corresponds to genuine differences rather than vote engineering alone.

## Conclusion

The Sixth Circuit upheld confirmation of U.S. Truck’s Chapter 11 plan, ruling that the debtor could separately classify the Teamsters’ unsecured claim arising from rejection of a collective bargaining agreement because the Teamsters’ interests differed materially from other unsecured creditors, and the classification did not violate §§ 1122 or 1129.


In re U.S. Truck Co., 800 F.2d 581 (6th Cir. 1986)