BANKRUPTCY CORNER
BANKRUPTCY CORNER
When is Silence Considered Acceptance in Subchapter V?
JASON S. RIGOLI
In Subchapter V Chapter 11 cases, a plan can be confirmed as a consensual plan under 11 U. S. C. § 1191( a) or a contested( nonconsensual) plan under 11 U. S. C. § 1191( b). The distinction carries meaningful consequences, including the timing of the debtor’ s discharge, the continued role of the Subchapter V trustee, the vesting of property in the debtor, and the ability of a plan to be modified.
For a plan to be confirmed as a consensual plan under § 1191( a),“ all of the requirements of section 1129( a), other than paragraph( 15) of that section, of this title are met.” 11 U. S. C. § 1191( a). Section 1129( a)( 8), in turn, requires that every class of creditors either has accepted the plan or is not impaired under it. See 11 U. S. C. § 1129( a)( 8). In many cases, there are classes of impaired creditors who simply do not cast a vote. Federal Rule of Bankruptcy Procedure 3018( c)( 1) provides that an“ acceptance or rejection of a plan must:( A) be in writing …” Fed. R. Bankr. P. 3018( c)( 1). Can silence be considered acceptance in a Subchapter V?
In In re 5 Star Home Care Inc., Case No. 25-04786-EG, 2026 WL 1127906( Bankr. D. S. C. Apr. 24, 2026), Judge Elisabetta G. M. Gasparini of the U. S. Bankruptcy Court for the District of South Carolina laid out four approaches found in the case law.
The first is the“ deemed acceptance” approach articulated by the U. S. Court of Appeals for the 10th Circuit in In re Ruti- Sweetwater, Inc., 836 F. 2d 1263( 10th Cir. 1988), in the context of a traditional Chapter 11 case. 2026 WL 1127906 at * 5. The 10th Circuit is the only circuit court to have decided this issue, and lower courts within the 10th Circuit have applied the“ deemed acceptance” holding to Subchapter V bankruptcy cases. Id.( citing In re Robinson, 632 B. R. 208( Bankr. D. Kan. 2021), and In re
Jaramillo, No. 21-10306, 2022 WL 4389292( Bankr. D. N. M. Sept. 22, 2022)).
The second approach“ is a subset of the‘ deemed acceptance approach’ and applies only when a bankruptcy court has approved solicitation procedures that contemplate that a silent class will be counted as a deemed acceptance.” Id. at * 6. As Judge Gasparini noted, generally, there are no solicitation procedures to be approved in Subchapter V, so this approach would be inapplicable. Id.
The third approach simply disregards the nonvoting class. Id.( citing In re Franco ' s Paving LLC, 654 B. R. 107( Bankr. S. D. Tex. 2023); In re Hot ' z Power Wash, Inc., 655 B. R. 107( Bankr. S. D. Tex. 2023)).
The fourth and final approach, which Judge Gasparini described as the“ majority view” holds that § 1191( a) requires affirmative acceptance by all impaired classes. Id. at * 7( collecting cases). One of the cases cited by Judge Gasparini is In re M. V. J. Auto World, Inc., 661 B. R. 186( Bankr. S. D. Fla. 2024), where Judge Laurel M. Isicoff of the U. S. Bankruptcy Court for the Southern District of Florida also held that silence is not acceptance, and that the Subchapter V plan could only be confirmed under 11 U. S. C. § 1191( b).
On September 11, 2026, Judge John T. Laney, III, of the U. S. Bankruptcy Court for the Southern District of Georgia issued an opinion in In re Junior Olivera Fitness,
LLC,--B. R.--, Case No. 26-40287-JTL, 2026 WL 2717981( Bankr. S. D. Ga. Sept. 11, 2026), reaching the same conclusion. Judge Laney also considered the amendment to Fed. R. Bankr. P. 3018( c), to become effective December 1, 2026, which will permit statements on the record to be counted as acceptance or rejection of the plan and held that the amendment does not change the calculus. Id. at * 2. The proposed amendment does not address silence by a class but provides for an alternative means of affirmative acceptance or rejection by a creditor.
Conclusion
While there is no binding precedent from
PBCBA BAR BULLETIN 10 the U. S. Court of Appeals for the 11th Circuit, courts in the circuit have consistently held that silence is not enough to be deemed acceptance, and that is unlikely to change absent either an amendment to the statute or further amendment of Fed. R. Bankr. P. 3018. Creative debtor’ s counsel may, however, find lawful ways around the current case law to have silence“ deemed accepted” in Subchapter V.
This article was submitted by GrayRobinson Shareholder Jason S. Rigoli, a member of the firm’ s Bankruptcy Section and located in the Boca Raton office. Jason can be reached at Jason. Rigoli @ gray-robinson. com or 561.368.3808.
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