United States Court of Appeals, Seventh Circuit.

No. 92-4014.

In the Matter of WOODBROOK ASSOCIATES, Debtor-­Appellant.

Decided March 18, 1994.

Argued Sept. 17, 1993.

Rehearing Denied May 12, 1994.

Before POSNER, Chief Judge, CUMMINGS, Circuit Judge, and ZAGEL, District Judge.*

Jeffrey L. Hunter, Asst. U.S. Atty. (ar­gued), Indianapolis, IN, for appellee.

Thomas D. Titsworth, John M. Rogers (ar­gued), Bamberger & Feibleman, Indianapo­lis, IN, for debtor-appellant.

*

The Honorable James B. Zagel, District Judge for the Northern District of Illinois, is sitting by designation.

ZAGEL, District Judge.

Woodbrook Associates (“Woodbrook”), is an Indiana real estate limited partnership whose sole asset is the Woodbrook Apart­ments constructed in 1980 in Indianapolis. The apartment complex was primarily fund­ed by a first mortgage loan of $5,559,700.00, at 7.5%, insured by the United States De­partment of Housing and Urban Develop­ment (HUD). Woodbrook Apartments failed to generate the expected income levels, the partnership defaulted, and the original mort­gage holder assigned the mortgage in 1988 to HUD.

In July 1990, HUD advertised Woodbrook Apartments for sale by private bid on Sep­tember 5, 1990, stating that it would not bid over $3.4 million. On August 21, 1990, Wo-­odbrook filed a voluntary Chapter 11 peti­tion, and the advertised foreclosure sale was stayed.

Deci-Ma Management Corporation (“Deci-­Ma Management”) continued to serve as pro­ject manager of the apartments during the bankruptcy, as it had since the inception of the project.1 Woodbrook then ceased paying net operating revenues to HUD, which had been less than the stipulated debt service.

Woodbrook filed a proposed Plan of Reor­ganization on April 19, 1991, eight months after the bankruptcy petition, and a substan­tially similar amended plan on June 14, 1991, by which time Woodbrook had possession of a net operating surplus of about $225,000 which it would otherwise have paid to HUD. The plan creates eight classes of claims and interests. Classes 1 and 2, as is typical, are reserved for expenses incurred by profes­sionals and other administrative costs. Pay­ments to creditors are structured as follows: HUD’s secured claim (Class 3), valued at $3.6 million, is to be paid over 30 years at the mortgage interest rate of 7.5%; HUD will also be paid 5% of its unsecured deficiency claim (Class 4), plus all funds on hand at confirmation excluding $100,000 (reserved for repairs, working capital and bankruptcy fees, and expenses); Deci-Ma Management’s unsecured claim (Class 5) will be paid in full over one year; Deci-Ma Corporation’s unse­cured claim (Class 6) will be paid monthly from any remaining cash flow from the debt- or’s operations until paid in full; other unse­cured creditors (Class 7) will be paid in full 30 days after confirmation; and the general and limited partners of the debtor (Class 8) will retain their ownership interests in return for new capital contributions. The plan also provides in Article IV that, in the event the Bankruptcy Court determines the plan can­not be confirmed as a consequence of the proposed retention of ownership by the gen­eral and limited partners (Class 8), their interests will be deemed cancelled and void (presumably along with their obligation to contribute new capital) and the “property of the estate” will, instead, vest in Deci-Ma Corporation (Class 6), in satisfaction of its general unsecured claim. Funding for the plan would be secured from apartment rent­als and the new cash infusion by “a new corporate general partner that will be substi­tuted for the existing general partners.” This new cash contribution would be used to pay off the 5% distribution on HUD’s unse­cured deficiency claim, unless Article IV was triggered. Finally, the cash on hand would be allocated first to administrative expenses, then to a $100,000 fund for roof repairs and working capital, and ultimately to HUD’s unsecured claim.

The next month, before any confirmation hearing or voting on the amended plan, HUD moved to dismiss the bankruptcy case, say­ing that HUD would not accept Woodbrook’s proposed plan or any plan not providing for full payment of its claim. At the hearing on the motion, Sam Birch, a HUD loan special­ist, swore that the plan was not “fair” and said that he did not have authority to accept any plan other than one which paid HUD in full. Charles Harvey, a Woodbrook general partner, testified the project was worth $3.6 million and the occupancy rate for the com­plex was 95% at the time of the amended plan. He also confirmed that the “principal” of Deci-Ma Management was his brother-in-­law, that Woodbrook was maintaining the property, and that Woodbrook would be able to make the payments provided in the plan. The Disclosure Statement filed by Harvey on July 1, 1991, stated that his wife, Patricia Harvey, “owns 48% of the common capital stock of Deci-Ma Corporation which is insol­vent and is a Chapter 11 debtor in bankrupt­cy proceedings.”

The bankruptcy court found, in part, that HUD would not accept any plan which did not provide for full payment of its claim; that general partner Charles Harvey had a bene­ficial interest in Deci-Ma Management and Deci-Ma Corporation; that HUD objected to Woodbrook’s use of the money it kept; and that the plan could not be confirmed over HUD’s objection. The court ultimately dis­missed the bankruptcy case for cause, con­cluding that: (1) the plan could not be con­firmed because it unfairly discriminated among unsecured creditors and violated the absolute priority rule; (2) the plan was not feasible because it relied on the use of funds in which HUD had a lien without HUD’s consent; and (3) the proposal of an uncon-­firmable plan constituted an unreasonable delay and prejudiced the creditors.

Woodbrook then moved under Bankruptcy Rule 9023 to amend the findings and conclu­sions or, alternatively, to file an amended plan. The Rule 9023 motion said that the dismissal was unsupported by the evidence and contrary to law and that it decided issues not raised by HUD’s motion. Lastly, Wood-­brook asked for leave to file an amended plan providing for full payment of HUD’s claim of $6,208,273.24, plus interest, under terms which it believed would quell the court’s con­cerns, but it did not say what those terms were. The bankruptcy court denied the Rule 9023 motion and did not permit Woodbrook to file a second amended plan. The district court affirmed, holding that Woodbrook would not be able to effectuate the proposed plan because it improperly classified unse­cured claims in separate classes, violated the absolute priority rule, and did not meet the new value exception.

Woodbrook now appeals the district court’s order, as it may under 28 U.S.C. §§ 158 and 1291. On appeal, this Court must accept the bankruptcy court’s findings of fact unless they are clearly erroneous, a tough test. Matter of Excalibur Auto. Corp., 859 F.2d 454, 457, n. 3 (7th Cir.1988). Con­clusions of law are reviewed de novo. Id.

DISMISSAL FOB CAUSE

A bankruptcy court has broad discre­tion under 11 U.S.C. § 1112(b) to dismiss a Chapter 11 case for cause. In re Lumber Exchange Bldg. Ltd. Partnership, 968 F.2d 647, 648 (8th Cir.1992). Woodbrook’s bank­ruptcy case was dismissed under § 1112(b)(2), which authorizes dismissals for the inability to effectuate a plan. A § 1112(b)(2) dismissal is proper “if the court determines that it is unreasonable to expect that a plan can be confirmed in the [Cjhapter 11 ease.” 5 Conrad K. Cyr et al., Codlier ON BANKRUPTCY ¶ 1112.03[2][d][ii], at 1112— 19-20 (15th ed. 1993).

NOTICE

Woodbrook says it did not have ade­quate notice of the issues considered by the bankruptcy court and so was foreclosed from either offering appropriate evidence or amending the plan. A review of the motion compels us to reject Woodbrook’s assertion. HUD’s motion plainly states that HUD “will not accept the Plan as filed, or any other Plan not providing for payment in full of its claim.” This declaration in the context of a motion to dismiss should have alerted Wood-­brook to the potential confirmation problems addressed by the courts below since the ma­jor creditor comprising an impaired class (or two) of unsecured creditors rejected the plan. Although it would have been desirable for HUD to spell out in detail all the alleged defects in the plan, its failure to do so is not fatal and neither deprived Woodbrook of ade­quate notice nor prejudiced Woodbrook at the hearing. This formal notice is adequate and, in fact, Woodbrook had actual notice. HUD quotes, without contradiction, Wood-­brook’s memorandum in opposition to dis­missal where Woodbrook said, “[T]he issue raised by the government’s Motion is wheth­er the unsecured deficiency claim of HUD must be classified in the same class with all other general unsecured creditors. If this is the case, the debtor will be unable to obtain acceptance by any unimpaired class.” Wood-­brook cannot reasonably claim ignorance of the issues raised in HUD’s motion to dismiss.

TIMING

Nor can Woodbrook win on a claim that dismissal was premature. A Chapter 11 case can be dismissed at any time. Creditors need not wait until a debtor proposes a plan or until the debtor’s exclusive right to file a plan has expired. In re Park Ave. Partners Ltd. Partnership, 95 B.R. 605, 609 (Bankr.­E.D.Wis.1988). Creditors, likewise, need not incur the added time and expense of a confir­mation hearing on a plan they believe cannot be effectuated. See Hall v. Vance, 887 F.2d 1041, 1044 (10th Cir.1989) (case dismissed where acceptable plan was not filed within eight months of Chapter 11 petition). The very purpose of § 1112(b) is to cut short this plan and confirmation process where it is pointless. The bankruptcy court found cause to dismiss the case under 11 U.S.C. § 1112(b), and it was not required to consid­er alternative remedies other than conversion to Chapter 7 in the best interest of the creditors. No one here claims (or claimed below) that conversion is in the best interest of the creditors.

BURDEN OF PROOF

Woodbrook argues that the bank­ruptcy court erred in placing a burden of proof on Woodbrook. The sentence in the ruling on which Woodbrook relies for this argument reads: “In the instant ease, debtor has not produced sufficient evidence to dem­onstrate that the interests of the non-HUD creditors are sufficiently unique to warrant separate classification.” This sentence, how­ever, is quoted from the district court’s opin­ion and does not reflect the standard of proof used by the bankruptcy court. Nor does it show that the district court applied the wrong standard of proof on review. Where a motion to dismiss for cause is opposed, the movant bears the burden of proving by a preponderance of the evidence that cause exists for dismissal of the debtor’s bankrupt­cy case. 5 CollieR on BankRuptcy ¶ 1112.-­03[2][a], at 1112-16; Colonial Daytona Ltd. Partnership v. American Sav. of Fla., F.S.B., 152 B.R. 996, 1002 (M.D.Fla.1993). That HUD bears the burden of persuasion, howev­er, does not eviscerate Woodbrook’s obli­gation to produce evidence in opposition to a well-supported motion. Viewed sensibly in the context of the entire opinion, the quoted sentence reflects the district court’s view of the sufficiency of the evidence presented at the hearing and HUD’s success in persuad­ing the courts that cause for dismissal exist­ed based on Woodbrook’s classification scheme. The district court did not err in its placement of the burden of proof or applica­tion of standards of review.

CLASSIFICATION OF CREDITORS

Did cause exist to dismiss Wood-­brook’s Chapter 11 case? Woodbrook argues that separate classification of HUD’s § 1111(b) unsecured deficiency claim2 was proper because the amount and character of HUD’s claim rendered it different from the unsecured claims of other creditors. HUD maintains that dismissal for cause was prop­er because Woodbrook engaged in “abusive” classification aimed at gerrymandering an af­firmative vote. We review de novo the pro­priety of classification. Lumber Exchange, 968 F.2d at 649.

Woodbrook possesses considerable, but not complete, discretion to classify claims and interests in its Chapter 11 plan of reor­ganization. In re Holywell Corp., 913 F.2d 873, 880 (11th Cir.1990). Some limits are necessary to offset a debtor’s incentive to manipulate a classification scheme and en­sure the affirmative vote of at least one impaired class, which is what the debtor needs to gain confirmation of the plan. Id.; In re U.S. Truck Co., Inc., 800 F.2d 581, 586 (6th Cir.1986). What these limits may be is subject to debate. Section 1122(a) says: “a plan may place a claim or interest in a partic­ular class only if such claim or interest is substantially similar to the other claims or interest of such class.” 11 U.S.C. § 1122(a).3 Section 1122 does not expressly forbid the separate classification of similar claims. Yet, the Fifth Circuit has coined a phrase re­ferred to as the “one clear rule”: “thou shalt not classify similar claims differently in order to gerrymander an affirmative vote on reor­ganization.” Matter of Greystone III Joint Venture, 995 F.2d 1274, 1279 (5th Cir.1991). Greystone condones separate classification “for reasons independent of the debtor’s mo­tivation to secure the vote of an impaired, assenting class of claims.” Id.; accord Lum­ber Exchange, 968 F.2d at 649; In re John­ston, 140 B.R. 526, 529 (9th Cir. BAP 1992).

The “one clear rule” is not easy to apply since it is not about “classifying similar claims”; it is about the debtor’s purpose. Similarity is not a precise relationship, and the elements by which we judge similarity or resemblance shifts from time to time in bankruptcy. Some courts had permitted separate classification based simply on a readily perceived legal distinction between unsecured deficiency claims created by § 1111(b) and general unsecured claims. These courts noted that general unsecured claims are recourse claims cognizable under state law while § 1111(b) claims exist only within a Chapter 11 bankruptcy case and are not cognizable under state law. See, e.g., In re Aztec Co., 107 B.R. 585, 587 (Bankr.­M.D.Tenn.1989). This legal distinction has been eliminated by the Code (because a § 1111(b) deficiency claim is an unsecured claim in Chapter 11), and it has been rejected as the sole basis for separate classification by a majority of circuits. 11 U.S.C. § 1111(b)(1)(A); Greystone, 995 F.2d at 1279; John Hancock Mut. Life Ins. Co. v. Route 37 Business Park Assocs., 987 F.2d 154, 161 (3rd Cir.1993); Lumber Exchange, 968 F.2d at 649. Other courts have permitted sepa­rate classification on the grounds that the vote of § 1111(b) claims “will be uniquely affected by the plan’s proposed treatment of the secured claim held by the creditor”; a § 1111(b) claimant may vote its large defi­ciency claim to defeat any plan, obtain relief from the automatic stay and foreclose, while the general unsecured claimant has a strong incentive to vote to accept the plan because it may receive nothing from liquidating the debtor if the automatic stay is lifted. In re SM 104 Ltd., 160 B.R. 202, 218 & n. 35 (Bankr.S.D.Fla.1993) (voting incentive ratio­nale “is highly persuasive when viewed in light of the logic underlying § 1129(a)(10) ... [which was] intended not to give the real estate lobby a veto power, but merely to require ‘some indicia of creditor support’ for confirmation of a proposed Chapter 11 plan”); Aztec, 107 B.R. at 587.4 The voting incentive theory is worthy of careful studjr, but we need not reach the question of wheth­er the voting incentive rationale supports the separate classification of HUD’s claim.

Significant disparities do exist be­tween the legal rights of the holder of a § 1111(b) claim and the holder of a general unsecured claim which render the two claims not substantially similar and which preclude the two from being classified together, under § 1122(a). Thus, we cannot accept the prop­osition implicit in Greystone that separate classification of a § 1111(b) claim is nearly conclusive evidence of a debtor’s intent to gerrymander an affirmative vote for confir­mation. These disparities in rights stem from the most obvious difference between the two claims: a general unsecured claim exists in all chapters of the Code, while a § 1111(b) claim exists only as long as the case remains in Chapter 11 and, once con­verted to a Chapter 7 case, recovery is limit­ed to its collateral. Compare 11 U.S.C. § 103(f) with 11 U.S.C. § 502(b)(1). This difference is amplified when the debtor is a partnership (as in this case) and the creditors face possible failure of its Chapter 11 case. Under such circumstances, the general unse­cured creditors can seek equitable relief to prevent dissipation of the assets of the gen­eral partners, who upon conversion to Chap­ter 7, are liable for the debts of the partner­ship. Such equitable relief is not likely to be available to a § 1111(b) claimant, whose re­covery is confined to its collateral.

This legal difference between the two claims also can lead to anomalous results when applying other sections of the Code to a class containing both § 1111(b) claimants and general unsecured claimants. First, sec­tion 1129(a)(7) requires that, for confirmation of a plan where a holder of a claim or inter­est in an impaired class rejects the plan, each claimant must “receive or retain ... proper­ty of a value, as of the effective date of the plan, that is not less than the amount ... receive[d] or retained] if the debtor were liquidated under [C]hapter 7.” 11 U.S.C. § 1129(a)(7). A § 1111(b) claimant is not entitled to payment under Chapter 7. Yet, because the § 1111(b) claimant has been classified with other general unsecured credi­tors and because § 1128(a)(4) mandates the same treatment of all claims in the class, the § 1111(b) claimant can block confirmation upless it receives payment of an amount equal to that of the general unsecured credi­tors. More importantly, there are anomalies in the application of § 1111(b) itself. Section Ull(b)(a)(A)(i), which requires that a § 1111(b)(2) election be made by “the class of which such [§ 1111(b)] claim is a part,” means the general unsecured creditors, in­cluded in the class, must vote on whether the § 1111(b) claimants should make the § 1111(b)(2) election. The general unse­cured creditors, consequently, can block ap­proval of the election by a majority of votes. 11 U.S.C. § llll(b)(l)(A)(i); Fed.R.Bankr.P. 3014. Finally, general unsecured creditors, who have no lien claims, can participate in the election process because the class com­prised of the § 1111(b) claimants holds collat­eral that is not of inconsequential value.5 These anomalies are all clearly set out in Judge Ginsbergs well-reasoned opinion, In re SM 104 Ltd., 160 B.R. 202, 219-21 (Bankr.­S.D.Fla.1993).

The drafters of the Bankruptcy Code did not intend these results. We find that, at least where the debtor is a partner­ship comprised of a fully encumbered single asset, the legal rights of a § 1111(b) claimant are substantially different from those of a general unsecured claimant. Accordingly, we hold that §§ 1111(b) and 1122(a) not only permit but require separate classification of HUD’s § 1111(b) unsecured deficiency claim in Class 4. Woodbrook’s separate classifica­tion of HUD’s § 1111(b) claim neither pre­vents confirmation of Woodbrook’s plan nor serves as conclusive evidence in this case that Woodbrook manipulated the plan to ob­tain an affirmative vote. The bankruptcy court, however, found other barriers to con­firmation.

ABSOLUTE PRIORITY RULE

To be confirmed under the cram-­down provision of the Code, a plan must satisfy the absolute priority rule. That is, the claims or interests of a dissenting class of unsecured creditors must be fully satisfied before any junior class may retain any prop­erty under the reorganization plan. 11 U.S.C. § 1129(b)(2)(C); Norwest Bank Wor­thington v. Ahlers, 485 U.S. 197, 202, 108 S.Ct. 963, 966, 99 L.Ed.2d 169 (1988); Matter of Snyder, 967 F.2d 1126, 1128 (7th Cir.1992). HUD says the proposed retention of owner­ship interest by the partners of the debtor, without payment in full of HUD’s claim, vio­lates the rule. Woodbrook counters that the partners’ infusion of new capital contribu­tions in exchange for their ownership inter­ests places the plan outside the rule.

The new value precept permits old equity owners to participate in a plan, with­out full payment to the dissenting creditors, if they make a new contribution (1) in money or money’s worth, (2) that is reasonably equivalent to the value of the new equity interests in the reorganized debtor, and (3) that is necessary for implementation of a feasible reorganization plan. Case v. Los Angeles Lumber Prods. Co., 308 U.S. 106, 121-22, 60 S.Ct. 1, 10, 84 L.Ed. 110 (1939). Under this precept, old equity owners may purchase new equity interests in the reorga­nized debtor.

The new value precept, though mentioned in the Bankruptcy Commission’s report to Congress, was not expressly codified in the Bankruptcy Code of 1978. Report of the Commission on the Bankruptcy Laws of the United States, H.R.Doc. No. 137, 93rd Cong., 1st Sess. pt. 2 at 241-42. Whether it sur­vives the enactment of the new Code is the subject of much debate. The current trend is to treat the new value precept not as an exception (as it was commonly called) but as a corollary to the absolute priority rule pre­served in the 1978 Code. See Snyder, 967 F.2d at 1130-31. The Supreme Court has yet to endorse or condemn such an interpre­tation of the Code,6 and we follow our prior decisions7 and again reserve ruling on the viability of the new value precept until anoth­er day. We reserve ruling because, even if we assume that this precept survives, we find the record supports the lower courts’ conclu­sion that the proposed $100,000 contribution does not satisfy the new value criteria.

The district court reasoned that a proposed new capital infusion of $100,000 could not be considered “substantial” since it constituted, at most, 3.8% of the approxi­mately $2.6 million of total unsecured debt.8 Simply put, “substantiality” requires that the contribution be real and necessary to the successful implementation of a feasible plan. Snyder, 967 F.2d at 1131; see SM 104, 160 B.R. at 226 n. 43 (finding it difficult to be­lieve a contribution that is real and renders the plan feasible would not qualify as “sub­stantial”). Essentially, what the lower courts determined was that the proposed contribu­tion, though in money, was a token cash infusion and not a fair price for the right to participate in the reorganized debtor. A to­ken cash infusion violates the absolute priori­ty rule because the old equity owners are receiving the opportunity to purchase the new equity interests at a bargain price “on account of’ their prepetition ownership. See Matter of Stegall, 865 F.2d 140, 144 (7th Cir.1989); SM 104, 160 B.R. at 226-27.

Whether the infusion of new capital is “substantial” is more a common sense de­termination than a mathematical calculation when the debtor comprises only a single real estate asset which is fully encumbered. And, as this Circuit noted in Snyder, this determi­nation may not always hinge on a comparison of the proposed contribution to the total amount of unsecured debt. Snyder, 967 F.2d at 1131. A court must make an informed judgment based on the facts of each case. We cannot say in this case, “where the dis­parity between the contribution and the unsecured debt is so extreme,” that the lower courts’ finding of insubstantiality is clearly erroneous. See Snyder, 967 F.2d at 1131-32 (refusing to disturb the bankruptcy and dis­trict courts’ finding that the infusion of $30,-­000 in new capital, which was just 4.5% of the total amount due unsecured creditors, was not substantial). We agree with the courts below that the proposed token cash infusion does not constitute “new value” and violates the absolute priority rule. A Chapter 11 plan that violates the absolute priority rule cannot be confirmed over a creditor’s legiti­mate objections. Ahlers, 485 U.S. at 202, 108 S.Ct. at 966 (1988).9

Woodbrook urges that Article IV saves the plan by voiding the partners’ inter­ests and vesting them in Deci-Ma Corpora­tion in the event the bankruptcy court rejects the new value proposal. We disagree. The proposed “savings clause” may sound the plan’s death knell. If Article IV is triggered, the 5% distribution to HUD is voided. The ultimate effect is to divest HUD of the 5% distribution towards its unsecured claim and vest the “property of the estate” in Deci-Ma Corporation in satisfaction of its unsecured claim. Deci-Ma Corporation’s receipt of an equity interest without new cash infusion may violate the absolute priority rule. Fur­thermore, a fair reading of Article IV is that the new cash infusion is cancelled, and the cancellation of the new cash infusion con­firms that the contribution is not necessary for the implementation of Woodbrook’s plan and cannot qualify as “new value.”

On the other hand, it may be that Deci-Ma Corporation’s receipt of equity interests as payment of its unsecured claim does not vio­late the absolute priority rule since Deci-Ma Corporation is not a prepetition owner and that the new cash infusion is not cancelled but rather is to be distributed as cash on hand. But this does not help the debtor here. In any event, the operation of Article IV only brings to light another barrier to confirmation, ie., the unfair treatment of or discrimination among unsecured creditors. 11 U.S.C. § 1129(b)(1). Clearly, the plan treats Deci-Ma Corporation and Deci-Ma Management more favorably at HUD’s ex­pense because of the connection to Harvey’s wife and brother-in-law. Article IV pre­serves the equity interests and assets for insiders of the debtor. The meager 5% dis­tribution, if any, on HUD’s § 1111(b) unse­cured deficiency claim, given the full pay­ment of Deci-Ma Corporation’s and Deci-Ma Management’s unsecured claims, clearly sug­gests from our perspective, as it did from the perspective of the courts below, that this plan was the “three dollar bill.” Such a plan, therefore, that unfairly discriminates among unsecured creditors cannot be confirmed. See Aztec, 107 B.R. at 588-92.

HUD’S NEGATIVE VOTE

The bankruptcy court also deter­mined that the plan could not be confirmed over HUD’s objection. Under Woodbrook’s amended plan, HUD would receive roughly 5% of its $2.6 million unsecured claim over three years, or $130,000; Deci-Ma Manage­ment would receive all of its unsecured claim within a year; and, Deci-Ma Corporation would receive Woodbrook’s cash flow avail­able after debt service until paid in full. HUD refused to accept the plan. This plan could be “crammed down” HUD’s throat if at least one impaired class10 of creditors ac­cepted the plan, not counting the acceptance by an insider. 11 U.S.C. § 1129(a)(10).

The difficulty here is that the only other impaired classes are Class 5 (Deci-Ma Man­agement) and Class 6 (Deci-Ma Corpora­tion). Charles Harvey, one of the debtor’s partners, has a beneficial interest in both Deci-Ma Corporation and Deci-Ma Manage­ment. Charles Harvey’s wife owns 48% of the capital stock in Deci-Ma Corporation and the “principal” of Deci-Ma Management is Harvey’s brother-in-law. The definition of “insider” under the Bankruptcy Code § 101 is “extremely broad.” 5 Collier on BanK­ruptcy ¶ 1129.02, at 1129-35. Where the debtor is a partnership, insiders include “rel­atives of a general partner in, general part­ner of, or person in control of the debtor.” 11 U.S.C. § 101(31)(C)(ii). Any affirmative vote from Deci-Ma Corporation and Deci-­Ma Management must be discounted as an insider vote. Thus, as the bankruptcy court found, confirmation cannot be achieved over HUD’s objection. Dismissal of Woodbrook’s Chapter 11 case, under these circumstances, was in the creditor’s best interest. See Lum­ber Exchange, 968 F.2d at 650 (dismissal is in the creditor’s best interest where § 1111(b) claimant can block any plan that does not pay its claim in full and debtor comprised a single real estate asset).

DENIAL OF OPPORTUNITY TO AMEND PLAN

Finally, Woodbrook insists that any defects in the plan can be cured by amendment and that its offer to submit a plan paying HUD’s claim in full plus interest renders dismissal for inability to effectuate a plan improper. “Chapter 11 provides a rea­sonable opportunity for corporate reorganiza­tion[;] it does not guarantee reorganization nor does it permit an indefinite suspension of creditors’ rights and remedies pending the unsuccessful attempts of any party to effect a reorganization of debt.” In re BGNX, Inc., 76 B.R. 851, 853 (Bankr.S.D.Fla.1987) (in view of time elapsed and failure of propo­nents to obtain consent of United States, court converted Chapter 11 ease to Chapter 7 liquidation after second proposed plan was unconfirmable). A special aspect of the prac­tice of bankruptcy is that it functions on a fluid set of facts, i.e., the plan can always be changed. And, for the most part, bankrupt­cy courts permit the parties to submit nu­merous and alternative plans. Yet, bank­ruptcy courts are given a great deal of dis­cretion to say when enough is enough.

Woodbrook was afforded an opportunity to amend its original plan. Woodbrook filed an amended plan two months after filing the original plan and ten months after filing for bankruptcy. The amended plan was sub­stantially similar to the original plan. Es­sentially, Woodbrook had taken two bites at the apple and each time took a risk in formu­lating a plan that bordered on the fine line of unfair discrimination and feasible reorganiza­tion. The new amendment, Woodbrook’s third bite at the apple, simply proposes to pay HUD’s unsecured claim in full.11 This amendment looks less like an honest effort to devise an acceptable plan and more like a death-bed conversion, particularly where the proposed amendment is vague on important details such as funding for the plan. Under the circumstances, we find that the bankrupt­cy court did not abuse its discretion in deny­ing Woodbrook an opportunity to amend the plan a second time. See Hall, 887 F.2d at 1044-45 (bankruptcy court did not abuse dis­cretion in dismissing Chapter 11 case under § 1112(b)(2) and in not considering remedies other than dismissal “where the debtor’s fail­ure to file an acceptable plan after a reason­able time indicated its inability to do so”).

Other arguments were raised to support reversal. We have considered each of them but none is persuasive or worthy of discus­sion in this opinion. Furthermore, because we conclude that dismissal under § 1112(b)(2) was justified, we need not ad­dress Woodbrook’s assignment of error with respect to dismissal under § 1112(b)(3).

For the foregoing reasons, the judgment of the district court affirming the bankruptcy court’s dismissal of the debtor’s bankruptcy case is AFFIRMED.

1

. The record is unclear as to how Deci-Ma Cor­poration served Woodbrook and its relationship to Deci-Ma Management. The district court found (and we agree) that Deci-Ma Corporation appears to be affiliated with Deci-Ma Manage­ment. Deci-Ma Corporation, however, has an unsecured claim of about $30,000, which pre­sumably constitutes some sort of trade debt sepa­rate from the management fees owed to Deci-Ma Management.

2

. A § 1111(b) unsecured deficiency claim is cre­ated in favor of an undersecured creditor in the amount of the lien in excess of the collateral's value, i.e., an undersecured creditor has a se­cured claim up to the value of the collateral and an unsecured claim for the deficiency. 11 U.S.C. §§ 506(a), 1111(b). An undersecured creditor, however, may waive its deficiency claim and elect, under § 1111(b)(2), to have its claim treat­ed as secured for the entire amount of the debt.

3

. Subsection (b) provides: “A plan may desig­nate a separate class of claims consisting only of every unsecured claim that is less than or re­duced to an amount that the court approves as reasonable and necessary for administrative con­venience.” 11 U.S.C. § 1122(b) (1988). Wood-­brook has designated such a class of unnamed unsecured creditors. However, there is no dis­pute regarding the propriety of Woodbrook's classification in this respect.

4

. But see Route 37, 987 F.2d at 161-62 (rejecting voting incentive rationale because “absent bad faith or illegality ..., the Code is not concerned with a claim holder’s reason for voting one way or another ... [and because,] undoubtedly, most claim holders vote in accordance with their over­all economic interests,” not simply creditor inter­ests).

5

. Section 1111(b)(1)(B) denies the right to make an election to "[a] class of claims” if the lien claims of the class members are of "inconse­quential value.” 11 U.S.C. § 1111(b)(1)(B).

6

. The Supreme Court, however, has granted cer-­tiorari in In re Bonner Mall Partnership, 2 F.3d 899 (9th Cir. 1993), cert. granted, - U.S. -, 114 S.Ct. 681, 126 L.Ed.2d 648 (1994). After a thorough analysis of the 1978 Code, the Ninth Circuit held that the new value corollary, or "the scrutinize old equity participation rule,” contin­ues to be a "vital legal principle.” Id. at 906-17.

7

. In re Snyder, 967 F.2d 1126, 1131 (7th Cir.­1992); Kham & Nate’s Shoes No. 2, Inc. v. First Bank of Whiting, 908 F.2d 1351, 1362 (7th Cir. 1990); In re Stegall, 865 F.2d 140, 142 (7th Cir.1989).

8

. The bankruptcy court concluded that the plan violated the absolute priority rule. The district court clarified the basis of the bankruptcy court’s conclusion.

9

. Woodbrook insists that whether the amount of capital infusion is substantial is a determination that must be made at the confirmation hearing. Dismissal here was not premature. A bankrupt­cy court need not engage in any further analysis of substantiality where the disparity between the proposed cash infusion and unsecured debt is so extreme. See Snyder, 967 F.2d at 1132.

10

. A class is impaired if there is "any alteration of a creditor’s rights, no matter how minor." In re Windsor on the River Assocs., Ltd., 7 F.3d 127, 130 (8th Cir.1993).

11

. In the Rule 9023 motion, Woodbrook pro­posed to pay HUD’s claim “in the amount of $6,208,273.24 at the rate of 8% per annum in level monthly payments commencing 30 days after confirmation at an amortization rate of 40 years, with the balance payable in 30 years ... [A]ccumulated net rentals on hand, except for an amount necessary for working capital, satisfac­tion of expenses of administration and payment of small general claims shall be paid over to HUD for application to the principal amount of its claim.”