Texas Rangers: A Big Changeup on Impairment?

The concept of “impairment” of a claim under a Chapter 11 plan for the purpose of determining whether the claimant has the right to vote on the plan has evolved since the Bankruptcy Code was enacted in 1978. A noteworthy step in that development was the subject of a ruling by the bankruptcy court overseeing the whirlwind Chapter 11 case of Major League Baseball's Texas Rangers. In In re Texas Rangers Baseball Partners, 434 B.R. 393 (Bankr. N.D. Tex. 2010), the court held that, in order to render a secured creditor's claim “unimpaired,” a Chapter 11 plan need not honor all of the creditor's contractual rights, so long as the creditor retains the right to sue the debtor for breach of the contract.