The debtor's plan of reorganization duly came before the court for hearing. The debtor has some $300,000.00 in unsecured creditors claims. He proposes to pay $72,000.00 over six (6) years to his unsecured creditors. This amounts to a present value dividend of about 17% to the unsecured creditors. The unsecured creditors have rejected the plan.

        The plan is not confirmable. The debtor cannot meet the requirements of 11 U.S.C. § 1129(b)(2)(B), the absolute priority rule. The debtor contends there is a "new value" exception to the absolute priority rule. I find there is no new value exception to the absolute priority rule. Case et al. v. Los Angeles Lumber Products Co., Limited, 308 U.S. 106 (1939) held that a plan which allowed the debtor's owner to retain their stock while not fully paying unsecured creditors in full was not confirmable. In dicta, the court stated that a contribution of money or money's worth might enable a shareholder to retain equity. In Norwest Bank Worthington v. Ahlers, 485 U.S. 197 (1988) the Supreme Court found a promise of future services to be inadequate consideration for retention of ownership by the debtor. Ahlers and Case both     2 ABR 199  strictly applied the absolute priority rule. I will do the same here. I concur with the reasoning of Judge Carlson, in the case of In re Outlook/Century. Ltd., ___ B.R.___, 21 Bankr.Ct.Dec. 1125, 1991 WL 79922 (Bankr. N.D.Cal) which found no exception to the absolute priority rule.

        Secondly, the source of the "new value" is suspect in this case. The bulk of the payments appear to come from the debtor's rental income. This is not "new value." The debtor has failed to clearly establish the amount and source of the payments of new value to unsecured creditors.

        Finally, even if there were an exception to the absolute priority rule, the debtor has offered no evidence, expert or otherwise, demonstrating his proposed 17% dividend plan payments are reasonable, substantial compensation to unsecured creditors. Courts that have recognized the alleged Case exception require such evidence. In re Anderson, 913 F.2d 530 (8th Cir. 1990); In re Pullman Const. Industries, Inc., 107 B.R. 909 (Bankr. N.D. Ill. 1989); In re Ashton, 107 B.R. 670 (Bankr. D.N.D. 1989).

        Confirmation of the debtor's plan of reorganization is denied.

        DATED:    June 20, 1991.

DONALD MacDONALD IV
United States Bankruptcy Judge