  |
  |
  |
    
  
   |
 | |||
|
|
|
|
| |||
confirmation of the debtor's plan.44 An ad hoc committee of objecting asbestos claimants argued that the described plan violated section 1123(a)(4) by treating the non-settling claimants differently from the settling claimants.
The bankruptcy court rejected this argument, concluding that it could not find, as a matter of law, that the plan described by the disclosure statements violated section 1123(a)(4). The court applied a two-fold analysis for equal treatment under section 1123(a)(4): equal value paid and equal consideration given. First, the court concluded that the plan would make equal distributions to all similarly situated class members. The non-debtor's payments to some, but not all, class members would not affect the distributions to be made under the plan, said the court, because any payments by a non-debtor entity would be made outside of the plan. Second, the court noted that it could not determine, as a matter of law, what consideration each class member had given. Specifically, the court declined to engage in a negotiation process, finding it unworkable to review each settlement agreement to determine what rights each settling claimant conceded and what rights each settling claimant retained. Further, noted the court, a settling party may have consented to disparate treatment, as allowed by section 1123(a)(4). At the very least, said the court, the disclosure statements contained adequate information to allow interested parties to cast ballots. While there were several other hurdles to overcome before the plan could be confirmed (most likely requiring evidentiary hearings), the court approved the disclosure statements.
* In re Heritage Org. L.L.C., 376 B.R. 789 (Bankr. N.D. Tex. Aug. 2007) (Houser, J.)
Co-proponents of a joint chapter 11 plan were not required to obtain court approval of a disclosure statement prior to entering into an agreement to support the plan. The bankruptcy court denied plan opponents' motion to designate certain votes, concluding that a pre-disclosure agreement whereby certain creditors agreed to support the joint plan was not an improper "solicitation" under section 1125(b). Said the court, "A reading of [section] 1125(b) that requires a creditor intending to jointly propose a plan to draft a disclosure statement, get it approved, and then mail it to himself before agreeing to vote for it, under penalty of disenfranchisement, would be absurd." The court further held that the term solicitation (not defined in the Bankruptcy Code) should be accorded the narrow definition of a specific request for an official vote either accepting or rejecting the plan of reorganization. Because the policy of prohibiting pre-disclosure solicitations would not be furthered when the targeted voters were co-proponents of the joint plan (with ample access to the pertinent terms of the plan and an opportunity to reconsider their support before voting), the court declined to designate the coproponents' votes.
44 The court noted that this conditioning of the non-debtor's obligation upon the confirmation of the debtor's plan may be a bad faith attempt to use the debtor's discharge injunction to protect a non-debtor entity. The court, however, declined to reach this issue, as it was unnecessary for the purposes of approving the disclosure statements.
