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Court approves third party release of lender in connection with bankruptcy except for willful misconduct. FCC objected. Court says 524(e) is n/a but only applies to save third party claims from possible invalidation as a result of the reorganization, especially since it may not have participated in the reorganization. As to power, court notes split of authority, but says ct has power and test is fact based depending on the circumstances. Here, Court said Bankruptcy Court had authority because release was narrow and limited to bankruptcy matters, release was subject to other plan provisions, and lender wouldn't provide and financing was essential to reorganization. In re Airadigm Communications, Inc., 519 F. 3d 640 (7th Cir 2008).
Court holds a committee was not authorized to bring an equitable subordination claim under section 510(c) and had not been so authorized. Here, the trustee had investigated and the bankruptcy court denied permission to pursue the claim; the action of the trustee was justified and the suit was not in the best interests of the debtor. The Court rejected the view that it could pursue equitable subordination because any party in interest can assert such a claim on the ground that the committee was not itself a creditor. In re Applied Theory Corp., 2007 WL 1965012 (2d Cir. 2007). See also In re Solutia Inc., 2006 WL 2640641 (Bk. S.D.N.Y. 2006) (committee cannot pursue claims of debtor without authorization even if not satisfied with how the debtor is pursuing and the debtor's proposed settlement; committee does have standing to object to the claims of a creditor).
A number of cases involve rejection of CBAs--virtually all approve rejection, but some require further procedures. A sampling of recent cases is In re Northwest Airlines Corp., 366 B.R. 270 (Bk. S.D.N.Y. 2007) (order authorizing rejection cannot be modified because economic conditions improved; court notes agreement was abrogated and that efforts to formulate a plan would be undermined if such decisions could be reconsidered); In re Northwest Airlines Corp., 483 F.3d 160 (2d Cir. 2007) (when agreement rejected, union's duty to bargain remained and court can enjoin strike); In re Delta Air Lines, Inc., 359 B.R. 468 (Bk S.D.N.Y. 2006); In re Delta Air Lines, 351 B.R. 67 (Bk. S.D.N.Y. 2006) (debtor negotiated in good faith and did not unjustifiably reject snap-back feature); Association of Flight Attendants v. Mesaba Aviation, 350 B.R. 435 (D. Minn. 2006) (remanding to require negotiation of certain issues).
Court refused to designate votes of creditors simply because they sought special consideration and they voted claims in one class to benefit another class; strong statement re the importance of creditor democracy and that votes should be designated only for egregious conduct. In re Adelphia Communications Corp., 359 B.R. 54 (Bk. S.D.N.Y. 2006).
In re Machne Menachem, Inc., 233 Fed. Appx. 119 (3d Cir. 2007) is an important case on what folks can and can't do to get plans confirmed. In the case, the debtor arranged for the
