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would be more than "as soon as practical" after the claims are allowed. The court concluded by affirming the bankruptcy court's order.
i. Morgenstein v. Motors Liquidation Co. (In re Motors Liquidation Co.), 462 B.R. 494 (Bankr. S.D.N.Y. 2012)
Issue: Whether the debtor's chapter 11 plan could be partially revoked as having allegedly been procured by fraud.
Holding: The court granted he debtor's motion to dismiss the adversary proceeding, finding that a plan may only be wholly, not partially revoked, and finding that the plaintiffs had not plead fraud with particularity. The court first concluded that it could not partially revoke a confirmation order. The court engaged in a textual analysis of section 1144 of the Code, ultimately finding that "Section 1144 authorizes the Court to "revoke such order," but it does not also say, in words or substance, that the revocation may be "in part." The word "revoke," by its nature, is total, and absolute, a construction that is borne out by its definition, as derived from both legal and lay authorities. Anything less would not be a revocation, but would instead be a modification, for which the Code has no provisions with respect to a confirmation order, but has separate provisions with respect to a plan, which could not be satisfied here. Nor does section 1144 say, in words or substance, that an order may be revoked with respect to any identified creditor, claim, or class of claims-one or more of which is what the Morgenstein Plaintiffs seek here. Rather, section 1144 speaks to the order itself, which is understandable, since it would be the order as a whole that would be "procured by fraud." Section 1144 simply does not say, as the Morgenstein Plaintiffs would need it to say, that the Court can cherry pick, or otherwise choose, the components of the confirmation order that the Court desires to revoke." The court further noted that no court had ever found partial revocation of a confirmation order to be permissible, and that the few courts to discuss the issue had all come out on the side of not permitting partial revocation. Next, the court concluded that the plaintiffs had failed to plead fraud (the grounds upon which the plaintiffs sought revocation of the confirmation order) with the requisite particularity. The court found that the plaintiffs' complaint relied largely on conclusory statements and inferences, and thus did not satisfy the requirements of Rule 9(b). The plaintiffs' complaint failed to allege sufficient facts showing either a motive and opportunity to commit fraud on the court or "strong circumstantial evidence of conscious misbehavior or recklessness." The court stated that "[t]here are no facts alleged suggesting that Old GM creditors, who overwhelmingly voted to support the Plan, would have voted differently in the absence of the alleged fraud-a consideration that Judge Hardin of this Court found significant in addressing a similar request for section 1144 relief to advance a private agenda. Likewise, there are no facts alleged supporting a conclusion that Old GM made a decision not to give notice to Morgenstein, Jacob or Carpenter (or other 2007 and 2008 Chevy Impala owners), or not to list them as creditors of the Old GM estate, or even that Old GM regarded them as creditors of the Old GM
©2014 William L. Norton III
