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Holding: The court held that cause existed to extend the debtor's exclusivity period for a fourth time to the maximum eighteen months allowed by the Code because the debtor showed that it was earnestly negotiating a confirmable plan and that creditors would not be prejudiced by the extension. Particularly, the court noted that after confirmation of the debtor's second amended plan was denied, the debtor promptly filed an amended plan addressing all of the issues the court had mentioned. The court found that the creditors' interests were protected by litigation over whether to convert the case to a Chapter 7, or alternatively dismiss the case, that was scheduled for trial in the near future.
i. In re Indianapolis Downs, LLC, 486 B.R. 286 (Bankr. D. Del. 2013)
Issue: Whether a restructuring agreement that required "yes" votes for any proposed plan conforming to the agreement and was executed by the debtors and their second and third tier secured creditors after the petition date but prior to the filing of a disclosure statement constituted an impermissible solicitation of votes warranting a designation of all votes that were cast by parties to the agreement.
Holding: The court held that that the restructuring agreement did not constitute an improper solicitation warranting the designation of the votes cast by the parties to the agreement. Among others, the court found a narrow construction of solicitation is appropriate to support Congress's intent to allows debtor and creditors to freely negotiate. Additionally, designation in this case would require the court to ignore an overwhelming majority of the creditors, guarantying that the debtor's plan would not be confirmed. Furthermore, the parties to the restructuring agreement were all sophisticated with experienced counsel, not the ill-informed parties "that [11 U.S.C.] § 1125 and the disclosure requirements intended to protect."
i. Acceptance Loan Co., Inc. v. S. White Transportation, Inc. (In re S. White Transportation, Inc.), 725 F.3d 494 (5th Cir. 2013)
Issue: Whether mere passive receipt of effective notice of bankruptcy is sufficient for creditor participation in Chapter 11 reorganization.
Holding: The Fifth Circuit held that mere passive receipt of effective notice is insufficient for creditor participation in a Chapter 11 reorganization. The court acknowledged that courts universally hold that a secured creditor may ignore a bankruptcy proceeding and look to its security interest to satisfy a debt. The court also provided the four factors for property to be dealt
©2014 William L. Norton III
