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estate had been asked to or had provided advice or opinions on any matter concerning debtor.
iii. In re J.C. Householder Land Trust # 1, 502 B.R. 602 (Bankr. M.D. Fla. 2013)
Issue: Secured creditor whose claim was to be crammed down under debtor's proposed Chapter 11 plan, after purchasing claim of unsecured creditor with ability to control how general unsecured class voted, moved to change the vote of creditor whose claim it acquired so as to prevent acceptance of plan by at least one impaired class.
Holding: The Bankruptcy Court, Michael G. Williamson, J., held that requisite "cause" did not exist to allow creditor to change how the acquired claim voted. Permitting secured creditor whose claim was to be crammed down under debtor's proposed Chapter 11 plan to purchase another creditor's unsecured claim and change creditor's vote from one that accepted, to one that rejected, proposed plan, for purpose of blocking confirmation of plan, would not promote underlying purposes of Chapter 11, and change in vote could not be allowed under "for cause" provision of Bankruptcy Rule. Allowing creditor to acquire claim that had previously voted and change the previously filed vote to block confirmation not only created huge risk of opportunistic behavior, but encouraged behavior that was inconsistent with consensual negotiation and fair bargaining.
i. In re Paige, 685 F.3d 1160 (10th Cir. 2012)
Issue and Holding: The plan was not feasible because it failed to provide sufficient funding for defense costs or to satisfy the monetary judgment that could result from the allowance of an administrative claim by one of the largest creditors.
ii. In re Waterford Hotel, Inc., 497 B.R. 255 (Bankr. E.D. Mich. 2013)
Issue: Whether a debtor's plan, requiring a $200,000 cash infusion, met the feasibility requirement under 11 U.S.C. § 1129(a)(11).
Holding: The bankruptcy court overruled a creditor's objection to a plan on the grounds that it did not conform to Section 1129(a)(11)'s feasibility requirement. The creditor argued that the plan required a $200,000 cash "infusion" into the debtor, that the debtor's only source of such capital was an unreliable sham corporation, and that the debtor had not shown that it could obtain the capital needed. The court first explained that the plan's guaranteed success is not required. Feasibility requires "only a reasonable assurance of commercial viability." Feasibility also looks to see if the debtor can make its future plan payments while keeping up with business expenses.
©2014 William L. Norton III
