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the Bankruptcy Code because they [were] non-consensual." For the foregoing, the court denied confirmation of the debtor shopping center owner's plan.
x. In re Indianapolis Downs, LLC, 486 B.R. 286 (Bankr. D. Del. 2013)
Issue: Whether any objections based on feasibility, the payment of the professionals of certain creditors, the administrative claims cap, the debtors' authority to propose a plan, and the scope and appropriateness of releases and exculpations were sufficient to prevent confirmation of the debtors' plan.
Holding: The court overruled the objections and confirmed the debtors' plan. The debtors operated a "racino"--a combination horse track and casino-- and obtained a buyer for all of its assets. They were in the process of closing as they sought confirmation of their plan, which centered on the sale. The objecting parties argued that the plan was not feasible because it relied on the purchaser obtaining regulatory approval. The court found that the plan was feasible because the purchaser was the only other racino owner in Indiana and the court had already determined that the purchaser had the ability to close when it approved the sale. The plan also had an "Administrative Claims Cap" and a "Tax Claims Cap," which the objecting parties argued literally limited the rights of such claimants. The court explained that the use of the term "cap" was a poor choice, but the plan simply set an amount for total administrative claims and total tax claims, above which the plan could not become effective without a waiver or proper treatment for such claimants. As to the objection regarding the payment of professional fees for the parties that contributed to a post-petition restructuring agreement that led to the asset sale, the court found such payment permissible under 11 U.S.C. § 503(b) because, in the absence of a creditors' committee in these cases, these parties and their professionals made a substantial contribution to the debtors' cases that reduced litigation expenses and moved the cases forward. The court also found that the debtors had the authority to propose a plan because the objecting parties, some of which were equity holders of the debtors, executed an agreement forming a "special committee" with broad powers to act for those equity holders and the debtors. The court also approved the releases and exculpations in the proposed plans because, among others, the plan was widely approved by the creditors, affected parties had the opportunity to opt out of the release, and exculpation clauses are accepted in the Third Circuit for actions taken in connection with a bankruptcy, other than "willful misconduct or gross negligence."
xi. In re Caviata Attached Homes, LLC v. U.S. Bank, NA, 481 B.R. 34 (9th Cir. BAP 2012)
Issue and Holding: The Bankruptcy Court dismissed the debtor's second Chapter 11 case. The BAP affirmed and held that the Bankruptcy Court did not abuse its discretion in dismissing the second Chapter 11 case because the debtor failed to show an extraordinary change in circumstances that substantially impaired the debtor's performance under it confirmed plan.
©2014 William L. Norton III
