  |
  |
  |
    
  
   |
 | |||
|
|
|
|
| |||
allocation was consistent with the risk assumed by parties before the bankruptcy." Here, the court concluded that Chase met the first two elements of the rebuttable presumption. Regarding the third element, the court noted that that this element "requires one of two things!either (a) the shorter payment period for the "5-year" secured claim classes results in "a materially lower percentage recovery for [Chase,] the dissenting class (measured in terms of the net present value of all payments);" or (b) Chase's longer payment period, compared to the "5-year" classes, allocates to Chase a "materially greater risk ... in connection with its proposed distribution." Chase's objection only implicated the second of these alternatives. The court concluded, however, that "[w]hether the risk of such a plan default actually occurring is high enough to be "material," and whether the differences in the ultimate percentage payments under such a default scenario would be material, are not issues the Court can decide on the present record." The court found the same to be true with respect to the issue of whether the debtor could rebut the presumption of unfair discrimination, if it arose. The court found that further briefing and evidence on this issue was needed. The court then addressed Chase's argument that BWP was solvent debtor whose plan did not meet the requirements imposed on solvent debtors. The court noted that "[t]he Sixth Circuit has held that when the debtor is solvent, the 'fair and equitable' requirement for confirmation and the 'absolute priority rule' mean that, 'absent compelling equitable considerations,' the Chapter 11 plan must pay creditors in full, in accordance with their pre-petition rights, including all of their contractual rights... Thus, in a solvent-debtor case, there is a presumption that even unsecured claims must be paid default-rate interest. And even unsecured claims 'may recover their attorneys' fees, costs, and expenses from the estate of a solvent debtor where they are permitted to do so by the terms of their contract and applicable non-bankruptcy law.'" The court found that BWP was a solvent debtor as that term was used in the Dow Corning case!based on BWP's own admissions as to the value of its assets and liabilities-and that the debtor's plan failed to meet Dow's requirements for solvent debtors. The court thus denied confirmation of the debtor's plan.
i. RadLAX Gateway Deck, LLC v. Amalgamated Bank (In re River Road Hotel Partners, LLC), 132 S.Ct 2065 (2012)
Issue: Whether Subsection (iii) of § 1129(b)(2)(A) can be used to confirm a plan that seeks to sell encumbered assets free and clear without providing the right to credit bid, or whether subsection (iii) can only be used to confirm plans that propose disposing of assets in ways that can be distinguished from those covered by Subsections (i) and (ii).
Holding: The debtor sought to confirm a cramdown bankruptcy plan over lender's objection. They proposed to sell all of the debtor's property at an auction and use the sale proceeds to repay the bank. Under the auction procedures, the bank would not be permitted to credit bid at the auction. Debtor asserted that such treatment was fair and equitable pursuant to § 1129(b)(2)(A) (iii) because the lender would receive the "indubitable equivalent" of it secured claim upon the
©2014 William L. Norton III
