Sorry Xena, but you don't know what you're talking about.
There was blood poured into efforts on behalf of the Ad Hoc and not for financial gain. There are people in the bankruptcy profession who understand acutely well that Debtors are exploiting opportunity at others expense all the time. It's sickening. Those people work long hours at great financial risk sometimes to level playing fields on behalf of those who will not have a chance otherwise.
Up until Boroff's ruling, it looked very good for formation of a committee. Boroff's opinion, unfortunately, ignored some basic tenants of 'going concern' value: (i) that there is future value of a going concern--supported in this case by the Debtors' own figures, (ii) that the Debtors' current liquidity is not in itself an indication of insolvency (ex: by backing out R&D, capex, & WC growth, cash flow is positive), (iii) that 101(32) of the code supports a view of going concern value by defining insolvency via the "fair value of assets" (the Debtors have yet to provide support against this in any capacity), and (iv) that value need not be determined by an ability to pay cash dividends (Boroff's decision appears pinned on liquidity and not potential to issue new shares to equity at some future time pending the outcome of a plan of reorganization).
Judges rule and try to get it right. In this case, Boroff got some fundamental tenants of financing wrong and ruled, imho, wrong as a result. Lawyers get these issues mixed up all the time. While the ad hoc pleaded for testimony by financial experts, Boroff yielded to the debtors who declined opportunity to have their expert testify or to cross examine the ad hoc's expert. Had you been there and seen the facts play out until then, seen Despin hemming and hawing, heard the ad hoc's arguments, you would have felt very good about the prospects for an EC--even without testimony.
But what do i know Xena? Your 2+2 logic is also pretty tight.
AI
