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Docket # 70 Footnote Page #3

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Stockminder   Wednesday, 09/25/19 12:41:10 PM
Re: Stockminder post# 1242
Post # of 1272 
Docket # 70 Footnote Page #3

Quote:
3 The sale process and certain pre-petition support agreements are tantamount to a sub rosa plan. The Debtors are seeking to sell their assets soon after filing their chapter 11 cases and in a manner that circumvents the fundamental protections of chapter 11. Bankruptcy courts may not, “in the guise of authorizing a transaction out of the ordinary course of business in a chapter 11 case, authorize a transaction that is tantamount to a plan. Such a transaction requires full compliance with the plan confirmation provisions of chapter 11.” 3 Alan Resnick & Henry Sommer, COLLIER ON BANKRUPTCY ¶ 363.02, at 363-11 (16th ed. rev. 2019); In re Braniff Airways, Inc., 700 F.2d 935 (5th Cir. 1983); In re CGE Shattuck, LLC, 254 B.R. 5, 12 (Bankr. D.N.H. 2000) (“The closer a proposed transaction gets to the heart of the reorganization process, the greater scrutiny the Court must give to that matter.”). This type of sale process could deny creditors the statutory protections they would otherwise receive through the chapter 11 confirmation process by establishing the terms of a sub rosa, or perhaps more accurately, de facto, plan in connection with the sale. See In re Tempnology, 542 B.R. 50, 63-64 (Bankr. D.N.H. 2015). Among the factors that courts consider in evaluating whether a transaction constitutes a sub rosa plan is whether the proposed transaction renders creditors’ rights under chapter 11 meaningless. See Comm. of Equity Sec. Holders v. Lionel Corp. (In re Lionel Corp.), 722 F.2d 1063, 1071 (2nd Cir. 1983)

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https://document.epiq11.com/document/getdocumentbycode/?docId=3489387&projectCode=RTF&source=DM

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