DigitalTown, Inc. (DGTW)

[trader59]

A key feature... all disposable income going to the creditors for up to 5 years.

Of course, this company has no revenue whatsoever, there's no evidence of any business operations. They have no cash, either, and will have to take on more debt to get some right after stiffing these creditors in bankruptcy. Fool me once.

Company appears to be playing games to get a stay against their former CEO and his lawsuits and playing fast and loose help sell some stock after their RS was denied.

D. Absolute Priority Rule Is Not a Barrier to Confirmation

The most significant advantage for debtors in Subchapter V is the elimination of the absolute priority rule. Typically, § 1129(b)(2)(B)(ii) mandates that a dissenting class of unsecured creditors must be paid in full before any junior class can receive or retain property under a plan of reorganization. 10 Norwest Bank Worthington v. Ahlers, 485 U.S. 197, 202 (1988). Hence, if the unsecured creditor class votes to reject a chapter 11 plan, equity holders cannot receive anything unless the dissenting class is paid in full. Rather, the equity holders would have their shares in the company cancelled. 11See, e.g., Bank of Am. Nat’l Tr. & Sav. Ass’n v. 203 N. LaSalle St. P’ship, 526 U.S. 434, 437 (1999). Courts recognize a new value exception to the absolute priority rule, but there are strict limitations on the exception. Equity’s new value contribution to retain their ownership interest must be money or money’s worth. Simply contributing future labor, management, or expertise is not sufficient to qualify as new value supporting retention of equity ownership. 12See Norwest Bank Worthington, 485 U.S. at 202-06.

New Subchapter V does not include these limitations on equity retaining ownership. Now the court may confirm a plan over the objection of unsecured creditors as long as all projected disposable income of the debtor, to be received in a three-year period or such longer period as the court may approve but not to exceed five years, will be applied to the plan. 13 11 U.S.C. § 1191(b) (2019). Removing the absolute priority rule in Subchapter V should encourage more successful small business reorganizations by allowing owners to continue managing their businesses and enjoying the benefits of ownership.

https://www.bradley.com/insights/publications/2020/08/the-pros-and-cons-of-the-small-business-reorganization-act-of-2019