In considering the various objections to the Plan, the Court began its analysis by recognizing that in order for the Plan to be confirmed, it must comply with section 1129 of the Bankruptcy Code. Citing the Court's decision in Exide Technologies, Judge Carey observed:
The plan proponent bears the burden of establishing the plan's compliance with each of the requirements set forth in section 1129(a), while the objecting parties bear the burden of producing evidence to support their objections. In a case such as this one, in which an impaired class does not vote to accept the plan, the plan proponent must also show that the plan meets the additional requirements of section 1129(b), including the requirements that the plan does not unfairly discriminate against dissenting classes and the treatment of the dissenting classes is fair and equitable. In re Exide Tech., 303 B.R. 48, 58 (Bankr.. D. Del. 2003)(internal citations omitted).
Why did the Court reject Spansion's proposed Incentive Plan? The parties opposing the Plan argued that the Incentive Plan was too generous and was offered to benefit management at the expense of unsecured creditors. The Debtor, on the other hand, argued that the Incentive Plan allowed the company to attract and retain key employees. Looking to the evidence presented at the confirmation hearing, the Court noted that peer groups of comparable companies (used as a comparison for the Incentive Plan) was selected by the Debtor's board instead of a compensation expert. Further, the companies used for the benchmark comparison were those that emerged from chapter 11 bankruptcy between 2003 and 2006. This comparison, the Court found, did not reflect the dramatic and adverse effects the economy and employee compensation experienced during the last two years. Opinion at *37.
'Courts of bankruptcy are essentially courts of equity, and their proceedings inherently are proceedings in equity.'
