BUSINESS REORGANIZATIONS Third Edition

BUSINESSREORGANIZATIONS

Third Edition

LexisNexis Law School PublishingAdvisory Board

Paul Caron

Professor of Law

Pepperdine University School of Law

Herzog Summer Visiting Professor in Taxation

University of San Diego School of Law

Olympia Duhart

Professor of Law and Director of Lawyering Skills & Values Program

Nova Southeastern University Shepard Broad Law School

Samuel Estreicher

Dwight D. Opperman Professor of Law

Director, Center for Labor and Employment Law

NYU School of Law

Steve I. Friedland

Professor of Law and Senior Scholar

Elon University School of Law

Joan Heminway

College of Law Distinguished Professor of Law

University of Tennessee College of Law

Edward Imwinkelried

Edward L. Barrett, Jr. Professor of Law

UC Davis School of Law

Paul Marcus

Haynes Professor of Law

William and Mary Law School

John Sprankling

Distinguished Professor of Law

McGeorge School of Law

Melissa Weresh

Director of Legal Writing and Professor of Law

Drake University Law School

BUSINESSREORGANIZATIONS

Third Edition

Michael A. GerberProfessor of Law

Brooklyn Law School

George W. KuneyLindsay Young Distinguished Professor of Law and

Director of the Clayton Center for Entrepreneurial Law

The University of Tennessee College of Law

ISBN: 978-1-4224-7729-8

Looseleaf ISBN: 978-1-4224-8165-3

eBook ISBN: 978-1-5791-1670-5

Library of Congress Cataloging-in-Publication Data

Gerber, Michael A., author.

Business reorganizations / Michael A. Gerber, Professor of Law, Brooklyn Law School; George W. Kuney, Lindsay

Young Distinguished Professor of Law, The University of Tennessee College of Law. -- Third edition.

pages cm.

Includes index.

ISBN 978-1-4224-7729-8

1. Corporate reorganizations--United States. 2. Bankruptcy--United States. 3. United States. Bankruptcy. Chapter 11,

Reorganization. I. Kuney, George W., author. II. Title.

KF1544.G369 2013

346.73’06626--dc23

2013035289

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(2013–Pub.078)

About the Authors

Michael Gerber is a Professor Law, former Interim Dean, and Director of the Business Boot

Camp program at Brooklyn Law School. For many years he also served as the Associate Dean for

Development. He writes and lectures on corporate governance in bankruptcy, bankruptcy ethics,

the treatment of intellectual property interests in bankruptcy, dot-com bankruptcies, international

and comparative insolvency law, and other business bankruptcy and reorganization topics. He is a

contributing author of Collier on Bankruptcy, the leading treatise on bankruptcy law. At Brooklyn

Law School, he helps lead the annual Barry Zaretsky Roundtable, which focuses on cutting-edge

bankruptcy issues, and he is the director of the law school’s foreign summer study programs in

Beijing and Bologna. He is a member of the School’s Dennis J. Block Center for the Study of

International Business Law and the School’s Center for the Study of Business Law and Regulation.

Prior to joining the faculty, Professor Gerber practiced law at Proskauer Rose. He has twice served

on the Merit Selection Panel for a Bankruptcy Judge in the Eastern District of New York and on the

Committee on Bankruptcy and Corporate Reorganization of the New York City Bar. He is a

member of the Federal Bar Council, the New York City Bar Association, and the American Bar

Association.

George W. Kuney is the Lindsay Young Distinguished Professor of Law and Director of the

Clayton Center for Entrepreneurial Law at The University of Tennessee College of Law in

Knoxville, Tennessee. He holds a J.D. from the University of California, Hastings College of the

Law, an M.B.A. from The University of San Diego, and a B.A. in economics from the University

of California, Santa Cruz. Before joining the UT faculty in 2000, he was a partner in the Allen

Matkins firm’s San Diego office. Previously, he practiced with the Howard Rice and Morrison &

Foerster firms in his hometown of San Francisco, doing litigation and transactional work largely in

the context of business restructuring and insolvency. He teaches business law courses, including:

Business Associations, Contracts, Contract Drafting, Commercial Law, Consumer Bankruptcy,

Debtor-Creditor, Mergers and Acquisitions, Representing Enterprises, and Workouts and

Reorganizations. Kuney writes books and articles about business, contracts, commercial law, and

insolvency-related topics; advises clients nationwide regarding bankruptcy, restructuring,

reorganization, and related subjects; and conducts training seminars for law firm associates and

summer associates regarding business law and transactional drafting.

iii

Acknowledgements

The authors thank Wendy G. Patrick, University of Tennessee College of Law Class of

2013, for her extensive and detail-oriented assistance with the preparation of this book.

v

TABLE OF CONTENTS

Chapter 1 INTRODUCTION: AN OVERVIEW OF CHAPTER 11 . . . 1

§ 1.01 MEET YOUR CLIENT: THE GREAT AMPHYDYNAMICS BUSINESS

DISASTER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

§ 1.02 COUNSELING YOUR CLIENT: ALTERNATIVES FOR FINANCIALLY

BELEAGUERED DEBTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

[A] Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

[B] Out-of-Court Restructurings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

§ 1.03 BUSINESS REORGANIZATIONS: THE CONTOURS OF CHAPTER 11

AND ITS PURPOSE AND PLACE IN THE BANKRUPTCY CODE . . . . 6

[A] The Theory of Chapter 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

[B] Statutory Road Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

§ 1.04 COMMENCEMENT OF A CHAPTER 11 CASE: PRE-FILING

CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

[A] Form and Content of the Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

[B] Where to File: Venue of Chapter 11 Cases . . . . . . . . . . . . . . . . . . . . . 12

[C] When to File; What to Pack . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

§ 1.05 THE EARLY DAYS OF A CHAPTER 11 CASE . . . . . . . . . . . . . . . . . . 14

[A] Property of the Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

[B] The Automatic Stay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

[C] The Bankruptcy Court and the United States Trustee System . . . . . . . . 16

[D] Operation and Control of the Business in Chapter 11: Trustees and Debtors

in Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

[E] Examiners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

[F] Meetings of Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

[G] Appointment & Role of Committees in Chapter 11 Cases . . . . . . . . . . . 24

[H] Role of the Securities and Exchange Commission . . . . . . . . . . . . . . . . 25

§ 1.06 THE MIDDLE PHASE OF A CHAPTER 11 CASE . . . . . . . . . . . . . . . . 27

§ 1.07 THE PLAN PHASE OF A CHAPTER 11 CASE . . . . . . . . . . . . . . . . . . 27

§ 1.08 ELIGIBILITY TO SEEK RELIEF IN CHAPTER 11 . . . . . . . . . . . . . . . 29

Toibb v. Radloff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Notes and Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

In re Victory Construction Co., Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Nester v. Gateway Access Solutions, Inc. (In re Gateway

Access Solutions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43


Offıcial Comm. of Unsecured Creditors v. Nucor Corp. (In re SGL Carbon

Corp.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64


In re General Growth Properties, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 70

vii

§ 1.09 WHAT PRICE GLORY: DETERMINING THE VALUE OF THE

ENTERPRISE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

[A] Determining the Present Value of a Stream of Payments . . . . . . . . . . . . 88

Problem: How Much is Amphydynamics Worth? . . . . . . . . . . . . . . 91

[B] Determining Book Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

[C] Liquidation Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

[D] Going Concern Valuation: Determining Reorganization Value by

Predicting the Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94

[1] Capitalization of Future Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . 94

[2] Discounted Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

In re Cellular Information Systems, Inc. . . . . . . . . . . . . . . . . . . . 96

Notes and Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103

Chapter 2 FIRST THINGS FIRST: A LOOK AT CHAPTER 11

“FIRST-DAY ORDERS” . . . . . . . . . . . . . . . . . . . . . . . . . 107

§ 2.01 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

§ 2.02 AUTHORIZATION TO RETAIN PROFESSIONALS . . . . . . . . . . . . . 108

[A] Section 327(A): Professionals Must Be “Disinterested” . . . . . . . . . . . 108

Problem 2.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

In re The Leslie Fay Companies . . . . . . . . . . . . . . . . . . . . . . . . . . 109

In re Marvel Entertainment Group, Inc. . . . . . . . . . . . . . . . . . . . . 124

Notes and Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130

[B] The Rule 6003 21-Day Cooling-Off Period . . . . . . . . . . . . . . . . . . . . 133

In re First NLC Financial Services, LLC . . . . . . . . . . . . . . . . . . . . 133


§ 2.03 AUTHORIZATION TO PAY “CRITICAL VENDORS” . . . . . . . . . . . . 136

Problem 2.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136

Sportfame of Ohio, Inc. v. Wilson Sporting Goods, Co.

(In re Sportfame of Ohio, Inc.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

Notes and Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143

In re Kmart Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143


§ 2.04 AUTHORIZATION TO USE CASH COLLATERAL . . . . . . . . . . . . . . 150

Introduction & Problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150

In re Dynaco Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151


§ 2.05 COMMITTEES IN CHAPTER 11 CASES . . . . . . . . . . . . . . . . . . . . . . 161

Problem 2.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161

In re America West Airlines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163


Problem 2.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176

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In re Northwest Airlines Corporation (Northwest I) . . . . . . . . . . . . . . 177

In re Northwest Airlines Corp. (Northwest II) . . . . . . . . . . . . . . . . . . 180

Note on Rule 2019 and the Aftermath of Northwest . . . . . . . . . . . . . . 184

Chapter 3 THE AUTOMATIC STAY . . . . . . . . . . . . . . . . . . . . . . . 187

§ 3.01 INTRODUCTION; BASIC FEATURES OF THE AUTOMATIC

STAY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

Problem 3.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

Problem 3.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

Floyd Weed v. Fleet Tire Mart . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189


§ 3.02 ACTS AGAINST PROPERTY OF THE ESTATE . . . . . . . . . . . . . . . . 193

Problem 3.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196

Citizens Bank of Maryland v. Strumpf . . . . . . . . . . . . . . . . . . . . . . . 196


§ 3.03 STAYS OF ACTIONS AGAINST NON-DEBTORS . . . . . . . . . . . . . . 200

[A] Direct Actions Against Insurers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200

Problem 3.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200

A.H. Robins Co. v. Piccinin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200

[B] Suits Against Co-Debtors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210

Problem 3.5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210

F.T.L., Inc. v. Crestar Bank (In re F.T.L., Inc.) . . . . . . . . . . . . . . . 211


[C] Suits Against Key Employees of the Debtor . . . . . . . . . . . . . . . . . . . 215

Problem 3.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215

[D] Suits Against Partners of the Debtor . . . . . . . . . . . . . . . . . . . . . . . . . 218

§ 3.04 EXCEPTIONS TO THE AUTOMATIC STAY . . . . . . . . . . . . . . . . . . 220

[A] The Governmental, Police, and Regulatory Power Exception . . . . . . . 220

[1] In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220

Problem 3.7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220

NLRB v. Evans Plumbing Co. . . . . . . . . . . . . . . . . . . . . . . . . . . 221

[2] What Is an Action to Enforce a Money Judgment? . . . . . . . . . . . . . 223

[B] Actions Brought in Bankruptcy Court . . . . . . . . . . . . . . . . . . . . . . . . 228

[C] Effect of the Automatic Stay on States . . . . . . . . . . . . . . . . . . . . . . . 229

§ 3.05 WHEN IS A CLAIM A CLAIM? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231

Problem 3.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231

Grady v. A.H. Robins Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231

Notes and Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236

§ 3.06 RELIEF FROM THE AUTOMATIC STAY: INTRODUCTION . . . . . . 238

§ 3.07 THE CONCEPT OF ADEQUATE PROTECTION . . . . . . . . . . . . . . . . 239

[A] Periodic Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239

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Problem 3.9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239

In re Bermec Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240


[B] Replacement Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244

Problem 3.10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244

In re American Kitchen Foods, Inc. . . . . . . . . . . . . . . . . . . . . . . . 245


[C] Other Methods of Providing Adequate Protection: The Equity Cushion/

Opportunity Costs/Indubitable Equivalent Concepts . . . . . . . . . . . . . . 254

Problem 3.11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254

In re Alyucan Interstate Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . 254

Problem 3.12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262

United Savings Ass’n v. Timbers of Inwood

Forest Associations, Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263

[D] Periodic Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271


[E] When Adequate Protection Turns Out to Be Inadequate . . . . . . . . . . . 275

In re Callister . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275


[F] Review: Fun With Adequate Protection . . . . . . . . . . . . . . . . . . . . . . . 286

§ 3.08 RELIEF FROM THE STAY: DEBTOR’S LACK OF EQUITY IN, AND

NEED FOR, THE PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288

Problem 3.13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288

In re Anchorage Boat Sales, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 288


Chapter 4 MANAGEMENT OF THE BUSINESS . . . . . . . . . . . . . . 291

§ 4.01 INTRODUCTION AND HISTORICAL NOTE . . . . . . . . . . . . . . . . . . 291

Back to the Future: The Evolution of Trustees and Debtors in Possession

Practice Under the Former Bankruptcy Act, 1938 to 1979 . . . . . . . . . 291

The Bankruptcy Reform Act of 1978 . . . . . . . . . . . . . . . . . . . . . . . . 299

Back to the Present: A Single Reorganization Chapter and Trustees

Only on Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300

§ 4.02 GROUNDS FOR APPOINTMENT AND ELECTION OF TRUSTEES . 302

Tradex Corporation v. Morse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302

In re Ionosphere Clubs, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311

Notes on the Appointment of Chapter 11 Trustees . . . . . . . . . . . . . . . 316

§ 4.03 APPOINTMENT OF EXAMINERS . . . . . . . . . . . . . . . . . . . . . . . . . . 322

§ 4.04 OTHER APPROACHES TO CHANGING AND STRENGTHENING

MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324

Appointment of “Responsible Persons” and “Chief Restructuring

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x

Officers” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325

§ 4.05 RIGHT OF STOCKHOLDERS TO MEET AND ELECT DIRECTORS

WHEN DEBTOR REMAINS IN POSSESSION . . . . . . . . . . . . . . . . . . 327

Problem 4.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327

In re Johns Manville Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327


In re Lifeguard Industries, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339

§ 4.06 POWERS AND DUTIES OF TRUSTEES AND DEBTORS IN

POSSESSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347

[A] In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347

[1] Duties of Trustees and Debtors in Possession . . . . . . . . . . . . . . . . . 347

[2] Rights and Powers of Trustees and Debtors in Possession . . . . . . . . 349

[B] Authority to Operate and Manage the Business . . . . . . . . . . . . . . . . . 349

Commodity Futures Trading Commission v. Weintraub . . . . . . . . . 349

[C] Limitations on the Power to Manage the Business . . . . . . . . . . . . . . . 354

[1] Ordinary Course of Business Transactions . . . . . . . . . . . . . . . . . . . 355

In re Curlew Valley Associates . . . . . . . . . . . . . . . . . . . . . . . . . 355

In re UNR Industries, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365


[2] Transactions Outside the Ordinary Course of Business . . . . . . . . . . 371

Medical Malpractice Insurance Association v. Hirsch

(In re Lavigne) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373


[D] The Duty of Care and the Business Judgment Rule in Chapter 11 . . . . 377

[E] The Duty of Loyalty in Chapter 11 . . . . . . . . . . . . . . . . . . . . . . . . . . 380

[1] The Trustee’s Duty of Loyalty . . . . . . . . . . . . . . . . . . . . . . . . . . . 380

[2] The Debtor in Possession’s Duty of Loyalty . . . . . . . . . . . . . . . . . . 383

[3] Scope of Fiduciary Duties of Officers and Directors of Financially

Troubled Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385

[a] Credit Lyonnais Bank Nederland, N.V. v. Pathe Communications

Corp.: The Discovery of the “Zone of Insolvency” . . . . . . . . . . . 386

[b] Production Resources Group L.L.C. v. NCT Group, Inc.: Credit

Lyonnais Revisited and Restrained . . . . . . . . . . . . . . . . . . . . . . . 388

[c] The Rise and Fall of the Deeping Insolvency Theory . . . . . . . . . . 391

[d] Trenwick America Litigation Trust v. Ernst & Young LLP: Deepening

Insolvency Meets the Business Judgment Rule . . . . . . . . . . . . . . 392

[e] North American Catholic Educational Programming Foundation, Inc.,

v. Gheewalla: A Derivative Claim Is Still a Derivative Claim . . . . 395

[F] Reprise: Living with Competing Interests in Chapter 11 . . . . . . . . . . . 397

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xi

Chapter 5 FINANCING THE DEBTOR’S OPERATIONS IN

CHAPTER 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401

§ 5.01 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401

Problem 5.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401

§ 5.02 ADMINISTRATIVE PRIORITY TREATMENT — SECTIONS 364(A), (B);

503(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 402

In re Ockerlund Construction Co. . . . . . . . . . . . . . . . . . . . . . . . . . . 405


§ 5.03 CREDIT WITH SUPERPRIORITY OR SECURED STATUS — CODE

§ 364(c), (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411

[A] Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411

[B] Superpriorities and Non-Priming Liens — Code § 364(c) . . . . . . . . . . 412

Problem 5.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413

In re Ames Department Stores, Inc. . . . . . . . . . . . . . . . . . . . . . . . 415


[C] Cross-Collateralization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426

Problem 5.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426

Shapiro v. Saybrook Manufacturing Co.

(In re Saybrook Manufacturing Co.) . . . . . . . . . . . . . . . . . . . . . . . 427


[D] Subordination of Existing Liens; Code § 364(d) . . . . . . . . . . . . . . . . . 441

Resolution Trust Corp. v. Swedeland Development Group, Inc. (In re

Swedeland Development Group, Inc.) . . . . . . . . . . . . . . . . . . . . . . 441

Note on Priming Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 446

Chapter 6 PREPLAN SALE OF THE DEBTOR’S BUSINESS . . . . . 449

§ 6.01 SALES OF SUBSTANTIALLY ALL OF THE DEBTOR’S ASSETS . . . 449

Problem 6.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451

In re The Lionel Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 452


Indiana State Police Pension Trust v. Chrysler, LLC . . . . . . . . . . . . . 466

In re On-Site Sourcing, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 475

§ 6.02 THE POWER TO SELL FREE AND CLEAR OF CLAIMS AND

INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486

[A] Conditions for Sale Free and Clear . . . . . . . . . . . . . . . . . . . . . . . . . . 487

[1] Code §§ 363(f)(1), (2), (3) — Unsurprising Conditions Allowing

Sale Free and Clear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 487

[2] Code § 363(f)(4) — Sale When the Interest Is in Bona Fide Dispute . 488

[3] Code § 363(f)(5) — The Standard That Could Have Swallowed the

Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488

Indiana State Police Pension Trust v. Chrysler, LLC

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(In re Chrysler LLC, Part 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 489

[B] Successor Liability and the Problem of Future Claims . . . . . . . . . . . . 495

[C] Future Claims Not in Existence at the Time of Sale or Plan

Confirmation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 497

[D] The Problem of Providing Adequate Notice to Future Claimants . . . . . 500

[E] Using a Future Claims Representative to Satisfy Due Process . . . . . . . 502

In re Roman Catholic Archbishop of Portland . . . . . . . . . . . . . . . . 502


§ 6.03 THE USE OF FINDINGS OF FACT AND CONCLUSIONS OF LAW IN

THE SALE PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509

In re Automation Solutions International, LLC . . . . . . . . . . . . . . . . . 510

Chapter 7 EXECUTORY CONTRACTS . . . . . . . . . . . . . . . . . . . . . 523

§ 7.01 INTRODUCTION: WHAT IS AN EXECUTORY CONTRACT? . . . . . 523

[A] The “Countryman” Definition of Executory Contract . . . . . . . . . . . . . 524

In re Rovine Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 527

[B] Other Approaches to Determining Whether a Contract Is Executory . . 532

§ 7.02 EFFECT OF ASSUMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 534

§ 7.03 EFFECT OF REJECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 535

[A] The General Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 535

[B] The Effect of Rejection on Specific Performance . . . . . . . . . . . . . . . . 535

[C] Damage Caps for Long Term Contracts . . . . . . . . . . . . . . . . . . . . . . 537

In re Klein Sleep Products, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 538

In re Energy Conversion Devices, Inc. . . . . . . . . . . . . . . . . . . . . . 547

[D] The Special Rule for Rejection of Real Property Leases by a

Debtor-Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 553


[E] The Special Rule for Rejection of Contracts for the Sale of Real

Property or Timeshare Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . 555

[F] The Special Rule for Rejection of Intellectual Property Licenses . . . . . 556

Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC . 556


Bankruptcy: The Next Twenty Years, Report of the National Bankruptcy

Review Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 560

§ 7.04 TIME FOR ASSUMPTION AND REJECTION . . . . . . . . . . . . . . . . . 561


§ 7.05 WHEN SHOULD A COURT APPROVE ASSUMPTION? THE GENERAL

RULE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 564

Orion Pictures Corp. v. Showtime Networks, Inc.

(In re Orion Pictures Corp.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 564

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§ 7.06 LIMITATIONS ON THE POWER TO ASSUME EXECUTORY

CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 567

[A] Contracts that Have Terminated . . . . . . . . . . . . . . . . . . . . . . . . . . . 567

[B] Contracts in Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 568

[C] Contracts to Make a Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569

[D] Nonresidential Real Estate Leases that Have Terminated . . . . . . . . . . 570

[E] Bankruptcy Termination Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . 570

[F] Contracts that Are Non-Assignable Under Nonbankruptcy Law . . . . . 571

In re Pioneer Ford Sales, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 571


[G] Adequate Assurance of Future Performance . . . . . . . . . . . . . . . . . . . 579

In re U.L. Radio Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 579


§ 7.07 WHEN SHOULD A COURT AUTHORIZE REJECTION? . . . . . . . . . 585

Problem 7.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 585

In re Chi Feng Huang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 585


§ 7.08 REJECTION OF COLLECTIVE BARGAINING AGREEMENTS . . . . 591

Problem 7.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 591

In re Pinnacle Airlines Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 593


Chapter 8 CLAIMS AGAINST THE DEBTOR . . . . . . . . . . . . . . . . 623

§ 8.01 INTRODUCTION TO THE PROOF AND ALLOWANCE OF

CLAIMS IN CHAPTER 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 623

§ 8.02 ESTIMATION OF CONTINGENT AND UNLIQUIDATED CLAIMS

AND TEMPORARY ALLOWANCE OF DISPUTED CLAIMS . . . . . . 626


In re Harmony Holdings, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 630

§ 8.03 OTHER GROUNDS FOR THE DISALLOWANCE OF CLAIMS . . . . 634

§ 8.04 SECURED CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 635

[A] Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 635

[B] Determining the Allowed Amount of a Secured Claim . . . . . . . . . . . 636

Problem 8.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 636

Associates Commercial Corp. v. Rash . . . . . . . . . . . . . . . . . . . . . 637


[C] Interest on Secured Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 641

Problem 8.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 641

Key Bank v. Milham . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 642


[D] Attorneys’ Fees on Unsecured and Unsecured Deficiency Claims . . . 650

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§ 8.05 ADMINISTRATIVE EXPENSE CLAIMS . . . . . . . . . . . . . . . . . . . . . 651

§ 8.06 REPRISE: WHAT IS A CLAIM AND WHEN DOES A CLAIM

ARISE? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 655

[A] Special Problems in Products Liability Cases . . . . . . . . . . . . . . . . . . 655

Kane v. Johns-Manville Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . 656

Epstein v. Offıcial Committee of Unsecured Creditors of Piper

Aircraft Corp. (In re Piper Aircraft Corp.) . . . . . . . . . . . . . . . . . 663


[B] Reprise: Special Problems in Environmental Cases . . . . . . . . . . . . . . 668

Ohio v. Kovacs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 668


Torwico Electronics, Inc. v. State of New Jersey Department of Envi-

ronmental Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 673

[C] Special Problems in Cases Involving Equitable Remedies . . . . . . . . . 678

§ 8.07 SUBORDINATION OF CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . 679

[A] Equitable Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 679

Problem 8.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 679

In the Matter of Lifschultz Fast Freight . . . . . . . . . . . . . . . . . . . . 680


[B] Subordination of Shareholder Claims for Rescission or Damages . . . 699

Problem 8.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 699

H.R. Rep. No. 95-595 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 700

§ 8.08 SUBSTANTIVE CONSOLIDATION . . . . . . . . . . . . . . . . . . . . . . . . . 702

Problem 8.5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702

In re Augie/Restivo Baking Company, Ltd. . . . . . . . . . . . . . . . . . . . 703


Chapter 9 THE CHAPTER 11 PLAN . . . . . . . . . . . . . . . . . . . . . . . 717

§ 9.01 WHAT IS A PLAN? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 717

§ 9.02 A BRIEF OVERVIEW OF THE PLAN ACCEPTANCE &

CONFIRMATION PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 722

§ 9.03 WHO MAY PROPOSE A REORGANIZATION PLAN;

EXCLUSIVITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 724

Problem 9.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 724

In re Express One International, Inc. . . . . . . . . . . . . . . . . . . . . . . . 728


Problem 9.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 739

In re El Comandante Management Company, LLC . . . . . . . . . . . . . 740

§ 9.04 IMPAIRMENT OF CLAIMS AND INTERESTS . . . . . . . . . . . . . . . . 743

[A] Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 743

§ 1124. Impairment of claims or interests . . . . . . . . . . . . . . . . . . 744

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[B] Leaving Rights Unaltered; Code § 1124(1) . . . . . . . . . . . . . . . . . . . . 745

[C] Undoing Acceleration and Curing Defaults; Code § 1124(2) . . . . . . . 747

Problem 9.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 747

In re Madison Hotel Associates . . . . . . . . . . . . . . . . . . . . . . . . . . 748


[D] Payment in Cash on the Effective Date of the Plan; Former

§ 1124(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 756

In re New Valley Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 756


§ 9.05 THE INTERSECTION OF IMPAIRMENT AND CLASSIFICATION: THE

ONE IMPAIRED ACCEPTING CLASS REQUIREMENT; WHAT CODE

§ 1111(B) DOES TO CLAIMS, AND WHY . . . . . . . . . . . . . . . . . . . . 760

§ 9.06 CLASSIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 765

Problem 9.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 765

Phoenix Mutual Life Insurance Company v. Greystone III

Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 766

Note on Classification in Single Asset Real Estate Cases . . . . . . . . . 772

Teamsters National Freight Ind. Negotiating Comm. v. U.S. Truck Com-

pany (In re U.S. Truck Company) . . . . . . . . . . . . . . . . . . . . . . . . . . 773

In re Dow Corning Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 777


§ 9.07 IMPAIRMENT AND CLASSIFICATION REVISITED: ARTIFICIAL

IMPAIRMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 792

In re Windsor on the River Associates, Ltd. . . . . . . . . . . . . . . . . . . 792


§ 9.08 THE PLAN ACCEPTANCE PROCESS — CONSENSUAL

CONFIRMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 798

[A] Disclosure of Adequate Information . . . . . . . . . . . . . . . . . . . . . . . . 798

In re Metrocraft Publishing Services, Inc. . . . . . . . . . . . . . . . . . . 801


[B] Solicitation of Acceptances and Rejections . . . . . . . . . . . . . . . . . . . . 813

Problem 9.5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 813

Century Glove v. First American Bank of New York . . . . . . . . . . . 814

In re Clamp All Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 820


[C] Voting on the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 828

[1] Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 828

[2] Creditors Holding Multiple Claims . . . . . . . . . . . . . . . . . . . . . . . . 830

[3] The Requirement of Good Faith in Voting. . . . . . . . . . . . . . . . . . . 830

Problem 9.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 830

In re Featherworks Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 831


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Figter Limited v. Teachers Insurance and Annuity Assn. of America

(In re Figter Limited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 835


§ 9.09 TRADING IN CLAIMS AGAINST THE DEBTOR . . . . . . . . . . . . . . 839

[A] Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 839

[B] Acquiring Claims to Take Control of the Debtor . . . . . . . . . . . . . . . 845

Dish Network Corp. v. DBSD North America Corp. (“Dish I”) . . 846

Dish Network Corp. v. DBSD North America, Inc. (“Dish II”) . . . 854

NOTE ON THE IMPACT OF CLAIMS TRADING ON

CHAPTER 11 CASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 857

§ 9.10 CRAMDOWN: TREATMENT OF DISSENTING CLASSES OF CLAIMS

AND INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 858

[A] Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 858

[B] Treatment of Dissenting Classes of Secured Claims . . . . . . . . . . . . . 859

[1] Deferred Cash Payments — Rewriting the Loan; Code

§ 1129(b)(2)(A)(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 859

Problem 9.7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 859

In re Hallum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 860

Note: Why Elect Code § 1111(B)(2) Treatment? . . . . . . . . . . . . 862

Till v. SCS Credit Corporation . . . . . . . . . . . . . . . . . . . . . . . . 864


Bank of Montreal v. Offıcial Committee of Unsecured Creditors

(In re American Homepatient, Inc.) . . . . . . . . . . . . . . . . . . . . . 871

Note on In re Mace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 876

[2] Sale of Collateral with Liens Attaching to the Proceeds; Providing the

Indubitable Equivalent; Code §§ 1129(b)(2)(A)(ii) and (iii) . . . . . . 877

Radlax Gateway Hotel, LLC v. Amalgamated Bank . . . . . . . . . . 879


[3] Dirt-for-Debt Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 884

Problem 9.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 885

[C] Cramdown: Treatment of Dissenting Classes of Unsecured Claims and

Equity Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 890

[1] Historical Note: Absolute Priority Under the Former Bankruptcy

Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 890

[2] The Absolute Priority Rule and Cramdown Under the Bankruptcy

Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 897

Debates on Uniform Law on Bankruptcy . . . . . . . . . . . . . . . . . 898

Norwest Bank Worthington v. Ahlers . . . . . . . . . . . . . . . . . . . . 900

Problem 9.9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 905

In re Landau Boat Co. (Landau I) . . . . . . . . . . . . . . . . . . . . . . 905

In re Landau Boat Co. (Landau II) . . . . . . . . . . . . . . . . . . . . . 908

Bank of America National Trust and Savings Association v. 203

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North Lasalle Street Partnership . . . . . . . . . . . . . . . . . . . . . . . 911


[3] Gifting Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 922

Dish Network Corp. v. DBSB North America, Inc. . . . . . . . . . . 922


[4] Unfair Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 931

Problem 9.10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 934

§ 9.11 THE STANDARDS FOR CONFIRMING A PLAN . . . . . . . . . . . . . . 936

[A] Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 936

[B] Best Interests of Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 937

In re Merrimack Valley Oil Co. . . . . . . . . . . . . . . . . . . . . . . . . . 938


[C] One Impaired Accepting Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . 941

[D] Feasibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 942

[E] Compliance with Provisions of Title 11 . . . . . . . . . . . . . . . . . . . . . . 943

[F] Good Faith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 944

[G] Approval of Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 945

[H] Identity of Prospective Management and Insiders . . . . . . . . . . . . . . . 945

[I] Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 946

[J] Payment of Administrative Expenses . . . . . . . . . . . . . . . . . . . . . . . . 946

[K] Payment of United States Trustee System Fees . . . . . . . . . . . . . . . . 947

[L] Payment of Certain Retiree Benefits . . . . . . . . . . . . . . . . . . . . . . . . 947

§ 9.12 PREPACKAGED CHAPTER 11 CASES . . . . . . . . . . . . . . . . . . . . . . 947

Chapter 10 THE EFFECT OF CONFIRMATION: POST CONFIRMA-

TION CONCERNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 953

§ 10.01 THE EFFECT OF PLAN CONFIRMATION . . . . . . . . . . . . . . . . . . . 953

[A] A Confirmed Plan Binds All Parties; Code § 1141(a) . . . . . . . . . . . . 953

Travelers Indemnity Co. v. Bailey . . . . . . . . . . . . . . . . . . . . . . . . 954

[B] A Confirmed Plan Vests Property in the Reorganized Debtor; Code

§ 1141(b), (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 960

In re Penrod . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 961


[C] A Confirmed Plan Discharges the Debtor; Code § 1141(d) . . . . . . . . 965

§ 10.02 NOTICE TO CREDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 966

Problem 10.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 966

Reliable Electric Co., Inc. v. Olson Construction Company . . . . . . . 967


Berk v. Brooks Fashion Stores, Inc. (In re Brooks

Fashion Stores, Inc.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 973


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Hexcel Corp. v. Stepan Company (In re Hexcel Corp.) . . . . . . . . . . 976


§ 10.03 THE EFFECT OF CONFIRMATION ON THE LIABILITY OF

NON-DEBTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 985

Problem 10.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 985

In re Master Mortgage Investment Fund, Inc. . . . . . . . . . . . . . . . . . 985

Deutsche Bank v. Metromedia Fiber Network, Inc. (In re Metromedia

Fiber Network, Inc.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 992


§ 10.04 POST-CONFIRMATION APPEALS; MOOTNESS . . . . . . . . . . . . . . 1001

Insurance Subrogation Claimants v. U.S. Brass Corp. (In re U.S. Brass

Corp.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1001


§ 10.05 REVOCATION OF CONFIRMATION . . . . . . . . . . . . . . . . . . . . . . . 1008

Tenn-Fla Partners v. First Union National Bank of Florida . . . . . . 1008

Haskell v. Goldman, Sachs & Co. (In re Genesis Health Ventures, Inc.)

(Genesis I) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1020

Haskell v. Goldman, Sachs & Co. (In re Genesis Health Ventures, Inc.)

(Genesis II) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1025


§ 10.06 ENFORCEMENT OF PLAN PROVISIONS; POST CONFIRMATION JU-

RISDICTION OF THE BANKRUPTCY COURT . . . . . . . . . . . . . . . 1028

Gray v. Polar Molecular Corporation (In re Polar

Molecular Corporation) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1030


§ 10.07 SERIAL FILINGS: THE CHAPTER 22 PROBLEM . . . . . . . . . . . . . 1043

In the Matter of Jartran, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1043

In re Deed and Note Traders, LLC . . . . . . . . . . . . . . . . . . . . . . . . 1050


Table of Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TC-1

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

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Documents

BUSINESS REORGANIZATIONS Third Edition