(Bankr. W.D. Ky. Feb. 18, 2016)
The bankruptcy court grants the oversight committee’s motion to enforce the confirmed Chapter 11 plan. The plan provided that certain equity security interests could be retained by their prepetition holders so long as no payments were made on them and they were not transferred until January 1, 2019. The unsecured creditors committee permitted this (despite the violation of the absolute priority rule) because it was understood that the proposed plan gave them the best possible outcome in the case. The debtor’s competitor sought to purchase the equity interests post-confirmation, and the oversight committee sought to enjoin the sale through its motion. The court holds that this particular plan provision was the result of lengthy negotiations and the unsecured creditors should receive the benefit of that bargain. Opinion below.
Author: Matt Lindblom