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United States Bankruptcy Court for the Southern District of New York
May 25, 1994, Decided ; May 25, 1994, Docketed
Case No. 91 B 10048 (TLB) Chapter 11
[*39] OPINION ON CONFIRMATION OF DEBTORS' JOINT PLAN OF REORGANIZATION AND APPROVAL OF RELATED COMPROMISES AND SETTLEMENTS
TINA L. BROZMAN, UNITED [**3] STATES BANKRUPTCY JUDGE
Best Products, Inc. and its affiliates (whom I will refer to together as "Best"), seek to confirm a joint plan of reorganization which has garnered the overwhelming support of all its creditor classes except for those ("Objectants") which hold claims that are contractually subordinated to the claims of Best's lenders. Best's chapter 11 petition was filed in the wake of a failed leveraged buyout ("LBO") which was commenced in late 1988 and consummated in early 1989. Best's plan embodies, among other things, settlements of adversary proceedings which it brought in December, 1992, against various LBO constituencies seeking to unwind the LBO under state fraudulent conveyance doctrines imported into federal bankruptcy law (the "LBO Action") and seeking to recover certain preferences. The plan represents the product of extended negotiations among Best, the banks who participated in the LBO and hold its senior debt ("the Banks"), the creditors' committee (on which the subordinated creditors are represented), two of the three Objectants and purchasers of a substantial amount of trade claims. The Objectants oppose confirmation of the plan on various grounds, foremost [**4] of which is that the proposed settlement with the Banks, who are defendants in the LBO Action, is unreasonable and lacking in good faith. The Resolution Trust Corporation ("RTC") 1 also asserts that I am unable to confirm this plan until I resolve a pending adversary proceeding which it recently commenced against the Banks seeking to invalidate the subordination agreement which renders its claims junior to those of the Banks. Much like the RTC, certain subordinated creditors led by Rockefeller Group Capital Corporation (the "Rockefeller Group") contend that I must resolve their cross-claims in the LBO Action before I may consider confirmation of the plan.
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168 B.R. 35 *; 1994 Bankr. LEXIS 787 **
In re BEST PRODUCTS CO., INC., et al., Debtors.
Subsequent History: As Amended May 27, 1994.
Banks, settlement, subordinated, confirmation, subordination agreement, equitable, contractual, parties, senior, projections, merger, fraudulent transfer, adversary proceedings, insolvent, shareholders, negotiated, reorganization plan, reorganization, Bridge, obligations, choice of law, distributions, intercreditor, tender offer, fraudulent, showrooms, lenders, bankruptcy court, courts, fraudulent conveyance
Bankruptcy Law, Plans, Plan Confirmation, Cramdowns, Plan Contents, Discretionary Provisions, Prerequisites, Fairness Requirement, General Overview, Prepetition Transfers, Voidable Transfers, Unsecured Creditors, Civil Procedure, Jurisdiction, Subject Matter Jurisdiction, Procedural Matters, Federal Questions, Preliminary Considerations, Federal & State Interrelationships, Federal Common Law, Mergers & Acquisitions Law, Liabilities & Rights of Successors, Torts, Business Torts, Fraud & Misrepresentation, Inability to Proceed, Disqualification & Recusal, Legal Ethics, Client Relations, Conflicts of Interest, Duties to Client, Duty of Confidentiality, Bankruptcy, Claims, Allowance of Claims, Constitutional Law, Congressional Duties & Powers, Bankruptcy Clause, Governments, Federal Government, US Congress, Administrative Powers, Automatic Stay, Types of Claims, Unsecured Priority Claims, Subordination, Adversary Proceedings, Causes of Action, Jurisdiction Over Actions, Settlements, Settlement Agreements, Enforcement, Banking Law, Federal Acts, Financial Institutions Reform, Recovery & Enforcement Act, Scope of Financial Institutions Reform, Recovery & Enforcement Act, Core Proceedings, Trials, Jury Trials, Right to Jury Trial, Noncore Proceedings, Jury Trials, Business & Corporate Compliance, Contracts Law, Standards of Performance, Creditors & Debtors, Contested Matters, Reconsideration of Claim Allowance, Proof of Claim, Contracts Law, Contract Interpretation, Real Property Law, Purchase & Sale, Fraudulent Transfers, Preferential Transfers, Evidence & Procedural Matters, Contract Formation, Evidence, Burdens of Proof, Financing, Secondary Financing, Lien Priorities, Best Interest Test, Exemptions, Claims & Objections, Good Faith Requirement