WASHINGTON, D.C. - (Mealey's) The U.S.
Supreme Court on Apr. 30 denied certiorari to a class of shareholders in
bankrupt Idearc Inc. who had objected to the confirmation of Idearc's Chapter
11 reorganization plan on grounds that its approval violated due
process (Spencer Ad Hoc Equity Committee v. Idearc Inc. [In Re:
Idearc Inc.], No. 11-874, Chapter 11, U.S. Sup.).
Idearc Inc. filed for Chapter 11 bankruptcy in the U.S.
Bankruptcy Court for the Northern District of Texas.
The Spencer Ad Hoc Equity Committee objected to Idearc's
reorganization plan, alleging fraud in a prior spinoff of Idearc from Verizon
After a hearing, the Bankruptcy Court confirmed Idearc's
plan, and the Spencer Committee appealed to the U.S. District Court for the
Northern District of Texas.
Idearc moved to dismiss the Spencer Committee's appeal on
the grounds of equitable mootness. The District Court granted Idearc's
motion, and the Spencer Committee appealed to the Fifth Circuit U.S. Court of
Appeals, which ruled that the reorganization plan was valid.
Stern v. Marshall
On Jan. 11, the Spencer Committee filed its petition with
the U.S. Supreme Court, contending that the Fifth Circuit's decision is an
unconstitutional extension of equitable mootness and violates the rule
articulated in Stern v. Marshall (131 S. Ct. 2594 ).
Moreover, the Spencer Committee argued that the original
bankruptcy proceeding violated the due process clause of the U.S. Constitution
and that there is a need to clarify the rules concerning rights of parties made
subject to the "cram down" procedure in a Chapter 11 proceeding.
The Spencer Committee is represented by Peter Talbot of
the Law Office of Peter Talbot in Media,
Pa. Idearc is represented
by Toby L. Gerber, Ryan E. Manns and Oscar Rey Rodriguez of Fulbright &
Jaworski in Dallas and Robert Andrew Black of
Fulbright & Jaworski in Houston.
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