U.S. Supreme Court Refuses To Hear Idearc Shareholders' Objection To Bankruptcy

U.S. Supreme Court Refuses To Hear Idearc Shareholders' Objection To Bankruptcy

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 Communications Inc.

Reorganization Plan

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 [2011]).

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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