“(b) Duties.—The [Subchapter V] trustee shall— . . . (7)facilitatethe development of a consensual plan of reorganization.”
- From 11 U.S.C § 1183(b)(7)(emphasis added).
Facilitation is, by statute, a duty of every Subchapter V trustee—something a Subchapter V trustee must do. But the nature and boundaries of the facilitation role have always been fuzzy and, therefore, misunderstood.
My purpose in this multi-part series is to provide observations on the facilitation role.
A "Liquidation Preference" is a clause in investment and shareholders’ agreements that determines the order in which proceeds from a liquidity event (such as a trade sale or asset sale) are distributed among different shareholders. This clause often pertains primarily to preferred shareholders, such as venture capital investors.
“Notwithstanding the court of appeals’ error, this case does not warrant this Court’s review.”
“(b) Duties.—The [Subchapter V] trustee shall— . . . (7)facilitatethe development of a consensual plan of reorganization.”
- From 11 U.S.C § 1183(b)(7)(emphasis added).
Facilitation is, by statute, a duty of every Subchapter V trustee—something a Subchapter V trustee must do. But the nature and boundaries of the facilitation role have always been fuzzy and, therefore, misunderstood.
My purpose in this multi-part series is to provide observations on the facilitation role.
“(b) Duties.—The [Subchapter V] trustee shall— . . . (7)facilitatethe development of a consensual plan of reorganization.”
- From 11 U.S.C § 1183(b)(7)(emphasis added).
Facilitation is, by statute, a duty of every Subchapter V trustee—something a Subchapter V trustee must do. But the nature and boundaries of the facilitation role have always been fuzzy and, therefore, misunderstood.
My purpose in this multi-part series is to provide observations on the facilitation role.
“Learn something new every day,” is a well-worn adage.
And it’s mostly true (I only question giving a literal meaning to the “every day” part).
Nevertheless, I’m embarrassed to acknowledge learning only recently of the existence of a noteworthy, bankruptcy-related statute: 28 U.S.C. § 959(a). Such statute reads in part (emphasis added):
Excluded from Subchapter V eligibility is a “single asset real estate” debtor.
We have a recent opinion on a Subchapter V debtor who beats that exclusion: In re Evergreen Site Holdings, Inc., [Fn. 1]
What follows is a summary of that opinion.
Eligibility Issue & Standards
The Evergreen issue is this:
In a mass-tort bankruptcy, when 95% of 120,000 creditors vote to accept a mediated plan paying over $7 billion to creditors, shouldn’t the plan be confirmed?
The Federal Labour Court (Bundesarbeitsgericht, BAG) had to decide in which case a social compensation plan endowment by the conciliation committee is economically unjustifiable for a company outside of insolvency. This shall be the case if the fulfilment of the social compensation plan obligation would lead to illiquidity, balance sheet over-indebtedness or an unacceptable reduction of the company's equity. If the endowment was economically unjustifiable, the discretion of the conciliation committee was exceeded and the social compensation plan therefore invalid.
Das Bundesarbeitsgericht (BAG) hatte darüber zu entscheiden, wann eine Sozialplandotierung durch die Einigungsstelle für ein Unternehmen außerhalb der Insolvenz wirtschaftlich unvertretbar ist. Dies sei der Fall, wenn die Erfüllung der Sozialplanverbindlichkeit zu einer Illiquidität, einer bilanziellen Überschuldung oder einer nicht mehr hinnehmbaren Schmälerung des Eigenkapitals der Gesellschaft führe. Liege danach eine wirtschaftliche Unvertretbarkeit vor, sei das Ermessen der Einigungsstelle überschritten und der beschlossene Sozialplan unwirksam.