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7th Circuit orders proposed plan of reorganization open to competitive bidding

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The 7th Circuit Court of Appeals reversed a Southern District Bankruptcy judge Thursday, finding the judge incorrectly ruled that competition was unnecessary in a plan of reorganization involving a shopping center.

George Broadbent owns 98 percent direct equity of Castleton Plaza, the debtor, and the other 2 percent indirectly. EL-SNPR is Castleton Plaza’s only secured lender. When Castleton Plaza’s note matured with EL-SNPR, it did not pay and instead commenced bankruptcy. About a year later it proposed a plan of reorganization, under which $300,000 of EL-SNPR’s $10 million secured debt would be paid now with the balance written down to around $8.2 million and treated as unsecured. One-hundred percent of equity in the reorganized Castleton Plaza would go to Mary Clare Broadbent, George’s wife, who would invest $375,000.

George Broadbent is CEO of the Broadbent Company Inc., in which Mary Clare Broadbent owns all of the equity, and he receives a salary from the company. Broadbent and Castleton Plaza would keep their management contract.

EL-SNPR, thinking Castleton Plaza’s assets have been undervalued, asked the bankruptcy judge to condition Mary Clare Broadbent’s plan acceptance on her making the highest bid in open competition. Judge Basil Lorch III held that competition is unnecessary and confirmed the plan as proposed.

“Competition helps prevent the funneling of value from lenders to insiders, no matter who proposes the plan or when. An impaired lender who objects to any plan that leaves insiders holding equity is entitled to the benefit of competition,” Chief Judge Frank Easterbrook wrote. “If, as Castleton and the Broadbents insist, their plan offers creditors the best deal, then they will prevail in the auction. But if, as EL-SNPR believes, the bankruptcy judge has underestimated the value of Castleton’s real estate, wiped out too much of the secured claim, and set the remaining loan’s terms at below-market rates, then someone will pay more than $375,000 (perhaps a lot more) for the equity in the reorganized firm.”

The case, In the matter of: Castleton Plaza LP; Appeal of: El-SNPR Notes Holdings LLC, 12-2639, is remanded with directions to open the proposed plan of reorganization to competitive bidding.

 

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  1. Good luck, but as I have documented in three Hail Mary's to the SCOTUS, two applications (2007 & 2013),a civil rights suit and my own kicked-to-the-curb prayer for mandamus. all supported in detailed affidavits with full legal briefing (never considered), the ISC knows that the BLE operates "above the law" (i.e. unconstitutionally) and does not give a damn. In fact, that is how it was designed to control the lawyers. IU Law Prof. Patrick Baude blew the whistle while he was Ind Bar Examiner President back in 1993, even he was shut down. It is a masonic system that blackballs those whom the elite disdain. Here is the basic thrust:https://en.wikipedia.org/wiki/Blackballing When I asked why I was initially denied, the court's foremost jester wrote back that the ten examiners all voted, and I did not gain the needed votes for approval (whatever that is, probably ten) and thus I was not in .. nothing written, no explanation, just go away or appeal ... and if you appeal and disagree with their system .. proof positive you lack character and fitness. It is both arbitrary and capricious by its very design. The Hoosier legal elites are monarchical minded, and rejected me for life for ostensibly failing to sufficiently respect man's law (due to my stated regard for God's law -- which they questioned me on, after remanding me for a psych eval for holding such Higher Law beliefs) while breaking their own rules, breaking federal statutory law, and violating federal and state constitutions and ancient due process standards .. all well documented as they "processed me" over many years.... yes years ... they have few standards that they will not bulldoze to get to the end desired. And the ISC knows this, and they keep it in play. So sad, And the fed courts refuse to do anything, and so the blackballing show goes on ... it is the Indy way. My final experience here: https://www.scribd.com/document/299040062/Brown-ind-Bar-memo-Pet-cert I will open my files to anyone interested in seeing justice dawn over Indy. My cases are an open book, just ask.

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