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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. A traditional parade of attorneys? Really Evansville? Y'all need to get out more. When is the traditional parade of notaries? Nurses? Sanitation workers? Pole dancers? I gotta wonder, do throngs of admiring citizens gather to laud these marching servants of the constitution? "Show us your billing records!!!" Hoping some video gets posted. Ours is not a narcissistic profession by any chance, is it? Nah .....

  2. My previous comment not an aside at court. I agree with smith. Good call. Just thought posting here a bit on the if it bleeds it leads side. Most attorneys need to think of last lines of story above.

  3. Hello everyone I'm Gina and I'm here for the exact same thing you are. I have the wonderful joy of waking up every morning to my heart being pulled out and sheer terror of what DCS is going to Throw at me and my family today.Let me start from the !bebeginning.My daughter lost all rights to her 3beautiful children due to Severe mental issues she no longer lives in our state and has cut all ties.DCS led her to belive that once she done signed over her right the babies would be with their family. We have faught screamed begged and anything else we could possibly due I hired a lawyer five grand down the drain.You know all I want is my babies home.I've done everything they have even asked me to do.Now their saying I can't see my grandchildren cause I'M on a prescription for paipain.I have a very rare blood disease it causes cellulitis a form of blood poisoning to stay dormant in my tissues and nervous system it also causes a ,blood clotting disorder.even with the two blood thinners I'm on I still Continue to develop them them also.DCS knows about my illness and still they refuse to let me see my grandchildren. I Love and miss them so much Please can anyone help Us my grandchildren and I they should be worrying about what toy there going to play with but instead there worrying about if there ever coming home again.THANK YOU DCS FOR ALL YOU'VE DONE. ( And if anyone at all has any ideals or knows who can help. Please contact (765)960~5096.only serious callers

  4. He must be a Rethuglican, for if from the other side of the aisle such acts would be merely personal and thus not something that attaches to his professional life. AND ... gotta love this ... oh, and on top of talking dirty on the phone, he also, as an aside, guess we should mention, might be important, not sure, but .... "In addition to these allegations, Keaton was accused of failing to file an appeal after he collected advance payment from a client seeking to challenge a ruling that the client repay benefits because of unreported income." rimshot

  5. I am not a fan of some of the 8.4 discipline we have seen for private conduct-- but this was so egregious and abusive and had so many points of bad conduct relates to the law and the lawyer's status as a lawyer that it is clearly a proper and just disbarment. A truly despicable account of bad acts showing unfit character to practice law. I applaud the outcome.

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