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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. Indianapolis employers harassment among minorities AFRICAN Americans needs to be discussed the metro Indianapolis area is horrible when it comes to harassing African American employees especially in the local healthcare facilities. Racially profiling in the workplace is an major issue. Please make it better because I'm many civil rights leaders would come here and justify that Indiana is a state the WORKS only applies to Caucasian Americans especially in Hamilton county. Indiana targets African Americans in the workplace so when governor pence is trying to convince people to vote for him this would be awesome publicity for the Presidency Elections.

  2. Wishing Mary Willis only God's best, and superhuman strength, as she attempts to right a ship that too often strays far off course. May she never suffer this personal affect, as some do who attempt to change a broken system: https://www.youtube.com/watch?v=QojajMsd2nE

  3. Indiana's seatbelt law is not punishable as a crime. It is an infraction. Apparently some of our Circuit judges have deemed settled law inapplicable if it fails to fit their litmus test of political correctness. Extrapolating to redefine terms of behavior in a violation of immigration law to the entire body of criminal law leaves a smorgasbord of opportunity for judicial mischief.

  4. I wonder if $10 diversions for failure to wear seat belts are considered moral turpitude in federal immigration law like they are under Indiana law? Anyone know?

  5. What a fine article, thank you! I can testify firsthand and by detailed legal reports (at end of this note) as to the dire consequences of rejecting this truth from the fine article above: "The inclusion and expansion of this right [to jury] in Indiana’s Constitution is a clear reflection of our state’s intention to emphasize the importance of every Hoosier’s right to make their case in front of a jury of their peers." Over $20? Every Hoosier? Well then how about when your very vocation is on the line? How about instead of a jury of peers, one faces a bevy of political appointees, mini-czars, who care less about due process of the law than the real czars did? Instead of trial by jury, trial by ideological ordeal run by Orwellian agents? Well that is built into more than a few administrative law committees of the Ind S.Ct., and it is now being weaponized, as is revealed in articles posted at this ezine, to root out post moderns heresies like refusal to stand and pledge allegiance to all things politically correct. My career was burned at the stake for not so saluting, but I think I was just one of the early logs. Due, at least in part, to the removal of the jury from bar admission and bar discipline cases, many more fires will soon be lit. Perhaps one awaits you, dear heretic? Oh, at that Ind. article 12 plank about a remedy at law for every damage done ... ah, well, the founders evidently meant only for those damages done not by the government itself, rabid statists that they were. (Yes, that was sarcasm.) My written reports available here: Denied petition for cert (this time around): http://tinyurl.com/zdmawmw Denied petition for cert (from the 2009 denial and five year banishment): http://tinyurl.com/zcypybh Related, not written by me: Amicus brief: http://tinyurl.com/hvh7qgp

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