Where objections have been raised to confirmation of a joint plan of reorganization, each of the requirements of 11 U.S.C. §1129 will have been met by a preponderance of the evidence provided that the plan is modified.
Objections overruled.
“NESV Ice, LLC (‘Ice’), NESV Swim, LLC (‘Swim’), NESV Tennis, LLC (‘Tennis’), NESV Land East, LLC (‘Land East’), NESV Field, LLC (‘Field’), NESV Hotel, LLC (‘Hotel’), and NESV Land, LLC (‘Land,’ collectively with Swim, Tennis, Land East, Field, and Hotel, the ‘Land Debtors,’ and the Land Debtors together with Ice, the ‘Debtors’), Ashcroft Sullivan Sports Village Lender, LLC (‘Ashcroft’) and Shubh Patel, LLC (‘SP’ and, collectively with the Debtors and Ashcroft, the ‘Plan Proponents’) seek confirmation of the Modified Second Amended Joint Plan of Reorganization of NESV Ice, LLC, NESV Swim, LLC, NESV Tennis, LLC, NESV Land East, LLC, NESV Field, LLC, NESV Hotel, LLC, NESV Land, LLC, Ashcroft Sullivan Sports Village Lender, LLC, and Shubh Patel, LLC (the ‘Plan’) … SHS ACK, LLC (‘SHS’) and Construction Source Management, LLC (‘CSM’) object to confirmation of the Plan (collectively, with prior pleadings referenced therein, the ‘Objections’). …
“Based on the evidentiary record at trial and the entire record in this case, I will overrule the Objections to confirmation and enter an order confirming the Plan provided that the Plan Proponents modify the Plan as described in this memorandum. I find that each of the requirements of §1129 will have been met by a preponderance of the evidence if the Plan is modified. …
“As will be discussed in detail below, I have determined that: Ashcroft is not an insider and may vote to accept the Plan, notwithstanding an existing subordination agreement; acceptance by one impaired class under this joint Plan satisfies §1129(a)(10); the doctrine of marshaling will not be applied to require SHS to first seek satisfaction from collateral of guarantor Debtors not obligated to CSM; to be fair and equitable with respect to the secured claim of CSM as required by §1129(b), the Plan must value CSM’s lien after allocating a portion of the senior SHS term loan to the Debtors other than Ice that are the primary obligors of that loan; the Plan Rate required to be paid to satisfy §1129(b) with respect to deferred payments under the Plan to SHS and CSM is the prime rate, plus 2%; and the Plan must be modified to provide that Ashcroft may not be paid any amounts on account of the equity interest to be issued under the Plan and any such equity interest must be held in trust for SHS until SHS’s claims are paid in full.”
In Re: NESV Ice, LLC, et al. (Lawyers Weekly No. 04-008-24) (76 pages) (Panos, J.) (Chapter 11 Case No. 21-11226-CJP) (April 15, 2024).
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