The Peabody Award: Exclusive Opportunism in Bankruptcy
- Philip Anker
- 10.23.2022
In an article published by Creditor Rights Coalition, Phil Anker and other expert Contributors weigh in on Exclusive Opportunism, the trend of preserving exclusive financial opportunities for select creditors without offering that opportunity to all creditors of the relevant class, all in exchange for voting in favor of the debtor’s plan.
Excerpt: From my perspective, two legal pillars frame the issue. The first is the statute itself. The Bankruptcy Code specifies that a Chapter 11 plan “shall” – i.e., must – “provide the same treatment for each claim or interest of a particular class, unless the holder of a particular claim or interest agrees to a less favorable treatment of such particular claim or interest.” 11 U.S.C. § 1123(a)(4). The second is the U.S. Supreme Court. In construing the Code, it has held that the exclusive right to invest in the reorganized debtor, to finance its emergence from bankruptcy granted under a Chapter 11 plan, is a form of property – i.e., that exclusive right can amount to “treatment” under the plan, and if that preferential treatment afforded one party in interest but not another is contrary to the requirements for confirmation, the plan cannot be confirmed. Bank of America Nat.Trust and Savings Assoc. v. 203 N. Lasalle St. P’ship, 526 U.S. 434 (1999).
