In Re Connector 2000 Ass'n, Inc.
447 B.R. 752
Bankr. D.S.C.2011Background
- Connector 2000 Association, Inc. filed for Chapter 9 relief to adjust its debts related to the Southern Connector toll road project.
- Debtor issued 1998A/1998B/1998C Bonds to finance construction; toll revenues have fallen short of projections.
- Debtor defaulted on January 1, 2010, with reserve funds previously covering debt service now exhausted.
- Debtor proposed First Amended Plan for Adjustment of Debts, with Amended and Restated Bonds and New License Agreement, supported by SCDOT.
- Court approved disclosure statement and solicitation procedures; plan was subject to objections, hearings, and Ballot Tally before confirmation.
- Court conducted a hearing and issued Findings of Fact, Conclusions of Law, and a Confirmation Order approving the Plan.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Eligibility of the Debtor under § 109(c) | Stoeckmann contends eligibility issues preclude Chapter 9 relief. | Debtor is insolvent, a municipality, and authorized under state law to pursue Chapter 9. | Debtor eligible under §109(c) and qualifies as a municipality. |
| Compliance with § 943(b) confirmation requirements | Objections contend plan may not satisfy §943(b) prerequisites. | Plan and disclosures satisfy §943(b) and related provisions. | Plan satisfies §943(b) and related Chapter 9 requirements. |
| Acceptance by impaired classes under § 1129(a)(8) | Some impaired classes did not vote or oppose; cramdown considerations arise. | Impaired Classes 1, 2, and 4 voted to accept; others had no claimants; no objections to plan. | All impaired classes accepted or were deemed to accept; §1129(a)(8) satisfied. |
| Third-party releases and injunctions under Plan | Releases may exceed permissible scope under §524(e) and related case law. | Releases are necessary, supported by the plan and record, and consistent with applicable law. | Third-party releases and injunctions are appropriate and necessary under the Plan. |
Key Cases Cited
- In re Pierce County Hous. Auth., 414 B.R. 702 (Bankr. W.D. Wash. 2009) (confirms preponderance standard for §943(b) confirmation)
- In re Mount Carbon Metro. Dist., 242 B.R. 18 (Bankr. D. Colo. 1999) (supports good faith and plan confirmation standards)
- In re A.H. Robins Co., 880 F.2d 694 (4th Cir. 1989) (third-party releases and §524(e) considerations)
- In re Dow Corning Corp., 280 F.3d 648 (6th Cir. 2002) (application of releases/injunctions framework in complex plans)
- In re Continental Airlines, 203 F.3d 203 (3d Cir. 2000) (seven-factor tests for releases and settlements)
- In re Specialty Equip. Co., Inc., 3 F.3d 1043 (7th Cir. 1993) (context for plan releases and settlements)
- In re Transit Group Inc., 286 B.R. 811 (Bankr. M.D. Fla. 2002) (balances factors in evaluating plan releases)