540 B.R. 251
Bankr. S.D. Tex.2015Background
- Star Ambulance Service, LLC (a small-business Chapter 11) and Rodolfo E. Martinez, Jr. & Silvia Martinez (converted to Chapter 11) filed jointly administered plans; the original combined plan and disclosure statement was filed May 27, 2015 and later amended.
- Debtors elected small-business procedures under 11 U.S.C. § 1121(e) and § 1129(e) applies (45‑day deadline to confirm a plan after filing).
- Debtors presented affidavits, a ballot summary, and testimony claiming improving cash flow and anticipated monthly net of ~$17,000; no detailed projections or feasibility model were submitted.
- The ballot certification omitted a known creditor rejection and did not demonstrate acceptance thresholds under § 1126(c).
- The plan lacked key disclosures and specifics: implementation means, management post-confirmation, treatment/timing for administrative and priority tax claims, liquidation analysis, executory-contract assumptions, and retiree/support payment information.
- The court denied confirmation both because the § 1129(e) 45‑day confirmation deadline (measured from the original plan filing) had expired without a timely extension request and because the plan failed multiple § 1129(a) requirements (feasibility, treatment of claims, disclosures, etc.).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 45‑day confirmation period under § 1129(e) runs from the original plan filing or restarts when an amended plan is filed | Debtors implicitly argued their amended plan preserved timeliness | Creditors/court argued the 45‑day clock runs from the original plan filing and was not restarted by amendments absent an authorized extension | Held: 45‑day period began with original May 27, 2015 filing and did not restart for amendments; no timely extension was requested, so confirmation is barred under § 1129(e) |
| Whether the plan meets § 1129(a)(11) feasibility (reasonable likelihood of success) | Debtors pointed to improving cash flow, recent repairs, and testimony estimating net monthly income | Court/creditors noted absence of projections, capital-structure analysis, or reliable evidence of sustained ability to perform plan obligations | Held: Plan is not feasible; Debtors failed to meet § 1129(a)(11) by a preponderance of the evidence |
| Whether the plan satisfies plan-content/disclosure requirements of §§ 1123 and 1129(a)(1),(4),(5),(9),(12),(13),(14),(15) (classification, implementation, management, payments) | Debtors relied on their disclosure statement and hearing testimony to satisfy requirements | Court found numerous substantive omissions: improper classification/designation, no implementation means, silence on management post-confirmation, inadequate treatment/timing for administrative and priority tax claims, incomplete liquidation analysis, and missing required disclosures | Held: Multiple statutory defects exist; the plan fails to comply with §§ 1123 and 1129(a) provisions and cannot be confirmed |
| Whether cramdown under § 1129(b) is available | Debtors implicitly sought confirmation despite dissenting votes | Opponents/court noted cramdown requires satisfaction of all applicable § 1129(a) requirements (other than § 1129(a)(8)) first | Held: § 1129(b) is unavailable because the Debtors failed to satisfy the § 1129(a) prerequisites |
Key Cases Cited
- In re Southmark Corp., 163 F.3d 925 (5th Cir.) (defines core bankruptcy proceedings)
- Stern v. Marshall, 131 S. Ct. 2594 (U.S.) (limits bankruptcy court authority to enter final judgments on certain matters)
- Wellness Int’l Network v. Sharif, 135 S. Ct. 1932 (U.S.) (parties may consent to bankruptcy-court adjudication to cure Stern problems)
- In re Save Our Springs (S.O.S.) Alliance, Inc., 632 F.3d 168 (5th Cir.) (§ 1129(e) 45‑day confirmation period runs from original plan filing and is not restarted by amendments absent extension)
- In re Florida Coastal Airlines, Inc., 361 B.R. 286 (Bankr. S.D. Fla.) (discusses relation‑back of amended plans to original filing date for timing provisions)