464 B.R. 208
Bankr. D. Del.2011Background
- Tribune sought confirmation of two competing plans; the court denied both plans under 11 U.S.C. §1129 in the Confirmation Opinion (Oct 31, 2011).
- Three motions for reconsideration were filed: Law Debenture/Deutsche Bank on PHONES subordination; Aurelius on PHONES subordination; NPP on various issues including LBO Lenders and Bar Order.
- Oral argument occurred on Dec 14, 2011; additional scheduling and allocation-dispute processes were proposed for the Third Amended DCL Plan.
- The court planned to grant the subordination reconsideration motions and amend the Confirmation Opinion to strike the Subordination Determination, while denying the remaining NPP reconsideration requests.
- The court reaffirmed that no PHONES value determination was made in the Confirmation Opinion and clarified the weight of evidence on the PHONES notes for purposes of subordination.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subordination scope of Section 14.02(A)/(B) | Movants argue broader interpretation; intro phrase should not insulate from subordination. | WTC argues intro phrase limits subordination to assets only. | Reconsideration granted; broad interpretation applied; Subordination Determination amended. |
| LBO Lenders' share in DCL Trust recoveries | Noteholders contend LBO Lenders should be barred from sharing; fairness issue. | DCL Plan Settlement already contemplates LBO Lenders’ participation. | Reconsideration denied; no change to prior fairness ruling. |
| Proportionate judgment reduction in Bar Order | Noteholders argue error in not making factual fault findings; seek pro tanto method. | Court found proportionate reduction fair among options. | Reconsideration denied; proportionate method retained. |
| PHONES note value determination | Value of PHONES notes potentially relevant to subordination. | No determinate value issue decided in Confirmation Opinion. | Clarification granted; opinion did not determine PHONES value. |
Key Cases Cited
- Cybergenics Corp. v. Scott Chinery, 226 F.3d 237 (3d Cir.2000) (fraudulent transfer claims not assets of the debtor/estate)
- In re Gentek, Inc., 328 B.R. 423 (Bankr.D.Del.2005) (debtors may pursue Chapter 5 claims post-petition)
- In re Dura Automotive Systems, Inc., 379 B.R. 257 (Bankr.D.Del.2007) (contract interpretation in subordination context; holistic view)
- In re Spansion, Inc., 426 B.R. 114 (Bankr.D.Del.2010) (context for subordination and plan-confirmation analysis)
- Eichenholtz v. Brennan, 52 F.3d 478 (3d Cir.1995) (bar orders and allocation fairness considerations)