represents the individual named appellants who are the sub shareholders in this case may please the court this is a case that out at bottom is about the bankruptcy code and the application of the bankruptcy code to a plan of say it's also however about a case about plaintext interpretation within the creature that the code has created that we know as the plan of reorganization so two things are really key we believe to this appeal first is what the code requires and second is what the plan of reorganization sets here the bankruptcy court's decision below conflicts with key provisions of the bankruptcy code and we believe ignores the plain language of the plan of reorganization that's at issue therefore we would ask this court to reverse the decision of the bankruptcy court we were interested in the plain language would you say the plan is silent about this point absolutely not your honor and the reason that we believe that is that we believe you need to start with the code to inform what can be in the plan the plan can only be creature of the code section eleven twenty three a one of the code says notwithstanding any otherwise the political bankruptcy non bankruptcy law a plan that just takes you back to the underlying numbers the end of that tells you whether the plan is silent or not well if america i think i'm just trying to make the point use a plain language and i guess i would have said to both of you i don't see the plan having pla language telling me what to do on this and we're going that's a do you disagree with that i don't disagree with that you're on to them and then on the impaired point i find that to be question begging that just because you have been notified about this if the plan tells you about it and if you haven't if the plan doesn't tell you about it in which case who cares because you can do it anyway so that's why i find that not super helpful to me right now her my my my response would be however we're talking about here is a fundamental right of alienation  and then under the bankruptcy code if you as a equity holder are going to be impaired the bankruptcy code says that first in a disclosure statement under eleven twenty five it needs to be clear to you what the precise impairment  under the plan itself it needs to be precise on the planet if the plan does clarified it would be harmless error that it wasn't in the disclosure statement don't you agree with me you wouldn't know a fire if the plan contemplated you could do the say all right well you're just trying to isolate what really matters and i'm just not sure the impairment point really matters i know it matters and i agree it matters as a backdrop that they nor the normal the presumption is you can alienate freely because that can potentially help help everybody you how you're unfair you can't be impaired but if we look to the plan the first provision in the plan that we believe is important and we believe codified is eleven twenty three within the plan is a statement that says on page one of predators  equity security holders should refer to articles or through five of this plan for information regarding that precise treatment of their claim or interest and so here we would argue goes even a step beyond the statute and before he says the word specific with percentage so it tells us we need to go to articles for an articles five read those articles and determine how precisely we may be impaired by we in this case out of curiosity just to make sure i'm getting this and this is a bankruptcy question which i'm just not sure i grasp so you have to plan bankruptcy court approves the plan with the bankruptcy court still have a role let's let's say you're right the theoretically the salutation was contemplated i'm assuming the bankruptcy court would still have a role to play in deciding whether this was an appropriate sale from the perspective of the doubters long term interests the creditors long term interests and other considerations in the code and plan i write about that i don't think so at least not in the first instance you're i mean first i think it's important to say what if this if it but just let me just ask the question a little differently but the bankruptcy court thought this sale destroys the effectiveness of the plan there would be apposite way to stop the sale well your honor i think that we could come up with a set of facts where it would be entirely appropriate for the bankruptcy court to get involved so here's here's where you're simply confirmation post confirmation from a close confirmation is confirmed is what i'm trying to figure out is what seems to me the message of the bankruptcy court and district court decisions is they weren't going to let this happen whether it's because the confirmation clan by its terms prohibit it or because they think it under served the interests of the r not the right of alienation is impaired which is a general question where we would we would look to the language see if it's ambiguous if it's not ambiguous and we believe that it's not ambiguous then you would give it its plain reading however what we believe they've done is they've gone back to the pre con from ation period they've looked at a sale that was contemplated a specific sale at that point in time other assets not of equity which is what we're talking about now and they've extrapolated out a potential parade of horrible that could result from a sale that was contemplated several years ago but may not be the offer of sale that's made tomorrow and so if tomorrow an offer of sell were made or a purchase were made by my client belfast go or anybody else the first instance would be for the independent trustee to take a look at that sale which is very expensive and time consuming and going to drain the i mean the hope is to let the structure eleven become a success or you're going to ration your honor i guess my client is just as entitle to the plaintext analysis of the plan as as everybody else this isn't just a contract between the creditor and the debtor it's a contract you have child challenge their assumption that the army department would cancel the cells so cancel what could cancel the killer person arrangement if you guys bought them well your honor i don't know that the record is current on that issue but let me answer with what i think we can glean from the record the department of the army chose not to participate in this proceeding so they clearly threw that that action at least have said that they don't have an issue to be heard in front of this court on appeal second the issue again that was consider pre agent was the sale of assets it wasn't a sale of equity interests if someone purchases the equity they're required to comply by the plan other is a binding provision in section two zero three that says if somebody steps in your shoes as a belfast co was interested in this company so that they could shut it down and would no longer have competition your honor there's no factual basis for that in the record other than the other side has stated it and the bankruptcy court has repeated it there tell us why your client wants to buy it your honor my client wants to buy it because it is a company that has similar synergies they would evaluate when they came into the company how they would run the company i can't tell you today  their plan and that's not what they're going to do we're on or i can't in good faith answer one way or the other because i don't know what ultimately would happen but again the last offer that was made by dell fastow was to keep the company operational through twenty eight hundred they would purchase the equity shares but they would can they were going to pledge to continue to maintain the company which goes back to my broader point which is that we can't i don't believe analyze the legal question of what is or isn't permissible under the plant with a series of hypotheticals about what an offer may or may not be just because a sale of purchase offer is made doesn't mean that it will be added that it will be accepted and if it is accepted in the company were sold and my client or anyone else who purchased it violated plan they would be subject to a breach of contract or or some other type of action but at base your honor the question that's been asked here by the bankruptcy court which is would  to dell fastow harm the company's chance of operations again we don't believe this is a correct question i'm running out of time your honor mr kaplan is going to come up but let me close for the moment on this we would really ask the court to focus on article five and the specific language that's addressed to the impairment the key sentence captains one which says on the effective date holders of equity security from the debtor shall retain their interest as an existence immediately prior to the effective da will their interests immediately prior would have include the right to sell there would have been nothing that would have prohibited that prohibited them the day before confirmation from selling their shares and it's only in that second sentence when the idea of a pro the bishan on sale exists and expects a fight that only the debtor can't buy the shares and that the date assigned to that is december thirty first twenty eight hundred so i'll wrap up for now in the support has more questions your honor but we would ask you to really look in focus at the plain language we think that the bankruptcy court has conflated those two sentences into one we don't believe that silence or ambiguous we think it's very clear what alienation is prohibited here they've told us specifically what that is th the plan speaks loudly when you loudly about who the stock can be sold to and who cannot be sold to the plant clearly states that the debtor and now that the company cannot purchase the stock from the  whether the topic is covered in the provision let's let's take an example of you know of a situation that where the court found that the plan was silent in the terrace case interest wasn't mentioned in the plan but in that case the insurance companies want title to be paid in full in cash on the distribution date because payment was delayed for a very long period of time they weren't receiving full value because of the time value of money the court then used its act with the power to come in and say ok we need to provide interest to enforce the terms of the plan and make sure that these creditors are paid in full there is no silence like that in this case what we have here is the case like in redwood which is the dairy farmer case where the farmer sold the dairy her because it  wasn't it wasn't prohibited by the plan the creditor said well golly how can the plan allow that because how are we going to be paid the dairy herd has to exist for us to be paid because otherwise the thing will be operational and therefore drawing the inference will the plan must not permit that that's what they're trying to do here honor there is no prohibition on selling stock in that provision and to your question why can't the court get involved with the if the provision destroys the plan no court can't get involved you can vacate a plan for fraud and rule of in forty four one hundred eighty days afterwards in this case your honor you're saying they would have nobody course if the there's an effort to sell and the bankruptcy court the creditors and the debtor think this is very much not in the interest of the players in the bankruptcy they would creditors it says they get their defined payments and they can get their contingent payments there is no evidence of record whatsoever that the rate of horribles would occur which is by start cease operations cease to pay can't because steps into the shoes of the  debtor they have to pay under the plan so the issue would only arise if the stock you know and there was a breach of the plan out of curiosity can both of you on behalf of your relevant clients guarantee that those key functional those guarantees your honor the guarantee is that the contract must be performed whoever owns condo is a parent is would be running can't go in those payments have to be made under the plan don't ask who would step into the shoes of isa trustee would be the stockholder country the board of directors and makes and ultimately be accountable so the debtor does nothing changes if the debtor stock is acquired the reorganize debtor that entity must perform the plan and if they didn't perform the plan and the creditors could allege and good faith that the plan violated because they're not getting what they bargained for their money which is well this is about money getting paid off in full they would have a breach of contract claim against the against company so the answer is no now all i've heard all i've heard is that the creditors will be able to sue duff asco well let me tell you don't get paid wrong here is that the u s will the department of army cancel the contract actually there's no there's no evidence of record on that it's general dynamics stated in a pleading that they would not they would object to the assignment of the contract to any affiliate of belfast co now what the bankruptcy court did is infer based on not that that will destroy the company but your honor in the reply brief we cited record evidence which they have not which is the general dynamics contract runs out at the end of two thousand and fifteen so the bankruptcy court approved a plan which involved payment of to creditors through two thousand eight hundred through the end of two thousand  that the general dynamics contract was going to sunset at the end of two thousand and fifteen even even though you know and she rightly say there's no here in town in the plan but the court it's gone through eight beef ability to termination considering all the factors prior to confirming the plan so that's that's what your audience for this week if the court had determined that it was necessary for congo to remain operational to perform the plan and that that further meant that the stock could not be sold because that would somehow affect operations the provision would state clearly that no third party can purchase the securities rather than just simply saying that the debtor can't repurchase the security so i infer in their argument but the first is that they have continuously alleged in their briefs that i was counsel for congo inc in answering a question from the district court in an action separate from this court in the federal court matter that i stated that a sale to a third party other than delph a scope might be permitted and i think it's important to look at that just briefly the appellant's of taking the set of contacts your honour's let's let's forget what you said before but this was a question i wanted to ask anyway so i don't care what you said before it's time of the answer i guess i'd be really surprised that you one would say as to this confirmation plan that there are no sales style so parties and warren buffet's hoops and  district court i don't want to hear about the patent answer my question warren buffett comes in is offering ten times whatever measly earnings to one hundred times it's a ridiculously good offer you're going to say we can't do it no but but we're both it's going to have to talk to the creditors and if the creditors agree then you have to amend the plan is out you're going to say no the plan is in the substantially consummated ok i go back and i'm in the plan but you would agree that in that setting you could have a sale to a third party contract with the with the creditors would be fulfilled what we need to happen is that we as the debtor would have to file in each chapter eleven and we would prepare a prepackaged chapter eleven guess what it is it is what it is is what it is and what it is right now is it doesn't allow you don't fasten it do you agree with me it silent on this point or do you think it plainly supports you it seems to me silent on third party confirmation order which is compass is the entire case this is the bankruptcy court lived with this case before confirmation for two years there were numerous hearings there were numerous briefs filed there were arguments from you know all parties and if you go through the vote the factors and i got a point out that you know when you look at a contract the primary issue that you're looking at is the intent of the parties here you have the creditors and the debtor agreeing on the intent of this point in the intent of this plane was that there would be no sale until january one of two thousand ninety so that's just that's that's the primary issue that what list which are answer to this but point of bankruptcy any role let's just say the plan does contemplate their party sales asco is there recourse for the debtor or the creditors to go to back to a bankruptcy judge or file some action protest the trustees consideration of the offer to protect their interest how does that work in other words would is the case over if their right is the case over technically yes you are once the case is substantially consummated if the plan were had specific language that says that this can of them they just make the offer and you guys the trustee decides whether to accept it and you're in you have the creditors have no right and the debtor has no right to come in and say our plesent what happened in that instance as is the appellant stated is that the appellant's would step in the shoes of the debtor and they would be under you know they would be required that's after the creditors but the creditors could protest couldn't connect filed action saying this is this whole scheme is designed to prevent us from getting our last year and a half of payments that they could bring the yes they could probably bring in action and you know i don't know whether it be through bankruptcy court or you know one third record they could bring an action potentially saying that that breach of contract action saying that we're not getting what we what we bargained for because what they bargained for here was not just pay out ok a forty cents on the dollar over a four year period of time they also bargained for  payment a contingent payment based on fifty percent of the a new will net operating profit before the depreciation and that would be impossible if if the fastow came in and bought this company there is no way they would be able to see that the benefit that they bargained for in this chapter eleven process your own as i point out that in this case the bankruptcy court did not modify and in the terms of applying the bankruptcy court did not apply any provisions of the bankruptcy code that a bankruptcy court simply interpreted the plane that over for two years prior to confirmation in the plan that it actually confirmed so you think we should look at exact strands of evidence here including the deliberations and what happened during the couple years before do work for that in this company makes casings for bombs you know so our our contracts are with the u s government and general dynamics who has contracts with the u s government that's primarily who we do business with very detrimental effect on this company we're talking about our primary competitor who has been trying to purchase for more than four years and certainly in the for your time that that this company's been in bankruptcy and out of bankruptcy that has had a very detrimental effect they've been we've been in federal court we've been in bankruptcy court we've been appeals were now here this is a continuous process where this company  thing for the oversight committee the successor in interest to the official committee of unsecured creditors that was in operation during the chapter eleven portion of the case and that has been charged with ensuring the enforcement of the plan and that creditors receive the benefit of their bargain in the chapter eleven case as you saw in the committee's brief we agree with the  debtors positions on many of the facts and the legal arguments but what i'd like to focus on this morning is the standard of review which i think is the path of least resistance for judicial determination this is still struggling with that one but i know where would you point to the contract that says you know you can't make this the four corners of this contract work and allow the sale  find entertain the say well if you accept it you accept it but i'm going to make sure the creditors get paid and i am and that's that's how that problem is solved in other words it's funny to use that concern to alter the meaning of the contract when there's another way to serve that interest i don't think it's alternate target i would just forget forget whether it is or not why isn't that the way to protect your clients or isn't why isn't that the certitude that it will all if the fastow which court which is the primary competitor which purchased a nominal plane in order to gain standing to be before your honor the involved if they're interested purchase the nominal credits claim so to me but that's why they and the issue your honor is if they took it over and they shut it down the creditors would then have a preacher tonto claims what they said against our liquidated entity whose assets are all leaned up by the bank  if that's what happens i'm sure that's where we will be but i think that it is faster and this goes back to what's going to get creditors there were temporary the fastest it's faster to go to the bankruptcy court which specifically retained jurisdiction and it's much operation which we think the best support for the record or general dynamics to drop them at either way is the one thing i don't quite understand about this and this must just be about the four years that preceded this but if i were in your shoes i'd still want to hear what they have to say i mean maybe they're going to give you plan but there was never any there there was today there was an inability to get to a resolution what is it with the committee and the creditors that voted in support of this plan light was there  reading life into the plant taking a look at everything that happened it's about the financial projections the oversight committee existing so that it can look at the projections and see if the debtor is succeeding projections what the contingent distribution upside to the creditors is going to be all of that would be jeopardized by a change of control and none of that's part of play to the plan instead what you have are mere words points which are suggests remind me of the dissolution other things would make the projections not make sense one way or another and the projections are based upon the debtor operating as it is under its contract but with objection to confirmation and then months later makes a new offer with the interested parties who had equity interest but they did not have the right to vote for the plan because only the impaired creditors they were at the bottom they just received notice they they could've object yeah but i mean i just that space the question many of them really clever they realized the plane was silent on this and i don't know what to say about that i mean they've just been hanging out realize oh i think here's what we'll it this is more than just contract interpretation which there are deeply you know the to know right now we're getting into how the contract read together the different provisions how do they fit with the bankruptcy case and that's where we get thank you there are a few points to hit on a rebuttal and the first one is that most of this argument has talked about belfast most of this argument has spoken about what happened reconfirmation and hypotheticals about what could occur if there was a purchase offer honor we would respectfully submit that the analysis should begin and end with the plan itself and the plan itself is very clear we don't believe it silent it if it did it in that dress is directly the question of alienation and it has only one limit on that alienation and that's a purchase by the creditor itself about the i mean that's an implication and there are implications from the keeping the same control of the company same management that's another implication of your inner can change of control provisions are quite frequently put into contracts and it strikes me that what we're trying to do is to twist ourselves to a way where we can find that the plan for him it's a change of control the plane could have said that it prohibits a change of control it doesn't the plant could have said that it prohibits a sale to a third party other than a creditor or other than what sort of the you know what it says the same file is going to be running the company what's that mean your honor that comes in under section i believe it's eleven twenty three that requires a good faith implementation plan where you have to state how in good faith you're going to try to run the company and included in that is another requirement that says if interested parties or or former employees are going to continue you need to list them by name so you're required to provide that information but if mr everson wanted to retire next year or this year that wouldn't mean that the company wouldn't continue to run or the plan wouldn't continue to go by the same for sure your honor under the contingent you know if this were if this if the payout schedule of the creditors were over ten years i would really have a lot i really think that was supportive but doesn't it hurt you that it's such a short time frame it really does suggest this is you know because i normally equity holders get nothing they're toast and here you have this payout and then they're going to have the company i mean it's it's a very tight timetable you're on are again respectfully i think we're conflating two questions we're conflating who owns the company with what happens to the company there's nothing in the record that shows that or anyone else and we have to remember this isn't a case about belfast it's a legal question as to whether or not the plan prohibits a sale generally but there's nothing that says that if someone purchases the equity that the company wouldn't continue to run and as i said before even though it's not directly in the record one of the offers that has been made by dell fastow along the way was to pledge that it would continue with the plan and file and or or is there an ambiguity with respect to that issue your honor we would say it's neither silent nor any big u s and that's because there's a statement that says on the effective date holders of equity securities shelf retain their interests that saying rather than have their shares extinguished they're going to have them on the effective day and they're going to be as in existence or in as an existence immediately prior will immediately prior they could have sold the shares your honor and so that language read on its plain terms means that if the day before confirmation they could have sold them they're going to keep their shares on the day of confirmation but they still have their interests the only limitation that would violate that would be a fetish priority in the code for them to take that position with no no your honor wouldn't it wouldn't violated at all because this was a consensual plan where they moved from so that's the starting bargaining position it's a starting pardoning background principle but your honor every version of this plan had similar language to this and as the plan moves along the only question the sale was a sale of assets not a sale of equity there was never an offer or contemplation of a sale of equity for a confirmation and there's just very simply a difference between purchasing assets and purchasing ownership  purchase ownership you stand in the shoes of the person that you purchased it for and to answer your honor's question and all and fear yes if belfast still purchases this company it would make the defined distributions that's required under the contract it would be required to do so as one of contract when i think of the conformation plans i'm supposed to think of them as contracts and as a general matter i usually thinking them of them is mainly contracts between the debtor and the creditors  said general i think you know where i was heading so i'll complete the point and then your answer is yes it's usually between those those are the two those are the two elephants in the room those are the two big players they both frank this was not contemplated it's  very funny i mean it's usually an intent case in contracts one party says and the other says opposite day here the two parties say ok and this other party says no no no this is not this national intuition to th is principal that it would require a new plan that's what i heard them say i would i would suggest it was not as clear in front of judge mckinley but i'll take mr borelli at his word here today but the second point to that your honor is that it's not just a got that serving independent trustee who represented the aesop that individual might have spoken of my point your honor is there's a whole hypothetical set of negotiation and things that could have occurred had this been in the plan had it been clear that could have been discussed and we can't go back in assume that we would have ended up with a plan that either would have had the absolute priority rule or would have had a clear clear prohibition on the right of alienation because we can't go back and redo that there was nothing in the disclosure statement that said you can't sell to a third party and we would argue there is nothing in the plan that says that either quite the contrary it makes a specific discussion of alienation and only limit sale to one person you know that you just say that there were prior offers that we're going to take care the creditors you know one thing i know about bankruptcy for sure everything's negotiable and we won't do anything for a week or two if you guys can figure it out figure it out after that you know at least two of us will do something maybe all three all right thanks to all of you for your very helpful briefs for the oral arguments it's a complicated case so thank you for trying to make it explainable to us which we were very much appreciate that a case can be submitted and the work may join court