right microphone today very well thank you may it please the court doug flower from eric fox l l p on behalf of the appellant in this matter diamond enterprises if i may i would like the court has been a comedy and said oral argument quite quickly we're here this morning because the bankruptcy court confirmed a plant that should have never been confirmed it was in unconfirmable plan in hindsight diamond probably should have simply appealed that order and come before your honor's however diamond believed in it because of economic reasons and kind the reasons that the more appropriate course of action at the time was to file a motion for reconsideration which diamond did and which the bankruptcy court considered on january th two thousand  i don't believe that when it was entered correctly and so i think michael would have would have been successful from that order but again because of the economics here the order was good enough for diamond in that it protected diamonds rights or at least diamond believed at the time that it protected diamonds rights and was fairly unequivocal about how it protected diamonds rights and modify the plan to protect diamonds right so whether whether the plan was lawful at that point or not you probably dispute that your client was willing to live with that it is correct and at the time there were plenty of discussions about whether to appeal that or not in the decision was alternately made not to appeal that january th two thousand and eighteen  aspects didn't disclose litigation didn't disclose assets didn't disclose companies didn't disclose community property serious problems so diamond filed a motion to revoke the original order entered in december on the debtors and it plain let me ask this did you find or do you allege that there was fraud committed in respect of the modified plan that was not also committed in the spec to the original plan you see and i'm saying i do your own i think the orange tree i think discusses that to some extent and i think the fraud was that was discovered was really in demick as to i guess both plans the original plan and the modified plan because what it was is it was that all the underlying facts are not not all that an exaggeration the important material underlying facts that underlined the original plan and the amended plan simply were faults and were not correct saw the allegation there wouldn't be a basis assuming this is even possible to set aside the confirmation of the amended plan for fraud but not set aside the confirmation of the st plan i don't believe so your honor if if the fraud that  we believe we've discovered years is proven i think it makes any of those plans dead in the water so we fast forward now an hour here and and in my statement of issues on appeal you know i think i phrased the issue trying to be as simple as possible look there's one hundred and eighty dollars days start from december december order or does it start from the january order when this court granted the motion for leave to appeal i think this court actually did a i'm not surprised but this court did a better job of sort of stating what the issue was and this court said look the issue is whether the chapter eleven plan modifications set forth in the reconsideration order constitutes substantive modifications of the confirm plan and thus extend the one hundred and eighty dollars days you realize that course that's not binding on ice right i do that that's the that's going to be the motions panel that's turns out not to be true we don't although i think that it is that is an accurate assessment of the situation and i think it's important because i think what we should be arguing what i'm going to argue today is look what here we have a plan i think going back to why as a subset of plan that that's where i sort of got sidetracked this is a subset of modification and i think reading you can read the order and i think you can tell the modification but i think it's even even more nuanced than that you read the transcript of the hearing we argued for about an hour in front of judge wallace down there and i think judge wallace himself recognized that this was a substantive modification he did so when to read the plan which is interesting plan to say at least it had three proposed treatments for diamond treatment a treatment be in treatment c n diamond was supposed to choose one well diamond didn't like any didn't choose any of them objected to the plan and opposed confirmation of course the plan said in there look you don't choose any of them you get treatment ok that's what we were opposing conformational when it came down to reconsideration the reconsideration hearing on january th the judge sat there and said he focused in on the prayer of my reconsideration motion and said look this plan should never be confirmed you have to revoke confirmation if you're not going to go that far at least throw my client a bone  carve my client out of this bad plan so that it doesn't adversely affect my client and the judge last on of that nd prayer and the alternative is that that's what exactly what i'm going to do and he said and he wasn't so concerned about it because he said you noticed your reconsideration motion to all creditors and he said look at one of these credits had a problem with it with treatment d he calls it treatment d the new plan treatment d that's the modify plan if somebody has a problem with treatment b they could come in here and say something and he said if they did that would be i would i would value their their objections that would be something i'd want to really hear but nobody is you know if you're motioned all creditors we did you wrong and that that's really important because we're feel careful in what we say about and i answer gets prior decisions well that's right and let's talk about orange or a tree is the big elephant in the room here so an orange tree the distinction in my view is whether the order on the th was a substantive modification or whether it was a clarification or interpretation look at orange tree orange tree looked at that order that nd order and it was comfortable that this was a clarification or interpretation as you don't even need this or he said it just  should have just asked for interpretation or clarification and that subset of modification isn't defined in the bankruptcy code not defining what i scratch my head to look in black's law dictionary it's not to find there either but i think how it relates to interpretation and clarification is how you understand subtile you're going to understand what a substantive modification is because there are a number of cases under one thousand one hundred and twenty seven that talk about is this of a modification or is this an interpretation o clarification and the reason it's important is because in a corporate debt or after the plan is substantially consummated you can't modify the plan you can't but you can interpret it and you can clarify and so there's litigation has to that's whether that  order is interpreted it or modifying it and so my definition of what a substantive modification is is substantive modification begins where interpretation or clarification and and so i think when you look at the order that was entered on the th you're going to see that this wasn't an interpretation this wasn't a clarification this was treatment the this was a modification and so whether or not went way out of his way to make sure the debtor agreed to the modification because you can't tell an individual better that they would have to be forced to live under this modified treatment the and the debtor greed and if you look it wasn't cited in my brief that there is a case  and it's notice right we have that it's a hearing we had that it's opportunity even care venator to object we had that and its assessment by the bankruptcy court that the modified plan meets the requirements for confirmation which minutes i will stop your honor thank you good morning michael jens representing the appellee michael you nessie who is present and in court today so judge st i was making reference here to the white elephant in the room i always thought the white elephant in this room was how did you get to supplant confirmed in the title eleven chapter eleven of you know we had the ability to propose a plan that provides for treatment of creditors and by giving the creditor diamond here alternative treatments our anticipation was that from those consented because you don't vote that's correct how does that possibly square with commercial western finance where they would have to pick choice a that was by consent now but it was but the whole point was the judge later found that consent concept was faulty right w be that was one of the alternate treatments did provide for full payment of the climb so there would have been a discounting of anyway of that debt had he been a bit said in continuing payments until the debt is discharged or are satisfied now it's a discharge and even even that provision wasn't clean it seemed to me it was there were there were there were hooks in the language there i'm not sure it would pass the cramdown test standing alone well so far our goal here of by diamond as to what it is they wanted to do the choice and they did include some creative elements but it was designed to be accepted by consent and not forced upon them it was kind of are and how you could possibly have concluded that was consent is beyond me and were and were expressing some incredulity so if this is i don't know what the rest of the panel thinks i i can't imagine in the motion for reconsideration the request was made that they either undue the confirmation or that the confirmation order be modified and and then they laid out the terms that they wanted in the modification of the confirmation order and so from that judge wallace found that since you had requested alternate forms of relief either this or that that by going with one of the two that they had requested that was consistent i was little bit astounded that you would suggest that somehow creditor has voted consent for a planned on a motion to the reconsideration of the confirmation order which seems to me to be certainly two steps to late to judge her kids didn't the judge have to find that there were consent on the day that he confirmed the plane well this was in regards to the modification of the water so the the motion the reconsideration motion that was made was cast with two full two requests for relief either  to undo the confirmation or to modify the confirmation order and so judge wallace elected to go with their request be to modify the confirmation order and that confirmation order that that order granting the motion for reconsideration did specify that what they were doing was modifying the confirmation order so judge for us i did want to address the issue as to whether or not this was a substantive change or clarification so diamond did submit that order that was ultimately entered by the court and in that order that was written by diamond it does specifically state the confirmation order is modified to make clear and then it goes through and states that there be no requirement for an affirmative statement and no effect on the five hundred and twenty three a p so dimond drafted that order and said what we're doing here is one modifying the confirmation order and two clarifying things you know on the point about modifying the order if i remember correctly the confirmation order said it takes precedence over any inconsistent provisions of a plan yes doesn't that really make it part of the plan now there is the order and the plan are a package and therefore modifying the order is a modification of the plan because the really one of the same that's a very interesting observation i would tell you that that might actually be direct on point into the orange tree case so as this court has recognized orange tree as a th circuit case not about case an actual might thirty case and in that the court went through and said look when you issued an order that was a modification order what you have done here is you made a couple changes to what was going on and so in orange tree the changes that were made in that case included even the removal of liens so they they hold that some of the elements that were made in that modification of the confirmation order may have meant housekeeping but that was certainly a substantive matter and so in orange tree you had a situation where the court had confirmed a plan and then they'd entered an order that modified the confirmation order and then where she looked at it and said hey we're not making a change to the plan this is not a modification under title eleven under chapter eleven this is a modification of an order and that modification of the order is very summer what happened here so in this case  diamonds treatment in the confirmation was treatment after the modification order it's still treatment so it's not like they did it's not exactly a because it they also have the five  doubted it really is a plus something right and that would be somewhat summer job fairs too when we're in street goes through and removes lanes so we're dealing with a particular creditor that's before the court and what's going on with them so again in that case what you're doing is you're saying hey if we're going to make a modification the bankruptcy code allows for modification but the requirements under one thousand one hundred and twenty seven to make a modification and the additional because the order says well just st except for the fact that orange tree says that you can modify the confirmation order without it being a modification plan i don't know whether the order in that case incorporated that was incorporate or superseded the plan by it's terms i just don't know i work for to i think this is the classic example that i've learned in law that when something is messed up in the st instance you know you really need to go back and fix it from the beginning as opposed to then patch on other fixes and and that's what's happened here we patched on another fix haven't we we modified we have confirmed on comparable plan and then we've then we modified it without complying with the statute dealing with modifications and that you know what we're doing with here you so it's just a clarification so explain to me what was qualified ok so what was clarified and what the order said is it's to make clear that in the two items that were highlighted there were that there would be no requirement  affirmative statement from the creditor and then the nd thing was that there would be no effect on the five hundred and twenty three action that was pending so i don't see how that's a clear clarification rather than a change because if you're in treatment a you've got to make the furnace statement and you lose the not discharge case that strikes me is not a clarification suppose it would be a clarification in the same way that an orange tree they removed the lien and said we're dealing with it's possible for that clarification if the order says for example liens come off but didn't identify him there was something in the orange tree case about how they made the change to make a title company happy and so i got the impression that it was an identified with  specificity to make the title company comfortable ensuring title free of those liens that's need reading between the lines i will admit but i can imagine a situation where that is just a clarification and not a change when you can certainly  the need to make whatever you do to a plan very public and very universal to me derives from the fact that we change all kinds of peoples rights through plants now i don't suspect that on the one hand that didn't happen trying to do so the plan time and receipt you need ok so now i mean that suggests to me that maybe what happened here wasn't substantive in the way we would ordinarily think of what happens with plans but it was pretty darn important to them and it was and as just fairest just suggested the two clarifications to me seem like really fundamental changes so i mean i'm struggling with what ought to be substantive here on how do we think about what substantive and you know if it's substantive to one party is that is that what we're talking about early talking about something that you know if we're really going to think about one thousand one hundred and twenty seven you know we are we have to be worried about effects on lots of parties which wasn't just isn't the case here and that your side of this is that who you know this really wasn't a modification in any meaningful way because everybody else you may didn't they didn't show up didn't care honestly just laugh it got us that's correct so what i would say what about if i would encourage the court to find that this was not a modification of the plan and that is critical for the issue before the court because if it's not a modification of the plan that one hundred and eighty dollars day deadline you know was blocked so the status statute of limitations very brief i mean really brief yeah eighty days you know the policy reason for that you've got to have finality in a chapter eleven plan you might have a chapter eleven plan that goes for decades can i ask your question about it to me one raise the issue of whether the fault that was alleged here was sufficient and the diamond has made all kinds of scandalous allegations none of which have been proven and we would highly dispute all of those so the the proof elements and things that have been introduced in that regard haven't even got out of the gate because we killed this w seconds it please the court again doug flower for mayor of fox on behalf of the appellant here i heard a couple of things that i want to go back to and just just focus the court in orange tree much less was made that looked orange tree and took away a lean or something reed orange tree very closely i don't think it did it's said he's quoting from orange tree is it different modified or different from the original order in that it explicitly discharged leans other than this line of new west and then later down it says look neither the plan nor the june th confirmation order exempts the original confirmation order exempts any lien from just have been made not by what purported to be a modified order again this is clarification interpretation versus modification but by a an order entered pursuant to provisions of the plan that authorizes the court to carry out the provisions purposes and intent of the plan if you go to any creditor that relied on this plan and ask whether their rights or the plan the substance of this plan changed when you took the largest creditor made and allowed them to proceed and collect on their non discharge ability during the sixteen months of this plan they did it and i think if it and i was there at that there should have been the world's greatest feasibility objection right i would think it was one of the ok the transcript of the of the  required i mean such a big change to the underlying economics that why shouldn't the other creditors had another chance to take a look at this well you know when i and i sort of made that argument and and i think the judge and this is why i think it's a little in can grow in that the judge said in the we just want to says look this does affect other creditors and if some other creditor wanted to come in and object to this treatment be you know they'd have to get by the waiver argument they didn't show up after they were noticed with the motion for reconsideration but if they could get by that waiver argument judge wells was like all listen to them so i think one thousand one hundred and twenty seven and the notice to creditors was substantially complied with and i think it's sort of a moot point between before this panel because no one appealed that order