of the bankruptcy code and that is the requirement for the equality of treatment of claims under a plan of or reorganization it's an it's a steadfast requirement that claims be treated equally under a plan of reorganization the plan that was approved here and affirmed by the district court unquestionably does not treat claims similarly and just to be clear about what we're complaining about here we're not complaining about every aspect of the reorganization but instead one specific element of the reorganization plan and that is what was called the private placement the private placement was a sale of almost half of the debtors equity to a select group of creditors at an enormous discount to the value of that equity those facts are undisputed in fact the discount was written in as a thirty five percent discount to the plan value that was negotiated and agreed amongst those parties and that was agreed to be what ended up being at the very low end of the debtors full range of values for their own enterprise and so what is clear is there's enormous value and that's undisputed every court that's looked at this is agreed that there was enormous value in the private placement where they disagree is on the question of whether or not that value can be distributed to creditors on an inequitable basis and that's where we think every court that's looked at this thus far has gotten this wrong and i can't understate the value inherent in that private placement the value that was retained by those small subset of creditors who negotiated the plane they're called in the in the papers below the consenting note holders those the value retained by them is worth one hundred sixty million dollars beyond that which was retained by all other creditors in the case and that plainly violates section eleven twenty three eight four of the bankruptcy code made applicable to the plan of reorganization under eleven twenty nine a one well th e the debtors and committee are going to come back and say yes but we put in new value we we backstop the pie and we we guaranteed basically guaranteed it's confirmation you could have stepped up you could have done the same thing and you refused to do so what's your response or your honor i have it with the last clause i have three answers to what i would have had to before but but with that last clause starting with just the last point we did offer to do exactly that we offered to do the full capital raise with no fees and make it available to everybody through right and secure creditors committee want that i mean as i understand it you proposed several plans as alternatives and everybody who took a look at it and and it was just one group of creditors from top to bottom they said this plan was better your honor that that is true that we proposed multiple plans the issue here was and the issue here is this this type of plan this type of private placement hadn't been there's been no effort to do this before and so it was really a sui generous proposal to have this measure of equity and what was important and what was necessary to the plan proponents in doing this was that they afforded enough they gave enough opportunity to other people to participate to buy their consent your honour's will recall what the plan was proposed on the twenty second over overnight on the twenty second of december and people had seven days over the christmas weekend to decide whether to participate and the penalty for not deciding to participate as our clients did which preserve the opportunity to object to the plan was punitive if you look at the difference in value that's where you get the loss of one hundred sixty million dollars of value is if people chose not to participate so that's why are so many people participated in it their their effort to purchase consent was effective but that doesn't solve the problem the court can't confirm a plan and the court should have confirmed in this court court can't affirm a plan simply because it garnered the requisite votes we cite the young behave b case from the supreme court that talks about that question the district court's decision in adelphi deals with that issue you can't pay somebody differently because of how they voted and in this case when they voted on a plan and that's really what the issue is is that they couldn't in the debtor's argued below to be very clear about that the determination or the decision to make their capital available the debtors argued below that they should be that these proponents should be compensated for making their capital available and they work they were compensated handsomely for doing so they were paid eight percent commitment fees a two and a half percent taking fee and a breakup fee that was also equal to eight percent if the debtors went a different direction those were enormous fees and i would command the court to look at section i'm sorry in the joint appendix paid seven hundred ninety one is the order by the bankruptcy court approving the backstop commitment agreement which approved those very large commitment fees and the court recognized that they were large relative to all the cops that were provided but the court concluded it was necessary and that's not any part of our appeal before this court so these creditors were compensated for putting their balance sheets at risk what was never presented to the court and therefore what the bankruptcy court never found was that this additional value that came from the overallocation to them was also compensation for them putting their balance  and with good reason the reason they didn't argue that to the bankruptcy court is because it runs squarely into the lasalle decision lets out is known as the new value case and the supreme court rejected the new value concept  lasalle as it related to equity holders the analysis in lasalle is indistinguishable from the analysis this court should do with respect to determining whether the compensation provided in this case the overallocation in the private placement whether that is reasonable compensation for putting the money up or if instead it in fact is compensation given to them as creditors and which they're not sharing equally and  that regard i think your honour's can look at the pacific drilling case which we filed in a rule twenty j letter on september twenty eighth of last year which was not available to the bankruptcy court because it had no effort had been been attempted to do a similar type of private placement and in that case southern district of new york bankruptcy judge judge wiles looked at a private placement that is in distinguishable from this one and rejected it out of hand and the analysis that he goes through is the same analysis we would submit the court should go through here and i'll just read that the beginning passage when he first even hears of it this is on page twenty six of one hundred sixteen page transcripts of before the parties even argued about it judge while says here's my problem on the private placement of the rights offering either the private placement as in consideration of current holdings and the agreement to equities them in which case you've got an equal treatment problem that's deadly to your plan and i mean deadly and then he says or alternatively and skipping a sentence ahead he says if it's not that then it's a separate standalone reasonable financing term right but then he goes through the analysis to say it can't be a reasonable financing term but they now argue it is if you express lee exclude other people from participating in it it's not offered on market terms or as the supreme court cautioned in lasalle for top dollar if you exclude other people from participating in that equity right or the financing opportunity and that's what the that's what judge wiles looked at and said and your honor should go through that transcript is is really is a longer version of anything i would argue here because judge wil himself looks at this repeatedly and says you simply can't do this under eleven twenty three a four let me ask you this is or was there any way under the proposal that you could have opted into the private placement opted in to the backstop which was part of it but still reserve your right to object to the plan no your honor none whatsoever so is the argument being that they bought acceptances well that they clearly bought acceptances yes and that the primary argument is they pay people different amounts based upon whether they voted in favor of the plan and when they voted in favor of the plan so if somebody like my client said we think this is discriminatory we want the ability to object we just want to have our voices heard they said then you get less than everybody else and your honor we outline in joint appendix page one nine hundred thirty seven is the declaration of our expert presented at the confirmation hearing and we outlined there each and every economic component of the value lost from not participating and in our view in our in our instance from choosing to exercise our right to object to a discriminatory plan we were forced to give up enormous value and that simply violates the bankruptcy court code and the supreme court has been clear even recently in the decision that there is no rare case exception to the bankruptcy code compliance with the banks bankruptcy code is required even if as the debtor suggested below and they've suggested here this was the only way that we could get this done counsel about the unknown market risk that they were bearing and the other factors that you did that you distance you honor they were compensated with for the unknown market risk with an eight percent commitment fee to to an after said taking fee and it was presented even by the debtors own witness mr cowan from mozart presented that at the very high end of the range in fact i think my recollection serves me it was beyond the range of the similar compensation for backstop agreements in other cases and judge shermer said i'll approve it and this is your honor why i referred the court to page seven hundred ninety one of the joint appendix that's his order approving the commitment fees he said i'll approve it even though it's at the high end of the range and so that that is the compensation that was provided for that that the decision to provide that capital well what's a ticking fee taking fee is if their commitment remained outstanding for longer than was expected so there was a date by which the debtors had to go effective if it went every month that it it wasn't that they didn't go effective so they didn't actually fund they got into additional two and a half percent payment for the appeal but either way they got it they got a massive commitment fee and then on top of that to the extent and i don't think their commitment stayed outstanding longer than it was expected but if it had so if they had to keep their balance sheets exposed for longer to compensate for the risk as judge grass act s they would get an additional two and a half percent for every month outstanding beyond that and so they got enormous number and then on top of that they had to break up the so that if the debtors did go with a different alternative for their financing they would have gotten an additional hundred twenty million dollars on top of what they would have already received for backstopping this commitment as i read the district court order here  pretty pretty significant n y t arguments at this point in the in the history of the case you are they would be if we were seeking the remedy from the court that the district court suggested we're not we are seeking a remedy of permitting us to invest on the same terms that the most favored of the creditors below did or alternatively an award of money damages we're not asking for an unraveling the plan there would have to be no reworking of the plan whatsoever and the reason for that is eleven twenty three  has an exception you can either treat everybody equally or they have to consent to lesser treatment and every other creditor consented to that lesser treatment we did not so this court can remedy the unequal treatment by affording us the same treatment and that's the reason it's not equitably moot and i would i would urge the court to look at the second circuit decision in the light squared third circuit's decision seven crude the fifth circuit's decision of pacific lumber all of which recognize the very limited nature of that equitable mootness doctrine beginning there was no there was never a suggestion and i think it's an important question there was never a suggestion that anybody had to participate in the mediation to to be to receive equal treatment that that was never the concept and in fact i think it's a very important issue and i urge this i argued this to judge shermer that it would be a terrible rule of law for this court say that to get equal treatment under eleven twenty three a four you have to participate in the mediation in full and the reason that would be a terrible rule of law is mediations would cease being in negotiations between significant parties where the treatments that made available to everybody else and instead everybody would have to then come and participate in the mediation for fear of losing out on the benefits that come from settling a class white dispute these were disputes between the first the second lien lenders on the one hand and unsecured note holders on the other hand not between the negotiating parties and so the participation in the media in the in the mediation or on how to submit is a red herring and not the rule of law that this court would want to endorse and in fact judge wiles and in his pacific drilling decision actually talks to that very issue and says he said i think the point of bankruptcy is the big creditors get together and they negotiate something and made available to everybody they don't take  good morning your honor is may please the court i'm shied for at ski with jones day on behalf of peabody the planted issue here represented the most successful coal company reorganization in history it allowed peabody to make substantial payments on its preexisting deaths to unsecured creditors and to emerge from bankruptcy with want to have billion dollars in new equity investments as well as a nearly two but two billion dollars in exit debt financing the terms of the plan that the ad hoc committee challenges achieved all of this in a necessarily limited window of time because coal prices were highly volatile which made any successful emergence from bankruptcy that much more difficult to negotiate let me tell you what my fundamental problem with this plan is and i ask you to address and we've already talked about it w your if you're opposing counsel as i understand it if somebody agreed with him there's a very limited period of time originators three days and became seven days to on a quote to sign a binding agreement to vote for the plan they got x if they refused to vote for the plan they got a percentage of x why is that not bad thing if you cannot if your pick if you're paying somebody more money to because they support the plans of somebody who doesn't support the plan because as the as the bankruptcy court found the money being paid or that the benefit being given was not for supporting the plan and it was not for a claim it was for instead the commitments that were  to purchase equity at a set price in the future no matter what happened to coal prices in the meantime and coal prices were highly volatile at that point while you're a part of so you could couldn't do that could they have could they have backstop the plan bought the equity and still pose you know because when you're buying it but you're not buying acceptance what you're buying what you're buying in a sense is a way to enforce the commitments to purchase the equity at the pre determined price and the if you didn't have the plan support agreement at the back end then those front end commitments would be meaningless because somebody somebody could say sure i'll buy the equity down the road call prices then plunge and at that point the person says oh never mind actually i'll just vote against the plan and then there's no need to carry carry out the commitments so the plan support agreements are not vote buying they're simply enforcing the commitments that the bankruptcy court found were incredibly valuable to the estate if you had a pure just  isn't isn't that what the disc to me at the end of the that's what this case is all about is that a new value would judge him a financial transaction on which you assume a significant risk and you get paid for that risk or you buy votes and if you voted against the plan you got last which is which is a classic bad faith as well and on that question i would direct you to numerous factual findings by the bankruptcy court which at this point are reviewed only for clear  the bankruptcy court found quote that consideration provided to the right offering backstop parties and the private placement parties in exchange for their participation in the private placement agreement in the rights offering backstop commitment agreement is not treatment on account of such parties claims which is what the statute speaks up to judge across this question that includes the the discount on the equity was itself part of the compensation for the commitments a joint appendix ninety nine to one thousand there's the callon declaration which was peabody's expert the bankruptcy court adopted the entirety of that declaration as factual findings a joint appendix thirteen thirty three and twenty one thirty eight thirty nine that declaration explains that this transaction as a whole was negotiated at arm's length and that all of the components of it provided great value to the estate and that the discount being provided was in exchange not for the claims but for the again the agreement to purchase the stock at a pre determined price notwithstanding the volatility of coal prices and for the substantial backstop the plan support agreements at the back end were simply a way of enforcing that if you had a situation where you had just a pure naked giveaway in return for a vote that might create a problem of vote solicitation under a different provision of the bankruptcy code but that doesn't implicate section eleven twenty three a for which only requires that the same treatment be provided for each claim  plan did provide the same treatment for each claim because there was the same distribution for each member of any given class without regard to the claim and without regard to put to the option to participate in the private place do think it's materially different because in that case the debtors had looked for better terms and there was no evidence in the way that there was both evidence here and factual findings here that the private private placement and backstop fees were necessary and proportionate for the risks involved again and all of this is in the record in adopted by the bankruptcy court as findings there was a limited window in which this deal could be negotiated because coal prices were so volatile and there were such a significant risk that coal prices would crater that the agreement to purchase stock at a pre determined price notwithstanding that provided tremendous value to the estate and the bankruptcy court found that not only did it provide value to the estate but it maximize the value for all creditors that's in the district court of the d seventeen and in the bankruptcy court record a joint appendix twenty four zero nine in the pacific drilling there was not the same consideration of alternatives here both peabody with it's for do sherry duties to all creditors and the unsecured creditors committee which will hear from separately carrying fiduciary duties considered numerous alternatives and rejected them for reasons that are explained in the record the alternatives had higher execution risk they would have left peabody post emergents within and with with an unreasonably high level of numerous flaws in each of the alternatives that were proposed those are explained also in the record a joint appendix ten thirty two to thirty nine and joint appendix eight hundred seventy five to eighty one so the fundamental distinction even if that statutory language were to apply here with sal involved a naked giveaway to all the equity holders they got the opportunity to purchase equity in the reorganize and eddie at no cost and with no consideration of alternatives and c raised the remedies that they're seeking are not legally available if the violation of the plan here was an equal treatment that it perpetuates rather than remedies that violation to continue the unequal treatment by giving by giving them the remedy that they're seeking likewise if there were if there were were a good faith violation which is contrary to the district to the bankruptcy court findings that this was an integral part of the plan that maximize value for the creditors but if there were such a finding then draining the estate further would only make the violation worse it wouldn't remedy it mr le blanc argues that there was consent to a lesser treatment here the reason that's not an answer is that the consent  lesser treatment relative to those who provided these valuable commitments the agreement to purchase the stock despite the volatility in coal prices and the backstop commitments no one consented to be treated less favorably than the hoc committee coming in after the fact and essentially asking for all of the benefit of the discount with none of the risk that would have i think that i think in my mind your arguments are a bridge too far you're saying  if you assume that the plan is totally invalid and illegal and you're saying well we because even though it's an illegal plan with all kinds of illegal provisions and treat of this particular creditor illegally they have no remedy available to  damages there's no reason you can't do that paying them money damages that are the equivalent of perpetuating the very wrongs that they're claiming would not remedy the wrongs the those money damages would also go to the very concerns at the heart of the equitable doctrine they they would of course upset the reliance interests of the creditors who have invested based on this plan by draining the reorganized and eddie of additional assets so this unsettles the expectations of the equitable mootness doctrine is concerned thought to stay from the district court the district court alerted this court to the possibility that they might seek to stay confirmation of the plan and they never pursued that it's in those state hearings that those arguments should be fleshed out and if there appears to be a violation then you can hit pause on the planet that point and address them but what they can't do is fail to seek a stay in this court and now come back afterwards and essentially try to undermine the plan either through money damages or by seeking to have the entire plan unwound as a whole may please the court use of morse and forrester on behalf of the official committee of unsecured creditors under the bankruptcy code the creditors committee is a fiduciary appointed to represent the interests of all on secured creditors we agree with peabody that the plan complied with all code provisions but rather than repeat those arguments i would like to focus on the process on the role that the creditors committee played in the process and explain first how it reached its conclusion that the debtor's plan maximize value f creditors and second why decided not to support the alternative proposals of the ad hoc committee on that first point after the debtors filed their initial plan and related transaction documents in december two thousand and sixteen the creditors committee and its advisors carefully examined them it then negotiated with the debtors to improve recoveries for unsecured creditors including by establishing a seventy five million dollars cash pool that would appeal to retail level unsecured creditors but even after the creditors committee decided to support the debtors plan it did so with a fiduciary out to consider the ad hoc committee's alternative postals and compare those proposals to the debtors plan to use them to negotiate still further improvements to unsecured credit recoveries under the debtors plan but it ultimately concluded that the debtors plan was still the best option to maximize value for unsecured creditors and the result of this was a very successful bankruptcy especially from the perspective of un if i can just step back the debtors managed to raise a one point five billion dollars of equity which was an unprecedented feat in recent coal bankruptcies and unlike recent prior coal bankruptcies where unsecured creditors received pennies on the dollar unsecured creditors here received substantial recoveries to name just a few of those general unsecured creditors of certain of the debtors could choose to receive a twenty two percent recovery through shares in the debtor and participation in the rights offering or they could choose to opt in to a seventy five million dollars cash pool and receive recoveries up to fifty percent unsecured claims for less than two hundred thousand dollars which are known as convenience claims received recoveries of up to seventy two and a half percent now the ad hoc committee claims that its alternative proposal show that better terms were available to the debtor but the creditors committee disagreed for several reasons first unlike the debtor's plan many of the ad hoc committees alternative proposals lacked committed acts that financing without that the debtors may not have been able to pay off their first level of creditors and so would have been prevented from providing meaningful recoveries to any other creditors in addition many of the alternatives anticipated the debtors emerging from bankruptcy with a higher level of funded than they could responsibly bear and even when the ad hoc committee belatedly provided proposals that would have kept the debtors within a sustainable level of debt it was then just too little too late the marginal improvements in recoveries were off risk given the volatility of coal prices the months long delay that would have necessarily followed from switching plans at that point could have eliminated entirely the ability of unsecured creditors to obtain meaningful value to on secured creditors if there are no questions we ask this court to affirm the decisions of the bankruptcy court and district court thank i let me start with equitable munis and i didn't address judge sheppard your question with respect to timing i think it's important we got a decision from the district court on the stay that we sought denying our stay on the thirtieth of march that was a thursday we knew because the debtors  announced that they were closing on monday the closing the going effective on their plan on monday and so we made a practical decision that coming to this court in that period of time wasn't a practical outcome that's why we didn't seek a stay i didn't want the court to be left without any  response that it but on the equitable moon is point that the suggestion that paying us cash or giving us the opportunity to invest cash into this debtor on the same terms that they did would somehow treat people inconsistent with their expectations as flatly wrong proponents are parties to this appeal those people who are not parties to the this appeal those that are the subject of the equitable mootness concerns they consented in advance to the no hold or co proponents authorizing the issuance of preferred equity so that's not an issue now with respect to the merits of the the argument what i think your honour's heard was a lot of this case is exceptional this is unique this is a the only coal company that provided meaningful distributions that doesn't matter compliance of the bankruptcy court is code is still required that's what the supreme court just said in jest moreover i would i would urge the court to look at the supreme court's statement in lasalle with respect to the argument that this is just one part of a global transaction and you need to you need to allow this part to go through because when you consider it in the whole it's a value maximizing transaction the supreme court rejected that idea as well saying it's no answer to say it's one part of a global transaction i did i want to correct one statement i referred the court to j seven hundred ninety one earlier it's actually hundred nineteen which is where the bankruptcy court orders the commitment fees to be approved as the price of getting capital and with that your honor unless the court has any other questions i would urge the court to reverse the bankruptcy court decision and the district court's