Opinion ID: 3062086
Heading Depth: 3
Heading Rank: 1

Heading: introduction

Text: In the Confirmation Appeal, we must determine whether the bankruptcy court erred in confirming the Joint Plan and denying confirmation of the SMDI Plan. To be confirmable, a plan must comply with all applicable provisions of 11 U.S.C. § 1129. The proponent of a plan must demonstrate compliance by a preponderance of the evidence. See Heartland Fed. Savs. & Loan Ass’n v. Briscoe Enters., Ltd., II (In re Briscoe Enters., Ltd., II), 994 F.2d 1160, 1165 (5th Cir. 1993). On appeal, SMDI argues first that the Joint Plan should not have been confirmed 29 because it was not proposed in good faith, as required by § 1129(a)(3). SMDI also argues that the Joint Plan was not fair and equitable, as it had to be under § 1129(b) since SMDI’s impaired residual interest did not accept the plan. Specifically, SMDI contends that the Joint Plan was not proposed in good faith for two reasons: (1) because the Trustee who supported the Joint Plan was not disinterested, and (2) because ConsumerInfo engaged in bad faith, unethical communications with the debtor. The first argument focuses on the Trustee and his duties to the estate and ConsumerInfo under the APA, and it is concerned only with the Trustee’s disinterestedness after January 2007; this is when ConsumerInfo acquired the CCB Claims, and when the Trustee, according to SMDI, became conflicted. SMDI’s second good faith argument, by contrast, focuses on ConsumerInfo and its interactions with the debtor. All of the conduct SMDI complains of in this regard took place before the bankruptcy court entered the Sale Order approving the APA. SMDI argues that the bankruptcy court, in rejecting both arguments, applied an overly narrow “good faith” standard. SMDI also argues that three provisions of the Joint Plan were not fair and equitable. First, as part of the Joint Plan, the estate agreed that the Liquidating Trustee would “not . . . voluntarily accept or elect money in lieu of recovery of the Domain Name Assets if he prevails in the Adversary Proceeding.” Liquidating Trust Agreement § 1.1 (Conf. App., Aplt. App’x at 2074). SMDI argues that the Trustee retained the option of accepting a monetary recovery in lieu of the Domain Name under the APA, and that electing a money remedy would have been advantageous to the estate. The estate, SMDI 30 argues, received inadequate consideration under the Joint Plan for waiving this right. Conf. App., Aplt. Br. at 48. Second, the Joint Plan authorized SMDI to object to the CCB Claims, but provided that such an objection could not be made until after the AP was concluded. SMDI argues that this term was unfair because it was inserted only to prejudice SMDI, which was the sole party that stood to benefit from objecting to the CCB Claims. Id. at 50. Finally, the Joint Plan only permitted the United States Trustee to object to the Liquidating Trustee’s fees. SMDI contends that this provision, too, was unfair because it was meant to prejudice SMDI. Id.