Opinion ID: 768674
Heading Depth: 2
Heading Rank: 1

Heading: Duplan's Bankruptcy

Text: 3 Before declaring bankruptcy, Duplan was a publically traded Delaware corporation engaged in the textile industry. In 1970, Duplan acquired Laga Industries, Ltd. (Laga), a Virgin Islands corporation that operated a textile manufacturing facility in Tutu, St. Thomas (the Laga Facility). After the acquisition, the former owners of Laga, appellants Gal and Lazare, became officers of Duplan. 4 On August 31, 1976, Duplan filed a petition for relief in the United States Bankruptcy Court for the Southern District of New York under Chapter XI of the Bankruptcy Act of 1898, as amended through August 31, 1976 (the Act). 2 By Order dated October 5, 1976, the bankruptcy court converted the case into one for reorganization under Chapter X of the Act. The case then was transferred to the United States District Court for the Southern District of New York (Kevin T. Duffy, Judge), where the court appointed a reorganization trustee and established July 10, 1979 as the last day to file proofs of claims against the Duplan estate (the Bar Date). 5 By order dated August 28, 1979, Judge Duffy authorized the reorganization trustee to sell the Laga Facility, which had ceased operations in late 1978. On December 12, 1979, the reorganization trustee sold the Laga Facility to a New York partnership consisting of Gal and Lazare. In 1981, Laga was dissolved for failure to pay corporate franchise taxes. 6 Notice of the hearing on confirmation of the proposed plan of reorganization was published on April 27, 1981. After the confirmation hearing, by order dated June 4, 1981 (the Confirmation Order), the District Court confirmed the reorganization trustee's Amended Plan of Reorganization (the Plan). For the purposes of implementing the Plan, the Confirmation Order permanently enjoined all creditors from asserting, commencing, or continuing any claims against Duplan (which by order dated July 15, 1981 amending the Plan, was renamed Panex Industries, Inc. (Panex)). 3 7 The Plan defines creditor as the holder of a Claim and Claim as: 8 [a]ny claim against either of the Debtors or the property of either of the Debtors, whether or not provable under Section 63 of the Bankruptcy Act, whether secured or unsecured, liquidated or unliquidated, fixed or contingent, which arose prior to the filing by the Debtors of the Petitions, proof of which was filed on or before July 10, 1979, or such other date as designated by the Court, and which has been or is hereafter allowed by the Court . . . . 9 Plan at B-2. The Plan defines Administrative Claims in relevant part as All costs and expenses of administration in connection with the Reorganization Cases . . . , except [those] paid prior to the confirmation date. Plan at B-2. Under the Plan, Duplan/Panex expressly assumed Administrative Claims for payment in the ordinary course of business. Plan at B-11. 10 Pursuant to the confirmed Plan, Laga was formally dissolved, and creditors of Duplan received cash and new shares of stock in the reorganized company (now called Panex) in partial satisfaction of their claims against the Debtors. Goldman, First Manhattan, Gal, and Lazare were among the creditors of Duplan that received shares of Panex Stock. Firmanco, a now-dissolved limited partnership with First Manhattan as its General Partner, bought shares of Panex on the open market. 11 On June 27, 1983, the District Court entered the Final Decree, closing the bankruptcy case and approving the reorganization trustee's final report. The Final Decree provided for a general discharge of the Debtors' debts and liabilities (the Discharge) 4 and permanently enjoined all persons having claims against the Debtors from pursuing or commencing any suit against the Debtors, Panex or any party with an interest in the Debtors or Panex (the Permanent Injunction). 5 Both the Discharge and the Permanent Injunction were subject to the other provisions in the Final Decree, and to the provisions in the Plan or the Confirmation Order. The Final Decree also provided that the court shall retain jurisdiction to enforce its orders and determine any issues related to the case. Final Decree at ¶ 9. Panex emerged from bankruptcy with over 300 shareholders, including Goldman, First Manhattan, Firmanco, Gal, and Lazare.