Court Opinion

ID: 8959267
Source: CourtListenerOpinion
Date Created: 2022-11-27 09:31:26.047168+00
Date Added: 2024-06-11T17:10:09.317209
License: Public Domain

MINER, Circuit Judge,
concurring:
Since the bankruptcy judge was empowered to estimate the claims of the Class-4 creditors, and did not abuse his discretion in doing so, I perceive no need to apply a harmless error analysis or to employ mathematical calculations to sustain the voting procedures adopted.
Acceptance of a plan of reorganization occurs when “such plan has been accepted by creditors ... that hold at least two-thirds in amount and more than one-half in number of the allowed claims of such class held by creditors ... that have accepted or rejected such plan.” 11 U.S.C. § 1126(c). For the purpose of allowance, a bankruptcy court must estimate “any contingent or *651unliquidated claim, the fixing or liquidation of which, as the case may be, would unduly delay the administration of the case.” 11 U.S.C. § 502(c)(1). Moreover, the court is authorized, after objections and notice and hearing, to allow a claim temporarily “in an amount which the court deems proper for the purpose of accepting or rejecting a plan.” Bankruptcy Rule 3018(a).
By the time of the June 23, 1986 hearing held to consider the Disclosure Statement and the Second Amended and Restated Plan of Reorganization filed by the debtors, approximately 6,400 proofs of claim had been submitted by asbestos health claimants for personal injuries. It was apparent at that juncture in the proceedings that the administration of the case would be delayed unduly if each of those unliqui-dated claims were to be considered separately for allowance purposes. Referring to the number of actual lawsuits then pending on behalf of asbestos health claimants, the bankruptcy judge observed that more than 16,500 hearings would be necessary “to treat each individual claim discretely.” Joint App. at 697. In the words of the debtors’ attorney, “the practical effect of having to value each and every claim individually would ... be delay[ ] beyond anybody’s reasonable expectations and probably lifetime.” Id. at 730. The problem of delay was even more apparent at the conclusion of the notice campaign, when proof-of-claim-and-voting forms had been received from 52,440 claimants.
Under the circumstances, the bankruptcy judge properly exercised his authority to estimate each of the claims at $1.00. The asbestos health claims were especially suited to estimation because of the uncertain nature of both liability and damages. Moreover, the very purpose of the reorganization would be defeated if each claim were to be considered separately for purposes of allowance and voting. Indeed, the delay entailed by such an approach would not only be fatal to the entire plan but might very well be fatal to any recovery for the claimants. Section 502(c)(1) is designed to forestall these types of consequences.
In any event, the assignment of a value of $1.00 per claim is merely the temporary allowance contemplated by Rule 3018(a), with the right reserved to each claimant to seek actual damages from the Asbestos Health Trust. Although the Rule calls for objections to the claims, followed by notice and hearing, before temporary allowances for voting purposes are made, there was substantial compliance with this requirement here. The debtors’ attorney objected to the Class-4 claims at the June 23 hearing: “I should say essentially all of the claims are unliquidated and/or contingent and they are also disputed, because until finally liquidated, the amount of the claim is a disputed item.” Joint App. at 638. The attorney for Lawrence Kane et at responded and noted his opposition to the proposed voting procedure: “Now, what this proposal does is essentially discriminate[ ] among the voting class because they each have different value[s] of the case.... Proof[s] of Claims with amounts should be determined and this Court should have a hearing on it.” Id. at 697. The Kane attorney also had notice and an opportunity to be heard on the voting issue at the December 16,1986 hearing on confirmation of the Plan. Id. at 1053-63.
In sum, I am of the opinion that the specific Code provisions referred to above are sufficient to support the voting procedures approved by the bankruptcy judge. Those procedures not only comply with the Code in all respects but also serve to further the overall purposes of Chapter 11 in cases of this nature. I concur with the reasoning of the majority opinion in all other respects, and, of course, with the conclusions reached therein.