Court Opinion

ID: 8918086
Source: CourtListenerOpinion
Date Created: 2022-11-27 05:56:49.214817+00
Date Added: 2024-06-11T17:09:10.818639
License: Public Domain

WINTER, Circuit Judge,
dissenting:
In order to expedite the decision in this matter, I set forth my dissenting views in summary fashion.
The following facts are undisputed as the record presently stands: (i) Lionel sought a buyer for the Dale stock willing to condition its purchase upon confirmation of a reorganization plan. It was unsuccessful since, in the words of the bankruptcy judge, “the confirmation of any plan is usually somewhat iffy,” and few purchasers are willing to commit upwards of $50 million for an extended period without a contract binding on the other party; (ii) every feasible reorganization plan contemplates the sale of the Dale stock for cash; (iii) a reorganization plan may be approved fairly soon if the Dale stock is sold now. If the sale is prohibited, renewed negotiations between the creditors and the equity holders will be necessary, and the submission of a plan, if any, will be put off well into the future; and (iv) the Dale stock can be sold now at or near the same price as it can be sold later.
The effect of the present decision is thus to leave the debtor in possession powerless as a legal matter to sell the Dale stock outside a reorganization plan and unable as an economic matter to sell it within one. This, of course, pleases the equity holders who, having introduced no evidence demonstrating a disadvantage to the bankrupt estate from the sale of the Dale stock, are now given a veto over it to be used as leverage in negotiating a better deal for themselves in a reorganization.
The likely results of today’s decision are twofold: (i) The creditors will at some point during the renewed protracted negotiations refuse to extend more credit to Lionel, thus thwarting a reorganization entirely; and (ii) notwithstanding the majority decision, the Dale stock will be sold under Section 363(b) for exactly the same reasons offered in support of the present proposed sale. However, the ultimate reorganization plan will be more favorable to the equity holders, and they will not veto the sale.
It seems reasonably obvious that result (i) is something that the statutory provisions governing reorganizations, including Section 363(b), are designed to avoid. Result (ii) not only is contrary to the purpose of the reorganization provisions in causing delay and further economic risk but also suffers from the legal infirmity which led the majority to reject the proposed sale, the only difference between the two sales being the agreement of the equity holders.
The equity holders offered no evidence whatsoever that the sale of Dale now will harm Lionel or that Dale can in fact be sold at a reasonable price as part of a reorganization plan. The courts below were quite right in not treating their arguments seriously for they are the legal equivalent of the “Hail Mary pass” in football.1

. With due respect to my colleagues, the problem of statutory interpretation is entirely straightforward and not deserving of a lengthy exegesis into legal history. The language of Section 363(b) is about as plain as it could be