Court Opinion

ID: 8944217
Source: CourtListenerOpinion
Date Created: 2022-11-27 08:16:35.308456+00
Date Added: 2024-06-11T17:09:49.095827
License: Public Domain

OAKES, Circuit Judge
(dissenting):
I am unclear what the majority intends to accomplish by the reversal and remand, except to compel bankruptcy judges and district courts to make more precise findings in support of their orders. Ordinarily I would support such a limited remand, especially where, as here, the bankruptcy court’s reasoning required supplementation by the district court. But here confirmation of a plan in one of the most complicated and difficult bankruptcy reorganizations in history is well under way, and I fear that the court’s opinion will not only unnecessarily duplicate, but it will, if not derail, at least delay the confirmation proceedings.
After all, the proposed plan had been in heated, tricky, combative negotiation for some three years prior to the Equity Committee’s actions. If the plan is indeed biased, the Equity Committee has ample opportunity to oppose confirmation and to prove discrimination or unfairness to it. *70See 11 U.S.C. § 1129(b) (1982 & Supp. III 1985).
Under In re Potter Instrument Co., 593 F.2d 470 (2d Cir.1979), the court has a duty to refuse to order a shareholder’s meeting upon a showing of clear abuse which “would probably jeopardize both [the debt- or’s] rehabilitation and the rights of creditors and stockholders_” Id. at 475. To seek a shareholders’ meeting at this late date, it seems to me, is just such a clear abuse. The Equity Committee, if it has its way, would set this reorganization back to square one. Apparently satisfied with the Board of Directors for three years following the filing of the bankruptcy petition, the committee waited until the directors finally proposed a plan to object, not only to the plan, but to the directors themselves. In addition to seeking to upset the plan, it is now trying to replace the directors, a result that would require negotiations to recommence from the beginning. In such a complex and lengthy proceeding as this one, the Equity Committee’s actions seem to me to be the very essence of abuse. Moreover, the bankruptcy court’s determination that a shareholders’ meeting would lead to “waste of this estate’s resources and thereby jeopardize the reorganization process” and that it “has the potential to derail the entire Manville reorganization with devastating consequences or at least to delay or halt plan negotiations” adequately supports its conclusion of irreparable harm.
But there is an entirely different reason that argues for affirmance. The bankruptcy judge has been living with this reorganization for a long time. He is fully sensitive to the enormity of the problems imposed by billions of dollars of future claims, as well as by billions of dollars of present claims for personal injury, death, and property damage — claims on a scale never before to hit the courts — as well as claims for punitive damages that, given those that have so far been imposed in the tiny fraction of cases that have been decided, are staggering to say the least. I repeat, no more complex reorganization has ever come before any bankruptcy court, and I include the railroad reorganization of recent past as well as of yore. I would here, as seldom elsewhere, defer to the bankruptcy court’s discretion.
Yet a third reason calls for no further delay in the name of abstract stockholders’ rights. There are innocent injured people, some of whom are survivors of deceased persons, whose recoveries have already been unduly delayed by the reorganization proceedings. Further delay will in many instances be unconscionable.
I would affirm outright and leave the Equity Committee to its usual remedy of objecting to the plan and its fairness in the confirmation proceeding.
Accordingly, I respectfully dissent.