Court Opinion

ID: 9458690
Source: CourtListenerOpinion
Date Created: 2023-08-04 20:59:34.94953+00
Date Added: 2024-06-11T17:35:51.880426
License: Public Domain

WINTER, Circuit Judge
(concurring specially):
Because I think that nothing will be lost, even if little is gained, by having an evidentiary hearing, I concur in the judgment of the court. Candor compels me to add, however, that, in my view, only the most positive and convincing parole evidence could justify a construction of the “March 11 Agreement" different from that placed on it by the referee and the district judge.
The majority sets forth the operative language of the agreement. It was part of a transaction in which Tose purchased the Eagles’ assets; there was nothing in the overall transaction to indicate that Tose made a loan and took a pledge of those assets as security therefor. It is not an unrestricted or unconditional option to repurchase. The parties elected to predicate the right of Wolmans to repurchase upon the condition that they “are able to fund the Debtors Plan of Arrangement . . .” (emphasis added). There is absent any language to extend the condition to any modification of the plan or to any substitute plan. “The” plan of arrangement manifestly could mean only the particular plan pending in the bankruptcy court at the time the parties entered into the March 11 Agreement, and that plan was subsequently abandoned so that the condition was not fulfilled.
If the language of the March 11 Agreement is not itself sufficient to require the construction of the referee and the district judge, analysis of the then pending plan should make that construction almost conclusive. Under the plan, Jerry Wolman Enterprises, Inc. (Enterprises) was incorporated and its stock was to be sold to the public. From the proceeds, Enterprises would lend $12,000,000 to the Wolmans, presumably to be used by them to pay their secured creditors. The loan was to be evidenced by a note on which the Wolmans would not be personally liable but the Wolmans would pledge their stock in the Eagles and their stock in Enterprises (which they received as consideration for the conveyance to Enterprises of other assets owned by them) as security for repayment of the principal and interest. Thus, for practical purposes, it is fair to say that the Enterprises loan would be repaid primarily from dividends which the Wolmans would receive on the Eagles’ stock. That stock would be valueless unless the Eagles’ assets were recaptured from Tose, and hence the conclusion seems inescapable that the only purpose of the March 11 Agreement was to permit the Wolmans to make feasible the sale of stock in Enterprises if the then pending plan of arrangement was to become an actuality. It would seem to follow that when that plan was abandoned and there was no longer a need for the Eagles to reacquire their assets from Tose in order to give value to the Wolmans’ Eagles stock, the right to reacquire those assets was extinguished and what purported to be an absolute sale to Tose, subject only to limited, conditional defeasance, should be treated as a completed transaction.