Eleventh Circuit Stops Plan Confirmation Stampede

In his recent article for The Bankruptcy Strategist titled “Eleventh Circuit Stops Plan Confirmation Stampede,” Michael L. Cook discusses the Eleventh Circuit's recent ruling, which upended a hastily confirmed reorganization plan. 

"When a modification to a Chapter 11 reorganization plan materially and adversely affects the treatment of a class of claim or interest holders, those claim or interest holders are entitled to a new disclosure statement and another opportunity to vote.” In re America-CV Station Group, Inc., 2023 WL 109967 (11th Cir. Jan. 5, 2023). In this case, the U.S. Court of Appeals for the Eleventh Circuit just upended a hastily confirmed reorganization plan. Its holding should stop the stampede known as the “confirmation express.” The bankruptcy court had summarily approved a plan modification that “materially and adversely affected” the rights of objecting pre-bankruptcy shareholders (Shareholders), depriving them of procedural protections and impairing their substantive rights. In reversing, the Eleventh Circuit directed “the bankruptcy court to fashion an equitable remedy ….”