Fair and equitable.
Each of these principal considerations can present a difficult hurdle for a plan proponent to overcome under court and creditor scrutiny. In this case, the confirmation of the plan hinged on the feasibility of their proposed plan. As defined in the Bankruptcy Code, feasibility simply means that confirmation of the plan “is not likely to be followed by the liquidation, or the need for further financial reorganization, of the debtor” unless proposed in the plan.
See 11 U.S.C. § 1129(a)(11).
Verlander Enterprises, a creditor and Village Inn franchisee, questioned the feasibility of the plan in its objections. As a franchisee, Verlander was contractually obligated to purchase pies from ABRH’s designated supplier, Legendary Pies. Verlander alleged COVID-19 had caused Legendary Pies to shut down one of its plants and make other operational changes that were negatively impacting their products and ultimately Verlander’s sales.
Wednesday, January 6, 2021
In the best of times, a chapter 11 reorganization is an uncertain and stressful process for all involved. When the disruptive effects of COVID-19 are added to the mix, and many businesses face significant economic difficulties, one can begin to appreciate the daunting task facing bankruptcy courts, debtors, creditors, and their lawyers.
The pandemic has challenged many industries, but has had a particularly destructive effect on those relying on foot traffic, such as retailers and restaurants. For many, declaring bankruptcy is the only life line left, and, given the ongoing economic uncertainties, a successful chapter 11 reorganization has become all the more important. This continues to occur on the national level, with Ruby Tuesday becoming one of the latest major restaurant chains to file for chapter 11 protection in order to address the financial impact of COVID-19. Restaurants facing chapter 11 can perhaps look to the recent successful