Holding: When evaluating competing confirmation plans, “the court shall consider the preferences of creditors and equity security holders in determining which plan to confirm.” 11 U.S.C. § 1129(c). Under both Debtor’s and Lender’s Plans, the existing equity holders would be replaced. As a result, only creditors’ preferences need to be considered when choosing between the competing plans. Accordingly, Lender’s Plan should be confirmed because it satisfies all of the required elements of § 1129 and provides for the best interests of creditors. Lender’s proposed 100% payment with interest offers better treatment to all creditors than Debtor’s proposal, which offers extended payment terms and exposes Lender (the largest creditor) to an unacceptable level of risk.

Holding: Chapter 11 provides a business debtor with the opportunity to restructure its debt and hopefully maintain employment opportunities for its workers.17 The Code provides powerful tools to assist a debtor’s reorganization efforts, including the right to extend loan terms, change interest rates, and rewrite or eliminate loan covenants. But to successfully exercise those rights, a debtor must assure that the risk of reorganization is borne fairly by all of the parties in the case. Debtor has failed to do so, and therefore, the Plan can not be confirmed.  

Memorandum Decision

Holding: The Plaintiffs have failed to prove, by a preponderance of the evidence, that the Debtor has committed an act that would support denial of his discharge under sections 727(a)(2)-(4).