Gift Plans: Death Knell or Still on Life Support?

This article focuses on whether an out-of-the-money unsecured creditor with an unliquidated claim has standing to object to a gift plan.

31 minute read March 22, 2011 at 10:16 AM
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Gift Plans: Death Knell Or Still On Life Support?
Gift Plans: Death Knell or Still on Life Support?

On Feb. 7, 2011, the United States Court of Appeals for the Second Circuit issued an opinion (In re DBSD North America, Incorporated, No. 10-1352) where the majority held, among other things, that a plan of reorganization violated the absolute priority rule of ' 1129(b)(2)(B) of the Bankruptcy Code where the holders of second-lien debt agreed to voluntarily gift shares and warrants to existing shareholders while the holders of general unsecured claims did not receive full payment of their claims.

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