In the Matter of Castleton Plaza, LP

Federal 7th Circuit Court
Civil Court
Citation
Case Number: 
No. 12-2639
Decision Date: 
February 14, 2013
Federal District: 
S.D. Ind., Indianapolis Div.
Holding: 
Reversed and remanded
In Chapter 11 bankruptcy action in which debtor proposed reorganization plan that called for wife of debtor’s current equity holder to provide $375,000 in new money in exchange for 100 percent equity in reorganized entity, while requiring objecting creditor to obtain less than full value of his secured debt, Bankruptcy Ct. erred in approving said plan without allowing creditors or anyone else opportunity to competitively bid on plan, and then distributing equity interest to wife as “insider.” Ct. further noted that proposed plan also called for current equity holder to continue his $500,000 management contract with debtor.