2009 Chapter 11 Recent Developments (Part I)

treatment of such particular claim or interest."

(3) Section 1123(b)(3)(A) and Bankruptcy Rule 9019 allow for settlements to be embodied in a plan of reorganization so long as it is 'fair and equitable.' In determining fair and equitable, courts are to consider "(1) the probability of success in litigation, (2) the likely difficulties in collection, (3) the complexity of the litigation involved and the expense, inconvenience and delay necessarily attending it, and (4) the paramount interest of the creditors." In evaluating the merits of potential litigation, the court just needs to make sure that the settlement does not fall below the lowest range of reasonableness.

Holding:

(1)

The Plan is not a substantive consolidation in either form or effect.

(2)

The Plan does not violate sections 1123(a)(4) and 1129(a)(7).

(3)

The settlement agreements embodied in the Plan are approved.

Reasoning:

(1)

The Plan does not consolidate all 16 debtors. Instead, it places the debtors into three debtor groups based on each company's function in an attempt to resolve intercompany claims and issues regarding asset ownership. Creditors are to file claims against the individual debtors and, due to the Multi-Debtor Claim Protocol, certain creditors are paid more than they would have gotten if their claims were allowed against one single consolidated debtor. Lastly, the intercompany claims were settled, not canceled.

(2)

The Multi-Debtor Claim Protocol is a compromise in which some creditors - none of whom comprise the Ad Hoc Committee - have agreed to receive less favorable treatment of their multiple claims and therefore does not violate § 1123(a)(4).

(3)

First, the liquidation evidence presented at the trial was sufficient and reliable. And conversion to chapter 7 would add substantial costs and delay to the bankruptcy process and the intricate settlement agreements would likely collapse. Therefore, the Plan does not violate § 1129(a)(7).

(4)

The settlements in the plan, which embody a global settlement, are approved as being fair and equitable and providing benefits to the entire creditor body.

V. POST-CONFIRMATION

a. Jurisdiction and Standing

Newby, et. al. v. Enron Corp., et. al. (In re Enron Corp. Securities, Derivative & ERISA Litig.), 535 F.3d 325 (5th Cir. 2008)

Facts: The appeal in this case involved ten cases (the "Fleming" cases) against former Enron managers, former Enron accounting firm and partners thereof, and other financial institutions. In all ten cases, the law firm of Fleming & Associates LLP represented the plaintiffs. The district court for the S.D. Tex is the multi-district litigation transferee for all Enron litigation. Nine of the Fleming cases were instigated in state court (the "Ahlich" cases) and were removed to federal courts under 'related-to' bankruptcy jurisdiction and were consolidated by direct removal or under the Multi-District Litigation statute (the "MDL"). The remaining Fleming case was filed directly in the district court in the S.D. Tex. (the "Odam" case). All ten Fleming cases have virtually identical allegations and state law claims; and the plaintiffs acted in unison in that they are all represented by Fleming, have nearly identical complaints, and discovery responses, and have joint scheduled discovery and motions, and, lastly, rely on the same expert and expert reports. On August 17, 2006, the Odam plaintiff amended her complaint alleging only state law violations. On the same day, the Ahlich plaintiffs sought leave to amend their complaint for the same purpose. The district court denied the