FB Acquisition Property I, LLC v. Gentry (In re Gentry)
- Summarized by Steven Mulligan , Coan, Payton & Payne, LLC
- 9 years 1 month ago
- Citation:
- FB Acquisition Property I, LLC v. Gentry, et al. (In re Gentry), Case No. 14-1441 (10th Cir. December 8, 2015). Published.
- Tag(s):
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- Ruling:
- To be confirmed, a Chapter 11 plan must be feasible and a feasible plan is not a guarantee of success but rather offers a reasonable assurance of success. Further, the general rule under Colorado law that a guarantor’s liability usually matches that of the borrower is inapplicable in the bankruptcy context.
- Procedural context:
- The District Court affirmed the Bankruptcy Court’s decision that (i) debtors’ plan was feasible, and (ii) the language in debtors’ guaranties limited their liability to the amount set forth in the confirmed chapter 11 plan of debtors’ entity. The 10th Circuit affirmed the feasibility finding but found that the Bankruptcy Court erred in determining that the debtors’ liability under their guaranties was limited and reversed and remanded. Determining feasibility is a factual finding and reviewed for clear error. Determining liability under the guaranties was a question of law because it involved contract interpretation and was reviewed de novo.
- Facts:
- Debtors owned Ball Four Inc., which defaulted on a loan and filed chapter 11. Debtors had each guaranteed the loan. Under Ball Four’s confirmed plan, the lender was to be paid in full over time. The lender sued debtors on their guaranties and debtors filed chapter 11. The debtors proposed a plan that provided that the debtors’ liability under the guaranties would be satisfied under Ball Four’s confirmed plan. The lender objected to confirmation but the Bankruptcy Court found that the plan was feasible and that the language of the guaranties limited debtors’ liability to the amount set forth in Ball Four’s plan. The debtors’ plan was confirmed.
- Judge(s):
- Kelly, Hart, Gorsuch (Kelly)
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