Robert Dremluk Published in The Bankruptcy Strategist
"Gift Plans: Death Knell or Still on Life Support? The Standing of Holders of Unliquidated Out-of-the Money Claims"

Seyfarth Shaw New York partner Robert Dremluk was recently published in the April edition of The Bankruptcy Strategist. Bob's article discussed a recent ruling by the Second Circuit Court of Appeals in which the majority held that a plan of reorganization violated the absolute priority rule of §1129(b)(2)(B) of the Bankruptcy Code, in which 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.

Bob also noted a dissenting opinion, which regarded the standing of holders of unliquidated out-of-the money claims objecting to confirmation of a plan. He posited that the Circuit Court never truly reached the standing issue because the parties never raised or briefed it, and it leaves the door open to raise standing in future gift plan cases.