880 F.2d 694 (4th Cir. 1989), 88-3602, In re A.H. Robins Co.
|Docket Nº:||and 88-3602.|
|Citation:||880 F.2d 694|
|Party Name:||In re A.H. ROBINS COMPANY, INCORPORATED, Debtor. (Eight Cases.) Rosemary MENARD-SANFORD; Karen Valenzuela; Constance Miller Engelsberg; Nancy Lauri Adams; Carolyn Harris, Claimants-Appellants, v. Ralph R. MABEY; The Official Committee of Equity Security Holders; The Official Unsecured Creditors Committee of A.H. Robins Company, Incorporated; Stanle|
|Case Date:||June 16, 1989|
|Court:||United States Courts of Appeals, Court of Appeals for the Fourth Circuit|
Argued Dec. 6, 1988.
Alan B. Morrison (Linda Donaldson, Public Citizen Litigation Group, Washington, D.C., on brief), for claimants-appellants.
James Crawford Roberts (James S. Crockett, Jr., Mays & Valentine, Richmond, Va., Dennis J. Drebsky, Alesia Ranney-Marinelli, Kirk C. Loos, Skadden, Arps, Slate, Meagher & Flom, New York City, Ralph D. Pittle, Medical Legal Consultants of Washington, Seattle, Wash., John T. Baker, Bragg & Dubofsky, Denver, Colo., Joseph McDowell, Ill, Cullity, Kelley & McDowell, Manchester, N.H., W. Bradley
Post, Post, Syrios & Bradshaw, Wichita, Kan., Frederic A. Bremseth, Doshan, Lord & Bremseth, Wayzata, Minn., Murray Drabkin, Cadwalader, Wickersham & Taft, Washington, D.C., Harold S. Novikoff, Wachtell, Lipton, Rosen & Katz, New York City, Henri E. Norris, Stanley K. Joynes, III, Rilee, Cantor, Arkema & Edmonds, Richmond, Va., Robert M. Miller, Berlack, Israels & Liberman, New York City, John S. Kinzey, Jr., Steven J. McCardell, Leboeuf, Lamb, Leiby & MaCrae, Salt Lake City, Utah, on brief), for debtor-appellee.
Before RUSSELL, WIDENER, and CHAPMAN, Circuit Judges.
WIDENER, Circuit Judge:
On July 26, 1988, the bankruptcy court and the district court jointly confirmed the "Sixth Amended and Restated Plan of Reorganization" (the Plan) submitted by A.H. Robins Company, Inc. (Robins). In Re A.H. Robins Co. Inc., 88 B.R. 742 (E.D.Va.1988). Rosemary Menard-Sanford and certain other personal injury claimants, who voted against the Plan, appeal. They challenge the district court's approval of the disclosure statement, the district court's use of a one claimant one vote voting procedure, the district court's feasibility finding, and a certain injunction found in the Plan. We affirm.
On August 21, 1985, Robins filed a petition for reorganization relief under Chapter 11 of the Bankruptcy Code. For an explanation of the details surrounding Robins' bankruptcy and some of the resulting litigation, see the district court's opinion in In Re A.H. Robins Co., Inc., 88 B.R. 742 (E.D.Va.1988), and our other published opinions regarding this bankruptcy. 1
On April 1, 1988, the district court approved the "Sixth Amended and Restated Disclosure Statement". The appellants argue that the disclosure statement does not contain adequate information. 11 U.S.C. Sec. 1125(b) requires that before solicitation of approval or disagreement of a plan of reorganization the disclosure statement must contain "adequate information" and be approved by the court. 11 U.S.C. Sec. 1125(a)(1) defines "adequate information" as "information of a kind, and in sufficient detail, as far as is reasonably practicable in light of the nature and history of the debtor and the condition of the debtor's books and records, that would enable a hypothetical reasonable investor typical of holders of claims or interests of the relevant class to make an informed judgment about the plan." The determination of whether the disclosure statement has adequate information is made on a case by case basis and is largely within the discretion of the bankruptcy court. In the Matter of Texas Extrusion Corp., 844 F.2d 1142, 1157 (5th Cir.1988), cert. denied, --- U.S. ----, 109 S.Ct. 311, 102 L.Ed.2d 330 (1988). The challenged disclosure statement began its 261 pages of information with a thorough summary of the complex plan in terms that almost anyone could understand. It explained, among much more, the amount to be put into trust and made available for the payment of claims, the various estimates of how much money was required, a warning that the funds furnished to pay the estimates might not be enough to pay all claims in full, the
sources of funding, an explanation of the various funding provisions which depended on the outcome of various appeals, how claims would be handled, the four options for processing claims and the background of the case. The disclosure statement continued with a discussion of the Robins company, the Dalkon Shield, various litigation regarding the Dalkon Shield, the reorganization, the proposed merger with American Home Products Corporation (AHP), the historical stock values of both AHP and Robins, and federal income tax consequences. The final part of the disclosure statement contains actual copies of the Plan, the Claimants Trust Agreement, the Other Claimants Trust Agreement, the Claims Resolution Facility, the Merger Agreement, Aetna's additional insurance policy, AHP's Annual Report, the Liquidation Analysis and biographies of the proposed Trustees.
The appellants contend that the disclosure statement is misleading because it contains a statement that in order to approve the Plan the district court must make a finding that the Plan contains enough money to satisfy all claims in full. They point out that in reality there may not be enough money to cover all claims. The disclosure statement, however, makes that clear to the claimants. It states that "if the Court's estimate turns out to be too low, Robins will not have to make any more money available to pay claims. In addition, the Plan would generally take away your right to recover for Dalkon Shield injuries against any other parties." The disclosure statement later repeats that thought in explicit terms: "[e]stimation is not an exact science. The money available to pay Dalkon Shield claims may prove to be more or less than the actual value of such claims. If the estimation decision underestimated the value of the claims, there may not be enough money for the Claimants Trust to pay all claims in full." Thus, we think appellants' contention is without merit.
The appellants' principal challenge to the disclosure statement, however, is that it is inadequate because it does not contain ranges of recovery for claimants with specified injuries. The disclosure statement notes that "[t]here is no certain way to predict the amount that you could receive under option 3. Each claim is different. Factors that affect the value of a claim include the nature of the injury, the medical evidence available to prove the injury, the medical evidence to prove Dalkon Shield use, the presence of other causes of your injury, how long ago...
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