In re Mason & Dixon Lines Inc.

• Citation: 63 BR 176
• Decision Date: 29 March 1986
• Docket Number: Bankruptcy No. B-84-00377C-11.
• Court: United States Bankruptcy Courts. Fourth Circuit. U.S. Bankruptcy Court — Middle District of North Carolina
• Parties: In re The MASON & DIXON LINES INCORPORATED, Debtor.

63 B.R. 176 (1986)

In re The MASON & DIXON LINES INCORPORATED, Debtor.

Bankruptcy No. B-84-00377C-11.

United States Bankruptcy Court, M.D. North Carolina.

March 25, 1986.

Order Confirming Restated Joint Plan of Reorganization March 29, 1986.

John Young, Fitzgerald, Young, Peters, Dakmak & Bruno, Detroit, Mich., William L. Stocks, Nichols, Caffrey, Hill, Evans & Murrelle, Greensboro, N.C., for debtor.

George E. Gilbertson, Burlington, N.C., Trustee.

R. Bradford Leggett, Catharine R. Carruthers, Allman, Spry, Humphreys & Armentrout, Winston-Salem, N.C., for trustee.

Michael A. Nedelman, Patrick A. Moran, Simpson & Moran, Birmingham, Mich., for Central Transport, Inc.

Herbert S. Falk, Jr., Greensboro, N.C., Elizabeth Roberto, Law Offices of Russell N. Luplow, Bloomfield Hills, Mich., for Central States Southeast, Southwest Areas Pension Fund.

Jonathan Harkavy, Greensboro, N.C., Dennis R. Wilcox, Climaco, Seminatore, Lefkowitz & Kaplan, Cleveland, Ohio, for Teamsters.

Thomas W. Waldrep, Jr., James C. Frenzel, Womble, Carlyle, Sandridge & Rice, Winston-Salem, N.C., for CORE.

Rayford K. Adams III, Tuggle, Duggins, Meschan & Elrod, Greensboro, N.C., for FNBB.

Sally A. Conti, Richard M. Hutson II, Mount, White, Hutson & Carden, Durham, N.C., for Unsecured Creditors Committee.

MEMORANDUM OPINION RE: RESTATED JOINT PLAN OF REORGANIZATION

RUFUS W. REYNOLDS, Chief Judge.

On January 23, 1986, George E. Gilbertson, Trustee for The Mason & Dixon Lines Incorporated ("Mason/Dixon") and Central Transport, Inc. ("Central Transport") filed their Restated Joint. Plan of Reorganization for Mason/Dixon, which was amended on February 5, 1986, (as amended, the "Restated Joint Plan"). The Restated Joint Plan was thereafter transmitted to creditors, and objections to confirmation of the Restated Joint Plan were filed by Central States, Southeast and Southwest Areas Pension Fund (the "Central States Fund"), First National Bank of Boston ("FNBB"), Committee of Retired Employees ("CORE"), and Teamsters Joint Counsel No. 83 Pension Fund (the "Virginia Fund"). After due notice, the initial hearing on confirmation of the Restated Joint Plan was held on March 18, 1986 at which were present, among others, the proponents of the Restated Joint Plan with counsel, and Mason/Dixon, Central States Fund, the International Brotherhood of Teamsters, Chauffeurs, Warehousemen, and Helpers of America, CORE, the Official Unsecured Creditors' Committee (the "Creditors' Committee"), and FNBB, all through counsel. The Court, having carefully considered the arguments and briefs of counsel, the testimony of witnesses, and the official court file, does herewith make its findings of facts and conclusions of law.

I. BACKGROUND AND PROCEDURAL HISTORY OF THE RESTATED JOINT PLAN

A. Summary of Restated Joint Plan and Disclosure Statement

This case was commenced by the filing of a voluntary Chapter 11 petition on March 29, 1984. On December 6, 1984, George E. Gilbertson was appointed as Trustee pursuant to the provisions of 11 U.S.C. § 1104. On September 6, 1985 the Trustee and Central Transport filed a Joint Plan of Reorganization and Disclosure Statement. Although this particular Plan was not approved, on November 12, 1985, the Joint Disclosure Statement as amended was approved by the Court.

On January 23, 1986 the Restated Joint Plan was filed by the Trustee and Central Transport. It was amended on February 5, 1986 and was transmitted to creditors and parties in interest for voting.

The Restated Joint Plan before the Court provides generally for the payment in full, on the effective date, of allowed cost of administration claims, priority claims, excluding the claims of taxing authorities which are paid in accordance with 11 U.S.C. § 1129(a)(9)(C), and the undisputed portion of the secured claim of the FNBB. Unsecured creditors will receive preferred stock in full satisfaction of their claims.

Based on the Mason/Dixon's performance during this Chapter 11 proceeding and the liquidation analysis attached to the disclosure statement, it is doubtful that the liquidation of the Mason/Dixon would generate sufficient funds to cover cost of administration claims, much less provide any payment for priority or unsecured claims.

B. Modifications.

At the March 18, 1986 hearing, certain modifications to the Restated Joint Plan were proposed and agreed to by the proponents of the Restated Joint Plan and Mason/Dixon.

At the request of the proponents of the Restated Joint Plan, the Restated Joint Plan shall be deemed modified as follows:

1. Article IX, Retention of Jurisdiction, paragraph 3 shall have the following subheading I. added thereto: I. Hear any disputes involving funding of the plan under the Post Confirmation Line of Credit including, but not limited to, failure by GLS LeasCo, Inc. to fund up to the maximum of $12,000,000 under such line of credit, default by Mason/Dixon thereunder, or in any modification thereof and to give notice to the Teamsters National Freight Industry Negotiating Committee upon the happening of any such events.

To the extent the (1) failure to extend the maximum line of credit, (2) default or (3) modification in such line of credit will negatively effect the payment of any allowed administrative or wage priority claims, GLS LeasCo, Inc. shall give ten (10) days notice, if possible, or as much notice as is possible under the circumstances, to the Teamsters National Freight Negotiating Committee, of (1) the failure to extend the maximum line of credit, (2) declaration of default or (3) modification in such line of credit, if such events will negatively effect the payment of any allowed administrative or wage priority claims.

2. Article VI, Execution Of The Plan, paragraph 5, shall have the following sentence added:

The Post Confirmation Line of Credit shall further be subject to the conditions in Article IX, Retention of Jurisdiction, paragraph 3 I herein.

3. Article VI, Execution Of The Plan, paragraph 13 shall be deleted. All parties are left with those rights and defenses which may exist at law and equity without regard to the deletion of Article VI, Paragraph 13.

After review of the modifications, this Court finds that the modifications are not material and do not adversely change the treatment of the claim of any creditor or the interest of any equity security holder who has not accepted the modification in writing. The Restated Joint Plan as modified above will therefore be deemed accepted by all creditors and equity security holders who have previously accepted the Restated Joint Plan and have not subsequently rejected the Restated Joint Plan in writing.

C. Voting On The Plan By Impaired Creditor Classes

The Trustee has reported and the record reflects that the Restated Joint Plan has been accepted or rejected in writing by the following impaired classes of creditors:

Class 2 (First National Bank of Boston): Rejected by the sole vote cast, representing 100% of the dollar amount of the claims voting.

Class 3 (Transport Insurance Company): Accepted by 100% of the votes cast, representing 100% of the dollar amount of the claims voting.

Class 6 (General Unsecured Creditors): Accepted by 1498 (87%) of the votes cast, representing $11,174,609 (93%) of the dollar amount of the claims voting.

Class 7 (Pension Fund Withdrawal Claims): Rejected by each of the votes cast, representing 100% of the dollar amount of the claims voting.

At the initial confirmation hearing on the Restated Joint Plan, FNBB stated that it favored the plan and that it desired to accept the same.

D. Objections.

The objections filed by CORE were withdrawn at the March 18, 1986 hearing. In addition, FNBB represented that the concerns it had had were satisfied by the proponents of the Restated Joint Plan prior to the hearing, and FNBB thereby withdrew its opposition to confirmation.

Objections were also filed on behalf of the Virginia Fund. Although counsel for the Virginia Fund did not appear at the March 18, 1986 hearing, the Court has given due consideration to their objections. Those objections are overruled for the reasons set forth below.

The Central States Fund also raised objections to confirmation. The Central States Fund has objected, inter alia, to the classification scheme proposed in the Restated Joint Plan which places all allowed withdrawal claims within Class 7; has asserted that the Central States Fund would receive more through liquidation of the Debtor than under the Restated Joint Plan; and has asserted that the Restated Joint Plan is not feasible.

II. CLASSIFICATION OF CLAIMS

In the Restated Joint Plan, the Trustee and Central Transport have separated the prepetition unsecured claims into Classes 6 and 7. Class 6 claims are:

All allowed general Unsecured Claims, including Rejection Claims and claims of secured creditors to the extent the same are unsecured, but excluding Withdrawal Claims.

Class 7 claims are all allowed Withdrawal Claims:

Any claim for complete withdrawal or partial withdrawal from multiemployer pension plans pursuant to 29 U.S.C. § 1381 et seq, other than an Administrative Claim. Restated Joint Plan Art. I, ¶ 28.

Included within Class 7 is the claim of Central States Fund¹. On or about April 14, 1984 the Central States Fund originally filed a contingent proof of claim for $26,357,365.86 based upon the Central States Fund's belief that Mason/Dixon would suffer a complete withdrawal under the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA") 29 U.S.C. § 1301 et seq. which amended the Employee Retirement Income Security Act of 1974 ("ERISA") 29 U.S.C. § 1001 et seq. On March 18, 1985, the Central States Fund filed on contingent amended proof of claim in the amount of $7,311,109.83 and a fixed amended claim for $19,909,711.72. On September 13, 1985 the Central States Fund filed its first amended proof of claim for $26,295,533.25. (The proofs of claim filed by the Central States Fund are hereafter...