In re Cape Quarry, LLC
| Decision Date | 16 November 2020 |
| Docket Number | CASE NO. 19-12367 SEC. "A" |
| Parties | IN RE: CAPE QUARRY, LLC, DEBTOR. |
| Court | U.S. Bankruptcy Court — Eastern District of Louisiana |
FINDINGS OF FACT AND CONCLUSIONS OF LAW IN SUPPORT OF ORDER (I) CONFIRMING FINAL MODIFIED CHAPTER 11 PLAN OF REORGANIZATION OF CAPE QUARRY, LLC PROPOSED BY HOLDERS OF THE DIP LOAN CLAIM, CELTIC CLAIM AND MILNER PREPETITION CLAIM, AS OF SEPTEMBER 25, 2020, AS FINALLY AND IMMATERIALLY AMENDED AND (II) DENYING CONFIRMATION OF THE QUARRY AGGREGATES PLAN
This Court held a hearing on Friday, November 6, 2020, at 1:00 p.m. (the "Confirmation Hearing") to consider confirmation of (i) the Final Modified Chapter 11 Plan of Reorganization of Cape Quarry, LLC Proposed by Holders of the DIP Loan Claim, Celtic Claim and Milner Prepetition Claim, as of September 25, 2020 (the "Senior Creditors Plan"), [ECF Doc. 127]; and (ii) the Chapter 11 Third Amended Plan of Reorganization of Quarry Aggregated (the "QA Plan"), [ECF Doc. 122], filed by Quarry Aggregates, LLC ("Quarry Aggregates"). Although the Court entered an Order on October 2, 2019, directing joint administration of the affiliated bankruptcy cases of Dominion Group, LLC, and Cape Quarry, LLC, [No. 19-12366, ECF Doc. 58; No. 19-12367, ECF Doc. 48], the two plans before the Court relate only to the case and estate of Cape Quarry, LLC ("Debtor" or "Cape Quarry"), except as discussed below.
The Holders of the DIP Loan Claim, the Celtic Claim, and the Milner Prepetition Claim as defined herein and in the Senior Creditors' Plan (the " Senior Creditor Plan Proponents") proceeded at the Confirmation Hearing jointly with the Official Committee of Unsecured Creditors appointed for the Cape Quarry Case (the "Committee") (with the Senior Creditor Plan Proponents, collectively, the "Joint Parties"). Quarry Aggregates is a third-party entity that proposed the QA Plan with the support of William Cline, III ("Cline"), an officer of Cape Quarry.
These Findings of Fact and Conclusions of Law (the "Findings of Fact and Conclusions of Law") are entered in support of the Court's contemporaneously issued Order (i) Confirming Final Modified Chapter 11 Plan of Reorganization of Cape Quarry, LLC Proposed by Holders of the DIP Loan Claim, Celtic Claim, and Milner Prepetition Claim, as of September 25, 2020, as Finally and Immaterially Amended; and (ii) Denying Confirmation of the Quarry Aggregated Plan (the "Confirmation Order").
THE COURT MAKES THE FOLLOWING FINDINGS OF FACT AND CONCLUSIONS OF LAW:1
A. Filing Date. On September 3, 2019 (the "Petition Date"), Cape Quarry filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code in this Court, as did affiliate Dominion Group, LLC ("Dominion"). Both the Senior Creditors Plan and the QA Plan relate only to Cape Quarry, except as discussed below. Cape Quarry was and continues to be eligible for relief under 11 U.S.C. § 109.
B. Jurisdiction; Venue. The Court has jurisdiction over this chapter 11 case, the parties, and the Debtor's property pursuant to 28 U.S.C. § 1334. Confirmation of a plan of reorganization is a core proceeding under to 28 U.S.C. § 157(b)(2)(L). Venue is proper under 28 U.S.C. §§ 1408 and 1409. This Court has authority to issue the Confirmation Order as a final order.
C. Committee Formation. On October 29, 2020, the Office of the United States Trustee ("UST") appointed the Committee pursuant to 11 U.S.C. § 1102. [No. 19-12366, ECF Doc. 111]. No committee was appointed in the Dominion case.
D. Solicitation and Notice. After notice and hearing, this Court approved the Amended Joint Disclosure Statement To Accompany Chapter 11 Plans of Reorganization, [ECF Doc. 132], and issued an Order on October 5, 2020 (the "Order Approving Disclosure Statement"), [ECF Doc. 136]. On October 6, 2020, the Debtor served a copy of the Order Approving Disclosure Statement on all parties in interest and supplied copies of the competing Plans, Disclosure Statement, and forms of Ballot on all creditors solicited to vote in accordance with the Order Approving Disclosure Statement and applicable Bankruptcy Rules. [ECF Doc. 139]. That notice was adequate under the circumstances. No other or further notice is necessary or required.
E. Appointment of Examiner. On September 25, 2020, this Court ordered the appointment of an examiner in this case. [ECF Doc. 125]. On that same date, the UST appointed David V. Adler as examiner ("Examiner"). [ECF Doc. 126]. At the Confirmation Hearing, the Examiner offered his two ballot tabulations:
The QA Ballot Tabulation shows that no impaired class solicited to vote accepted the QA Plan. The Senior Creditors Plan Ballot Tabulation shows that all impaired classes solicited to vote accepted the Senior Creditors Plan.
F. Modifications of the Senior Creditors Plan. At the Confirmation Hearing, the Senior Creditors Plan Proponents presented the Court with an exhibit showing in redline form themodifications to the version of their Plan filed on September 25, 2020 (the Senior Creditors Plan Modifications). See Joint Parties Ex. Z; [ECF Doc. 127]. Those modifications were made in large part to resolve the UST's objection to the Senior Creditors Plan, (the "UST Objection to Senior Creditors Plan"), [ECF Doc. 177]. Additional immaterial modifications have been presented to the Court via filing of a Notice of Filing of Final Modified Chapter 11 Plan of Reorganization of Cape Quarry, LLC Proposed by Holders of the DIP Loan Claim, Celtic Claim and Milner Prepetition Claim, as of September 25, 2020 as Finally and Immaterially Amended and of Changes Contained Therein, and a redlined version of the Senior Creditor Plan. [ECF Doc. 191].
"A modification is material if it so affects a creditor or interest holder who accepted the plan that such entity, if it knew of the modification, would be likely to reconsider its acceptance." In re Am. Solar King Corp., 90 B.R. 808, 824 (Bankr. W.D. Tex. 1988) (quoting 8 COLLIER ON BANKRUPTCY ¶ 3019.03 (15th ed. 1987)). Thus, an improvement to the position of the creditors affected by the modification will not require resolicitation of a modified plan. See In re Mangia Pizza Invs., LP, 480 B.R. 669, 689 (Bankr. W.D. Tex. 2012) . Nor will a modification that is determined to be immaterial require re-solicitation.
The Court has reviewed the Senior Creditors Plan Modifications and concludes that such modifications are immaterial and do not adversely affect the treatment of any claim against, or equity interest in, the Debtor under the Plan. Because the Senior Creditors Plan Proponents made no material and adverse modifications, resolicitation is unnecessary and acceptances of the SeniorCreditors Plan should be deemed acceptances of that plan as modified. Counsel for the UST withdrew the UST Objection to Senior Creditors Plan in open court. Therefore, in accordance with 11 U.S.C. § 1127 and Bankruptcy Rule 3019, all holders of claims or equity interests who voted to accept the Senior Creditors Plan are deemed to have accepted the Senior Creditors Plan, as modified, and no holder of a claim or equity interest that has voted to accept the Senior Creditors Plan shall be permitted to change its acceptance to a rejection. Further, any modifications to that plan that are included in the Confirmation Order are immaterial and do not affect the voting as reflected in the Senior Creditors Plan Ballot Tabulation.
G. No Additional Disclosure. Pursuant to Bankruptcy Rule 3019, the Senior Creditors Plan Modifications do not require additional disclosure under 11 U.S.C. § 1125 or the re-solicitation of votes under 11 U.S.C. § 1126, nor do they require that the holders of claims or equity interests be afforded an opportunity to change previously cast acceptances or rejections of the Senior Creditors Plan, as they comply with 11 U.S.C. § 1127 and Bankruptcy Rule 3019.
H. Judicial Notice. The Court takes judicial notice of the docket maintained in these jointly administered Chapter 11 Cases by the Clerk of Court, including, without limitation, all pleadings and other documents filed, all Orders entered, and all evidence and arguments made, proffered, or adduced at hearings in the jointly administered cases of Dominion and Cape Quarry. Certain Exhibits are dealt with and accepted as evidence on the basis of this Court accepting filed and docketed pleadings as exhibits by reference, without the necessity of any party separately submitting them for consideration; and the Court may refer to other pleadings of record herein.2
I. Voting. Votes on the Plan were solicited after disclosure of "adequate information" as defined in 11 U.S.C. § 1125. As evidenced by the two Ballot Tabulations and the representations/testimony of the Examiner at the Confirmation Hearing, votes to accept or reject the two plans before the Court have been solicited and tabulated fairly, in good faith, and in a manner consistent with the Order Approving Disclosure Statement, the Bankruptcy Code, and the Bankruptcy Rules. No party filed any pleading seeking to challenge either Ballot Tabulation.
J. Ballot Tabulations QA Plan. As reflected in the QA Plan Ballot Tabulation, pursuant to 11 U.S.C. §§ 1124 and 1126: (i) Class 3 ("Milner Claim") unanimously voted to reject the Plan; (ii) Class 4 ("Celtic Claim") unanimously voted to reject the...
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