In re Drexel Burnham Lambert Group, Inc.

• Decision Date: 09 March 1992
• Docket Number: Bankruptcy No. 90 B 10421 (FGC).
• Citation: 138 BR 723
• Parties: In re DREXEL BURNHAM LAMBERT GROUP INC., et al., Debtor.
• Court: U.S. Bankruptcy Court — Southern District of New York

138 B.R. 723 (1992)

In re DREXEL BURNHAM LAMBERT GROUP INC., et al., Debtor.

Bankruptcy No. 90 B 10421 (FGC).

United States Bankruptcy Court, S.D. New York.

March 9, 1992.

COPYRIGHT MATERIAL OMITTED

C. Ball, P. Gruenberger, P. Leake, A. Miller, J.J. Rapisardi, T. Schneider, H. Spierer, Weil, Gotshal & Manges, New York City, for Drexel Burnham Lambert Group, Inc., et al.

D. Brand, M. Guss, M.S. Kirschner, Jones, Day, Reavis & Pogue, New York City, for Official Committee of Unsecured Creditors of Drexel Burnham Lambert Group, Inc.

D. Dillon, M.F. Witkin, C.D. Montgomery, Milgrim Thomajan & Lee, P.C., New York City, for Official Committee of Equity Interest Holders of Drexel Burnham Lambert Group, Inc.

O. Lewis, Davis Polk & Wardell, New York City, for Official Committee of Unsecured Creditor of Drexel Burnham Lambert Trading Corp.

M. Zelmanovitz, Zalkin, Rodin & Goodman, New York City, for Official Committee of Unsecured Creditors of Drexel Burnham Lambert Inc.

G. Wailand, Cahill, Gordon & Reindel, New York City, special counsel for Drexel Burnham Lambert Group, Inc.

N. Bartolino, M. Flumenbaum, A.W. Kornberg, Paul, Weiss, Rifkind, Wharton & Garrison, New York City, for Michael R. Milken.

D. Eaton, Kirkland & Ellis, New York City, for Nat. Bank of Yugoslavia.

J.J. Jerome, Milbank, Tweed, Hadley & McCloy, New York City, for Nissho Iwai Corp.

J. North, Cravath, Swaine & Moore, New York City, for Federal Deposit Ins. Corp. and the Resolution Trust Corp.

P. Goodman, S. Hirshon, Proskauer Rose Goetz & Mendelsohn, New York City, for Subcommittee of Subordinated Debt Holders.

D.J. O'Brien, Eckert Seamans Cherin & Mellott, Pittsburgh, Pa., for Liggett Group and Liquid Green Trust.

W.W. Kannel, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Boston, Mass., for Hart Holding Co. and Reeves Industries, Inc.

M.I. Klein, Dreyer and Traub, New York City, co-counsel for Michael R. Milken.

D. Berger, Philadelphia, Pa., S. Nesmer, Wolf Popper Ross Wolf & Jones, New York City, for Plan Proponent Sub Class B.

M. Brosterman, M. Goldstein, Stroock, Stroock & Lavan, New York City, for Robert Rubin and Barry Stein.

A.J. Levander, Shereff Friedman Hoffman & Goodman, New York City, for Paul Higbee, et al.

MEMORANDUM OF DECISION ON PLAN CONFIRMATION

FRANCIS G. CONRAD,^* Bankruptcy Judge.

                                               TABLE OF CONTENTS
                                                                                          Page
                PRELIMINARY MATTERS ....................................................727
                FINDINGS OF FACT .......................................................728
                    I. Background ......................................................728
                   II. Critical Components of the Plan .................................730
                  III. Classification, Designation, Treatment and Voting of Claims .....730
                   IV. Entities under the Plan and Plan Securities .....................732
                       A. The Trust and Its Liquidating Subsidiary, DBP Corp........... 733
                       B. New Street Capital Corporation ...............................734
                       C. DPI, DPI-A Corp. and DPI-B Corp.............................. 736
                       D. The Pooled Contingent Assets .................................737
                       E. The Securities Litigation Settlement Funds ...................737
                

                   V. Plan Modification.............................................................737
                  VI. Distributions.................................................................738
                    A. Projected Recoveries Under the Plan..........................................738
                    B. Distributions Mechanisms Under the Plan......................................738
                       1. Trust Distributions.......................................................738
                       2. DPI Distributions.........................................................739
                       3. Distributions for Allowed Administrative/Tax Claims and Disputed
                                 Claims and Contested Claims and Enforceable Claims.................739
                       4. Reserves..................................................................740
                       5. Escrows...................................................................740
                 VII. Substantive Consolidation.....................................................741
                VIII. Settlements In the Plan.......................................................744
                      A. Securities Litigation Claims Settlement....................................745
                      B. Intercompany Settlement....................................................746
                      C. DBL Group Guaranty Holder Settlement.......................................747
                      D. Employee ERISA/Compensation Claims Settlement..............................748
                      E. DBL Trading Pro Rata Settlement............................................750
                  IX. Best Interests Test...........................................................751
                   X. Conditions Precedent..........................................................753
                  XI. Miscellaneous ................................................................753
                      A. Release and Injunction Provisions..........................................753
                      B. Executory Contracts .......................................................754
                      C. Profit Sharing Plan and Stock Bonus Plan ..................................754
                OBJECTIONS .........................................................................754
                DISCUSSION .........................................................................757
                     I. Section 1122(a).............................................................757
                    II. Section 1123................................................................758
                   III. Section 1129(a)(2)..........................................................759
                    IV. Section 1129(a)(3)..........................................................759
                     V. Section 1129(a)(4)..........................................................760
                    VI. Section 1129(a)(5)..........................................................760
                   VII. Section 1129(a)(6)..........................................................760
                  VIII. Section 1129(a)(7)..........................................................760
                    IX. Sections 1129(a)(8) and 1129(b).............................................761
                     X. Section 1129(a)(9)..........................................................761
                    XI. Section 1129(a)(10).........................................................761
                   XII. Section 1129(a)(11).........................................................762
                  XIII. Section 1129(a)(12).........................................................763
                   XIV. Section 1129(a)(13).........................................................763
                    XV. Substantive Consolidation...................................................763
                CONCLUSIONS OF LAW..................................................................767
                     I. The Plan Satisfies the Requirements of Section 1123(a)(1) of the Bankruptcy
                          Code..................................................................... 767
                    II. The Plan Satisfies the Requirements of Section 1122(a) of the Bankruptcy
                          Code..................................................................... 767
                   III. The Plan Satisfies the Requirements of Section 1123(a)(2) of the Bankruptcy
                          Code..................................................................... 767
                    IV. The Plan Satisfies the Requirements of Section 1123(a)(3) of the Bankruptcy
                          Code..................................................................... 767
                     V. The Plan Satisfies the Requirements of Section 1123(a)(4) of the Bankruptcy
                          Code..................................................................... 767
                    VI. The Plan Satisfies the Requirements of Section 1123(a)(5) of the Bankruptcy
                          Code..................................................................... 767
                   VII. The Plan Satisfies the Requirements of Section 1123(a)(6) of the Bankruptcy
                          Code..................................................................... 768
                  VIII. The Plan Satisfies the Requirements of Section 1123(a)(7) of the Bankruptcy
                          Code..................................................................... 768
                

                    IX. The Rejection of Executory Contracts and Unexpired Leases Pursuant
                          to Section 1123(b)(2) of the Bankruptcy Code Is in the Best Interests
                          of the Debtors' Estates ......................................................... 768
                     X. All Settlements and Compromises Incorporated in the Plan Pursuant to
                          Section 1123(b)(3) Are Reasonable, Fair and Equitable and in the
                          Best Interests of the Debtors' Estates .......................................... 768
                    XI. The Distribution of Plan Securities Is Exempt from Any Applicable
                          Registration Requirements Pursuant to Section 1145 of the Bankruptcy
                          Code ............................................................................ 769
                   XII. The Distribution of Plan Securities Is Governed by the Exemption
                          Provided in Section 1146(c) of the Bankruptcy Code .............................. 769
                  XIII. The Plan Satisfies the Requirements of Section 1129(a)(1) of the Bankruptcy
                          Code ............................................................................ 769
                   XIV. The Plan Proponents Have Satisfied the Requirements of Section
                          1129(a)(2) of the Bankruptcy Code ............................................... 769
                    XV. The Plan Satisfies the Requirements of Section 1129(a)(3) of the Bankruptcy
                          Code ............................................................................ 769
                   XVI. The Plan Satisfies the Requirements of Section 1129(a)(4) of the Bankruptcy
                          Code ............................................................................ 770
                  XVII. The Plan Satisfies the Requirements of Section 1129(a)(5) of the Bankruptcy
                          Code

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