Is this “clickbait,” as they call it? Sort of. Almost exactly two years ago, we found an excuse to blog about the Houston Astros as they were heading into World Series Game 7 against the Washington Nationals. Before that, we found a more direct October excuse to blog about the formerly-bankrupt Cubs (2016) and the formerly-bankrupt Dodgers (2017).

Our 2019 hook was more indirect, that being the Astros’ entrenched Chapter 11 valuation fight in Houston Regional Sports Network’s Texas Chapter 11 case. The Astros weren’t bankrupt, but it was close enough because they and the Houston Rockets (the “Teams” as they call themselves) had formed the debtor for broadcasting their games. Thus, they were inevitably tangled-up in the 2013 Chapter 11 case and, as we learned this week, it continues.

As we explained in greater detail two years ago, Texas Bankruptcy Judge Marvin Isgur was tasked, on remand from the Fifth Circuit, to resolve a valuation fight regarding an Affiliation Agreement. In short, was it, under § 1111(b), of “inconsequential value” as of the petition date based on its proposed use and disposition? To answer that question, Judge Isgur concluded that he needed to answer at least two questions in the coming months:

  • What was the fair market value of the Agreement to the reorganized debtor on the plan effective date?
  • What adjustments, if any, should be made to determine the fair market value as of the petition date?

When we left it, the parties had five months of discovery in the lead-up to a March 16, 2020 valuation hearing. That was two years ago. Where does it stand now? Unfortunately, not much has changed. An unsuccessful “meet and concur” led to a December 2019 discovery status conference. That resulted in Judge Isgur ordering competing briefs on a novel bankruptcy valuation issue which, when resolved, should also resolve the parties’ discovery dispute. The parties briefed it in January 2020 but then the March 2020 valuation hearing came off for at least one reason and possibly three reasons.

First, the Houston Chronicle reported in July 2020 that the hearing came off, at a minimum, due to COVID. Second, the discovery issue appears to have been fully briefed and still under consideration as of March 2020. Finally, as the parties reminded the Court at the December 2019 status conference, not one document had been exchanged through that date. In short, some or all of the discovery appears to be on pause while the parties wait for a ruling.

As of today, they’re about 21 months (!) out from the original 2020 briefing without a decision if, indeed, a decision is forthcoming. There is no indication that the parties settled the valuation dispute and, at least as of January 2021, the Houston Chronicle, in itemizing all pending litigation matters involving the Astros, reported that it was still pending.

For now then, we’ll leave you with the transcript from the 2019 status conference and the related briefing (see below), only because they (i) highlight an interesting valuation methodology issue and, most importantly, (ii) help justify another October baseball post. After all, following our 2019 Astros post, the Nationals went on to win it. We’re not bashful about hoping for the same sort of good luck for the Braves as they take the series back to Atlanta with the series tied-up, 1-1—although tonight’s weather isn’t looking good.

As background, one or more of the parties were seeking discovery about internal projections that had been conducted after the relevant valuation date but using data that was relevant to the immediate valuation.

Comcast summarized the disputed requests this way in its brief:

The parties’ remaining disputes . . . relate to discovery that the Teams contend is germane to the valuation of Comcast’s Affiliation Agreement under a purported replacement value theory. In particular, the Teams seek ‘drop analyses’ (i.e., analyses by Comcast Cable seeking to estimate the number of customers who potentially would stop subscribing to Comcast Cable, and the financial impact of losing such customers, if Comcast Cable decided to stop carrying a particular network) . . .

In considering the discovery dispute at the status conference, Judge Isgur sheepishly used a paternity  analogy to articulate the puzzling issue, i.e., if a court had determined that a defendant was the father of a child before DNA testing was available and a year later, DNA testing became available, would the court conform to the newly-available science?

More directly, Judge Isgur stated it this way:

And so what I’m hearing now is just an interesting question that I really haven’t thought through, which is, you know, what happens if a different way of looking at the world develops later, but it’s better. Am I supposed to use the better way or am I supposed to use an inferior way if that was the best that people had thought of at the time?

The formal briefs that followed are here, here, here, and here.

We’ll keep watching this one. In the meantime, our next post in the Judge Drake series comes out on Monday. If you missed part one, then you can find it here. Please subscribe for future posts.

GO BRAVES !

In what I hope will turn into an ongoing Bankruptcy Judges series, bring Plan Proponent out of an unintentional COVID hiatus, and highlight the blog’s “new look” on the LexBlog platform, this is the kickoff post for a weekly series on Georgia’s very own Hon. W. Homer Drake, Jr., likely the longest or second longest serving bankruptcy judge after 1960, if not in all of U.S. history. As we are prone to focus on, the series will emphasize Judge Drake’s opinions. But first an introduction.

On January 31, 2021, Judge Drake retired after over 53 years on the bench, first as a “referee in bankruptcy” (read: a judge) starting in 1964 and then continuing as a bankruptcy judge starting in 1979. In honor of Judge Drake’s retirement, U.S. District Court Judge Timothy Batten described Judge Drake as “one of the all-time preeminent bankruptcy judges in the United States”—high praise from the “upstairs judge” who often quipped that everyday people in Newnan, Georgia would see them at lunch and assume that Judge Batten was Judge Drake’s law clerk.

Beyond that, though, where do you start? Judge Drake’s resume is unapproachable in its breadth, especially for this Macon lawyer who practiced in front of him for just the last fifth of his tenure. While I’ll do my very best, I’m hoping that our Georgia readers, in particular, will not be bashful about setting me straight or pointing out what I may have missed.

Continue Reading Judges Series – Judge Homer Drake’s Bankruptcy Opinions – Introduction

Justice Ruth Bader Ginsburg died last Friday. She was 87. Politics aside, she was a legal giant on the world’s most powerful court . . . That’s a cheap introduction to our first blog post since March, as I simply adapted it from the opening lines of our February 2016 tribute to Justice Scalia. The parallels are bittersweet because, famously, Scalia and Ginsburg were close friends; the parallels are frustrating because of their similarly enormous political ramifications.

Continue Reading Justice Ruth Bader Ginsburg’s Bankruptcy Opinions

Last night we blogged about the $2 trillion COVID-19 stimulus bill that proposes to increase the SBRA small business debt limit in Subchapter V Chapter 11 bankruptcy cases from approximately $2.7 million to $7.5 million, at least for the next year. The Senate approved the legislation late last night, 96-0, and it’s now headed to the House and, ultimately, to the President. Unfortunately, our email feeder didn’t pick it up, hence this post for our email subscribers. Click here for last night’s post.

If you’d like to stay on top of this and other important bankruptcy issues, then you can subscribe to Plan Proponent via email here.

We spent the last part of February blogging about the first series of substantive opinions under the Small Business Reorganization Act of 2019 (SBRA), which became effective on February 19, 2020. That news seems rather quaint a month later, as the world, and now the U.S., is in the throes of the COVID-19 pandemic. Yesterday, those worlds collided for me when my client in the Northern District of Georgia, a Subchapter V debtor, let me know that he had to shut down both of his business locations in response to Gov. Kemp’s COVID-19 order. And this morning, we all woke-up to news that Congress was close to passing a $2 trillion coronavirus stimulus bill, potentially the largest emergency aid package in U.S. history. 

Continue Reading COVID-19 Stimulus Package May Temporarily Increase SBRA Chapter 11 Debt Limit to $7,500,000

It’s the Wild West of “firsts” in these opening days of the Small Business Reorganization Act of 2019 (SBRA), which went live on February 19, 2020. We blogged about the first ever small business Subchapter V case here and provided some opening filing stats here. On Friday, Stone & Baxter even filed the first Sub V case in Georgia. More importantly, it appears that Judge Scott C. Clarkson, a bankruptcy judge in Central District of California, is the first judge to issue a substantive opinion about Sub V, and about one of its most talked-about issues no less:

Continue Reading California Bankruptcy Judge Clarkson Suggests that Pre-SBRA Debtors May Opt-Into Subchapter V

I blogged late yesterday evening about what appeared, at first glance, to have been a slow debut for the Small Business Reorganization Act of 2019 (SBRA). Although the Turney case still gets the trophy for the first ever Subchapter V small business Chapter 11 case, there were still a few other Sub V filings on Wednesday. At 11 p.m. EST, the Turney case was the only Sub V case being reported. As of 8:30 a.m. EST this morning, PACER caught-up, with some rough, updated filing statistics as follows:

Continue Reading The First Subchapter V Small Business Chapter 11 Bankruptcy Case (Updated)

Effective today, the Small Business Reorganization Act of 2019 (SBRA) is live and taking cases. Thus, we figured that PACER would have much to report about such a potentially big day for small business debtors. In fact, we assumed that dozens of debtors, if not more, have been holding their breath since August 2019, hoping that they can bridge the gap to February 19, 2020. However, as of 11 p.m. EST, it appears to have been a big day for just one debtor: Michael and Gwatholyn Turney, the husband and wife owners of Papa Turney’s Old Fashioned BBQ in the Nashville, Tennessee area. 

Continue Reading The First Subchapter V Small Business Chapter 11 Bankruptcy Case

We figured we’d wrap-up a slow blogging year with a look back, just in time for the New Year and a New Decade. Believe it or not, Plan Proponent, which debuted on February 12, 2015, has occupied nearly half of the 2010s. And now, here we are, 26,786 clicks, 80 posts, and 94 email followers later. 

Continue Reading Happy New Year: The Best of 2015-2019

With an exciting but somewhat controversial finish in last night’s game, the Washington Nationals tied the series 3-3 with the Houston Astros, setting-up for a potentially exciting Game 7 conclusion to the World Series. Unlike the Cubs in 2016 and the Dodgers in 2017 and 2018, neither of this year’s teams is a former Chapter 11 debtor. However, the Astros are still very much tied-up in Houston Regional Sports Network, L.P.’s Texas Chapter 11 from 2013. Hence, our hook for our third bankruptcy-related World Series post.

Continue Reading The Houston Astros in October: Bankruptcy Edition