Menard-Sanford v. Mabey (In re A.H. Robins Co.)

880 F.2d 694
CourtCourt of Appeals for the Fourth Circuit
DecidedJune 16, 1989
DocketNos. 88-1750, 88-1754, 88-1756, 88-1758 to 88-1760, 88-1763 and 88-3602
StatusPublished
Cited by49 cases

This text of 880 F.2d 694 (Menard-Sanford v. Mabey (In re A.H. Robins Co.)) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Menard-Sanford v. Mabey (In re A.H. Robins Co.), 880 F.2d 694 (4th Cir. 1989).

Opinion

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. § 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. § 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 [697]*697sources 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 Daikon Shield, various litigation regarding the Daikon 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 Daikon Shield injuries against any other parties.” The disclosure statement later repeats that thought in explicit terms: “[estimation is not an exact science. The money available to pay Dai-kon 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 “[tjhere 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 Daikon Shield use, the presence of other causes of your injury, how long ago you were injured, and what steps you took to enforce your legal rights after your injury became apparent.” There is no requirement in case law or statute that a disclosure statement estimate the value of specific unliqui-dated tort claims. In fact, with so many various unliquidated personal injury claims which vary so much in the extent and nature of injury, medical evidence and causation factors, any specific estimates may well have been more confusing than helpful and certainly would be more calculated to mislead. Given the quantity and quality of the information in the disclosure statement we can not say that the district court abused its discretion in finding that it contained “adequate information.”

The appellants next challenge the legality of the voting procedure used to confirm the Plan. The difficulty surrounding the voting procedure resulted from the 195,000 unliquidated claims for personal injuries (Daikon Shield Claims). The controlling legal provisions for the reorganization include 11 U.S.C. § 1126(a) which provides that a “holder of a claim or interest allowed under section 502 of this title” is entitled to vote on the acceptance of a plan. 11 U.S.C. § 502(a) provides that a claim filed “is deemed allowed unless a party in interest” objects. Robins objected to all the Daikon Shield Claims. B.R. 3018(a) provides that “[njotwithstanding objection to a claim or interest, the court after notice and hearing may temporarily allow the claim or interest in an amount which the court deems proper for the purpose of accepting or rejecting a plan.” The district court, after notice and a hearing, ordered that, for purposes of voting, each Daikon Shield Claim was estimated and allowed to be equal. It found, fully supported by the record, that any attempt to evaluate each of the 195,000 individual claims for voting [698]*698purposes would cause intolerable delay. The challenge to the voting procedure relies on 11 U.S.C. § 1126

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Bluebook (online)
880 F.2d 694, Counsel Stack Legal Research, https://law.counselstack.com/opinion/menard-sanford-v-mabey-in-re-ah-robins-co-ca4-1989.