Judge Markell denied confirmation, holding Debtor failed to show feasibility and “drop dead” liquidation clause did not save plan. The Court noted distinct requirement of feasibility even with creditor consent. §§ 1129(a)(8), (11).
Debtor called for debt still more than twice value of Debtor; annual accounting losses of at least $15 million over next seven years; and underfunded plan by $38.4 million. Court rejected Debtor’s contingencies to increase performance. Experts testified contingencies were not in the plan because they were not supported by facts at hand; the Court rejected later testimony that contingencies were more likely than not to occur.
Court also considered alternative analysis of six feasibility factors from Trans Max Technologies, but held plan still failed to meet them. Court explicitly rejected feasibility based on a liquidation option.
Debtor “asks the court to allow it to float along until it sinks, suggesting that when it ultimately sinks, the court need not concern itself with how creditors will make it onto the life raft—or even whether there will be a life raft available.” Finally, Court rejected Debtor’s arguments that it is a socially responsible transit system whose contributions to the community exceed costs, as that is not standard for feasibility.
