In Re Ionosphere Clubs, Inc.
United States Bankruptcy Court for the Southern District of New York
113 B.R. 164 (1990)
- Written by Philip Glass, JD
Facts
Eastern Airlines, Inc., and its affiliate Ionosphere Clubs, Inc. (collectively, Eastern) (debtors) petitioned for Chapter 11 bankruptcy on March 9, 1989. The Official Committee of Unsecured Creditors of Eastern (the committee) (creditors) moved for the appointment of a Chapter 11 trustee. The committee claimed that Eastern’s mismanagement of business affairs was not merely inevitable and capable of correction, but instead severe, persistent, and a breach of fiduciary duty that harmed the estate and diminished the chances of reorganization success. Eastern’s operating forecasts had always failed. As a result, unsecured creditors had borne all losses, and the equity of Texas Air, Eastern’s parent company, had been eliminated. Eastern had neither complied with agreements with the committee on possible reorganization plans nor developed long-term business plans. Thus, the committee felt little confidence in Eastern, as Eastern’s reorganization attempts would likely fail. The bankruptcy court needed to determine whether the committee demonstrated cause for appointment.
Rule of Law
Issue
Holding and Reasoning (Lifland, J.)
What to do next…
Here's why 832,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 46,500 briefs, keyed to 994 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.
