In re Revere Copper and Brass, Inc.

Revere Copper and Brass, Inc. (Revere) (debtor) filed for Chapter 11 bankruptcy in October 1982. Revere had not filed a formal reorganization plan, but on November 30, 1984, The Wall Street Journal published an article with the details of Revere’s proposed reorganization plan. The article stated that the plan would give Revere’s general unsecured creditors three options with respect to their claims, including choosing to receive 65 percent of the claim’s value in cash. However, between November 5 and November 29, 1984, Phoenix Capital Corporation (Phoenix) had sent letters to 19 of Revere’s creditors, offering to pay the creditors 20 percent of their claim’s value in cash. Phoenix had no relationship to Revere and was not a member of Revere’s creditors’ committee or equity securityholders’ committee. Phoenix sent the same solicitation letters to nine more creditors on December 6, 1984. All 28 solicited creditors accepted Phoenix’s offer and assigned their claims to Phoenix in return for the promised payment. Phoenix then asked the bankruptcy to approve Phoenix’s subrogation (i.e., substitution) with respect to the rights of the 28 claimants. The bankruptcy court clerk sent notices of the proposed subrogation to the assignor-claimants and received no objections. The clerk thus presented the bankruptcy court with 28 proposed orders approving Phoenix’s subrogation as assignee-claimant.