In re Zenith Electronics Corporation

241 B.R. 92 (1999)

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In re Zenith Electronics Corporation

United States Bankruptcy Court for the District of Delaware
241 B.R. 92 (1999)

  • Written by Heather Whittemore, JD

Facts

Zenith Electronics Corporation (Zenith) (debtor) was an electronics company. After experiencing years of losses, Zenith decided to reorganize through a Chapter 11 bankruptcy. Zenith prepared a detailed disclosure statement, which included all of Zenith’s financial information and history. Because Zenith’s proposed reorganization plan involved the issuance of a new security, the Securities and Exchange Commission (SEC) was required to approve the disclosure statement. After the SEC approved the disclosure statement, Zenith sent the statements and its proposed reorganization plan to its creditors. In preparing its proposed reorganization plan, Zenith was valued at $310 million as a going concern. Zenith’s creditors largely voted to accept the plan. Zenith then filed its disclosure statement and reorganization plan with the United States Bankruptcy Court for the District of Delaware. A committee representing equity-security holders and several shareholders (collectively, the objectors) (creditors) opposed the plan. The objectors argued that (1) Zenith’s disclosure statement was inadequate, (2) Zenith was improperly valued, (3) the plan was not fair or equitable to the equity-security holders, and (4) the plan was not proposed in good faith.

Rule of Law

Issue

Holding and Reasoning (Walrath, J.)

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