## Facts

- The debtors, including Greate Bay Hotel & Casino, Inc., owned and operated the Sands Hotel & Casino in Atlantic City, New Jersey.
- The debtors filed voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the District of New Jersey.
- The debtors’ capital structure included roughly $181–185 million in 10⅞% first mortgage notes (the “Old Notes”), with significant holdings by the Icahn/High River interests and other institutions.
- Two competing Chapter 11 plans were presented for confirmation after extensive negotiations and confirmation hearings:
  - A creditor-sponsored plan proposed by the Icahn/High River interests.
  - A competing plan proposed by Park Place Entertainment.
- Under the High River plan, general unsecured creditors and Old Noteholders were placed in separate classes; projected recoveries were approximately 80% for general unsecured creditors and 76% for Old Noteholders, funded in part by a substantial equity cash infusion.
- Under the Park Place plan, Park Place would obtain a significant equity interest and issue new debt or other securities to restructure claims, but the transaction depended more heavily on regulatory approvals and casino licensing.
- Voting support differed by constituency: the general unsecured class favored the High River plan, while a majority of Old Noteholders supported the Park Place plan, with some votes influenced by prior support or lock-up arrangements.

## Issues

1. Whether each competing plan satisfied the confirmation requirements of 11 U.S.C. § 1129(a) and, if applicable, the cramdown requirements of § 1129(b), including proper classification, best interests, and feasibility.
2. If both plans were confirmable, which plan the court should confirm given creditor recoveries, creditor preferences, feasibility, and regulatory timing and risk.

## Decision

- The court found that both the High River plan and the Park Place plan satisfied the Bankruptcy Code’s confirmation requirements, including § 1129(a) and, where necessary, § 1129(b).
- The court confirmed the High River plan and declined to confirm the Park Place plan.
- In selecting between two confirmable plans, the court emphasized comparative recoveries, capital structure, creditor preferences as weighed by the court, and relative regulatory risk and delay.

## Legal Principles

- A Chapter 11 plan may be confirmed only if it satisfies the requirements of 11 U.S.C. § 1129(a), including the best-interests test (§ 1129(a)(7)) and feasibility (§ 1129(a)(11)).
- Where an impaired class does not accept a plan, the plan may still be confirmed through cramdown if it meets § 1129(b)’s “fair and equitable” and non-discrimination standards.
- Separate classification of secured noteholder claims and general unsecured claims may be permissible when supported by differences in legal rights and economic position, and not used solely to manipulate voting.
- When multiple plans are confirmable, the court has discretion to choose among them, guided by the Code’s standards and equitable considerations such as comparative recoveries, reliability of creditor support, feasibility, and consummation risk.
- In heavily regulated industries, regulatory approvals and expected timing may materially affect feasibility and the court’s selection between otherwise confirmable plans.

## Conclusion

The bankruptcy court determined that both competing reorganization plans met § 1129’s confirmation standards but exercised its discretion to confirm the High River plan because it provided stronger projected recoveries and a more conservative post-confirmation structure, and because it posed less regulatory timing risk than the Park Place proposal.


In re Greate Bay Hotel & Casino, Inc., 251 B.R. 213 (Bankr. D.N.J. 2000)