## Facts

- Made In Detroit, Inc. (debtor) owned roughly 400 acres of Detroit River waterfront property intended for a high-end residential development.
- Development was delayed for years by resident opposition and environmental and regulatory obstacles; the debtor lacked key permits and generated no meaningful income.
- After falling behind on secured debt and taxes and facing foreclosure by a secured lender, the debtor filed a voluntary Chapter 11 petition.
- The debtor proposed to reorganize through a $9 million postpetition loan commitment from Kennedy Funding, Inc., to be secured by the real property that was the estate’s principal asset.
- The proposed financing required, among other things, timely payment of a loan-commitment fee and completion of collateral appraisals, along with other conditions precedent to funding.
- The debtor sought court authority to borrow from shareholders to pay the commitment fee; the court denied that request, and the fee remained unpaid.
- At plan confirmation, the collateral had not been appraised and multiple conditions to closing the Kennedy loan remained unsatisfied.
- The debtor’s proposed Chapter 11 plan depended on the Kennedy financing as the linchpin of feasibility.

## Issues

1. Whether a plan dependent on postpetition financing with unmet conditions precedent satisfies the feasibility requirement of 11 U.S.C. § 1129(a)(11).
2. Whether seeking confirmation based on speculative, unconsummated financing can meet Chapter 11 confirmation requirements, including 11 U.S.C. § 1129(a)(3).

## Decision

- The court denied confirmation of the debtor’s proposed Chapter 11 plan.
- The court found the plan was not feasible under § 1129(a)(11) because it relied on a financing transaction that was contingent and not reasonably assured.
- The court emphasized that the commitment fee was unpaid, no appraisal had been completed, and other prerequisites to the loan had not been met, leaving the financing speculative.

## Legal Principles

- A Chapter 11 plan must be feasible under 11 U.S.C. § 1129(a)(11), meaning it must have a realistic likelihood of success and not be premised on conjecture.
- A plan that depends on third-party financing must be supported by evidence of a workable, fundable transaction; unmet conditions precedent and lack of resources to satisfy them weigh against feasibility.
- Failure to satisfy basic pre-closing requirements (such as commitment fees and required appraisals) may show that proposed financing is too uncertain to support confirmation.
- Where the plan’s performance depends on multiple unresolved contingencies, the debtor bears the burden to show more than a hopeful possibility of funding and performance.

## Conclusion

The court refused to confirm the debtor’s reorganization plan because its success hinged on a postpetition loan that had not progressed beyond conditional commitments, leaving the plan too speculative to satisfy § 1129(a)(11)’s feasibility requirement.


In re Made In Detroit, Inc., 299 B.R. 170 (Bankr. E.D. Mich. 2003)