## Facts

- Revere Copper and Brass, Inc. (Revere) filed for Chapter 11 bankruptcy in October 1982 in the U.S. Bankruptcy Court for the Southern District of New York.
- Revere had not yet filed a formal plan of reorganization when the events at issue occurred.
- Between November 5 and November 29, 1984, Phoenix Capital Corporation (Phoenix), a distressed-claim purchaser with no prior relationship to Revere and no role on any official committee, mailed form letters to 19 of Revere’s creditors.
- Phoenix’s letters offered to buy each creditor’s unsecured claim for 20% of its face amount in cash in exchange for an assignment of the claim.
- On November 30, 1984, The Wall Street Journal published an article describing the terms of Revere’s proposed plan, including a set of options for general unsecured creditors—one of which was an election to receive 65% of the claim’s value in cash.
- On December 6, 1984, Phoenix mailed the same purchase offer letter to nine additional Revere creditors.
- All 28 solicited creditors accepted Phoenix’s offer and assigned their claims to Phoenix for the promised cash payment.
- Phoenix then asked the bankruptcy court to approve Phoenix’s substitution (described as “subrogation”) as the holder of record of those 28 claims.
- The bankruptcy clerk issued notices of the requested substitutions to the original claimholders; no objections were filed, and the clerk presented proposed orders approving Phoenix’s substitution.

## Issues

1. Whether the bankruptcy court should approve Phoenix’s substitution as the holder of record of 28 unsecured claims it acquired by assignment from Revere’s creditors.
2. Whether Phoenix’s claim-purchase letters, sent while a plan was developing and after public reporting of expected plan recoveries, raised concerns about misleading conduct or plan-related influence that could affect Chapter 11 voting and confirmation.

## Decision

- The court approved Phoenix’s substitution as assignee-claimant for the 28 transferred claims.
- The court treated the transfers as generally permissible but stated that claim buying and related communications in Chapter 11 remain subject to the court’s control when needed to protect the reorganization process.
- The court cautioned that recognizing an assignment for distribution and participation purposes does not prevent later review of how the assignee uses creditor rights (including plan voting) if the conduct is unfair, misleading, or otherwise improper under Chapter 11 standards.

## Legal Principles

- Bankruptcy claims are generally transferable, and an assignee may be substituted as the holder of record through the bankruptcy claims-transfer procedure when proper notice is given and no timely objection is made.
- Chapter 11 is a court-supervised collective process; activities that affect creditor decisionmaking and plan voting are not treated as purely private market behavior when they may impact confirmation.
- Communications that function as plan-related influence can trigger Chapter 11 safeguards tied to informed voting, including the disclosure framework associated with 11 U.S.C. § 1125 and the court’s supervision of the confirmation process.
- A bankruptcy court has authority to respond to improper claim-trading tactics that threaten fair voting or the integrity of the case, including through case-management orders and confirmation-stage remedies (such as review of voting conduct).

## Conclusion

The court entered orders substituting Phoenix as the holder of 28 purchased unsecured claims, while warning that claim-acquisition campaigns and related communications can be examined and controlled if they mislead creditors or distort plan voting, and that approval of a transfer does not shield later conduct from scrutiny during confirmation.


In re Revere Copper and Brass, Inc., 58 B.R. 1 (1985)