In Re Mangia Pizza Investments, Lp

480 B.R. 669 (2012)

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Nature of the Case

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Facts

P is a pizza restaurant with several locations. P scaled back its operations to one location and licensed its name to operations at two other locations. P filed Chapter 11 on November 10, 2010. At the disclosure statement hearing, the Court learned that Cloud Cap had purchased the claim of Knife Sharpest for $244.66 and, because exclusivity had terminated, filed a competing disclosure statement. Cloud Cap articulated its business plan for P, which included a revised menu, improved décor for the restaurant, and a proposed expansion of the restaurant. Cloud Cap also objected to P's lack of disclosure, focusing on feasibility, and an apparent inability to confirm a plan. It was agreed that one plan packet would be sent to all creditors that included copies of both amended disclosure statements and plans. Creditors were given the option of voting for either plan, voting for both plans, or rejecting both plans. If claimants voted to accept both plans, they were to indicate which plan they preferred. The parties further agreed that the Court would consider confirmation of both plans, allowing P to present its plan first and Cloud Cap second. The plans are similar but for one significant aspect: Cloud Cap has created a fund of $305,000 with which Cloud Cap proposes to pay administrative, secured, priority claims in full (with some exceptions) and provide a 22% dividend to allowed unsecured non-priority claims shortly after confirmation of its plan. P proposes to pay all creditors in full over time from ongoing operations. It could take until 2022 for all creditors to be paid under P's amended plan. The Cloud Cap Plan created an additional class of claims for HEB. Pursuant to §506(a), HEB's claim is a secured claim for which separate classification is required. The Allowed HEB Secured Claim shall be paid in full on or before 30 days after the Effective Date. Pending payment of HEB's Secured Claim, HEB shall retain its liens on any Collateral Securing its Claim. The Reorganized Debtor shall pay the Allowed Class 2(a) Claim with Cash from funds available from the Membership Purchase Agreement and operations of the Reorganized Debtor. Cloud Cap reached an agreement with HEB regarding the treatment of HEB's secured claim. It allows HEB to set off its security deposit against its pre-petition rent claim.