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Point Blank Solutions Objection Filed

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According to the U.S. Bankruptcy Court docket, CarVal Investors filed an objection to Point Blank Solutions’ Second Amended Joint Plan of Liquidation.

CarVal Investors asserts, “Under Sections 4.4 and 4.6 of the Plan, the holders of Class 4 Subordinated Unsecured Claims and Class 6 Old Common Stock Interests, whose claims and interest are junior to the claims in Class 3, will receive Class 4 and Class 6 Trust Interests, respectively, on account of their claims and interests; accordingly, the Plan may only be confirmed if the requirements of 1129(b)(2)(B)(i) are met. In a woefully inadequate attempt to satisfy this requirement, the Plan proposes to pay each holder of a General Unsecured Claim ‘up to the Allowed amount of said holder’s Class 3 Claim plus postpetition interest at the Federal Judgment Rate.’ The phrase ‘value, as of the effective date of the plan’ in section 1129(b) of the Bankruptcy Code has been consistently recognized to mean that, where a plan proposes to defer the timing of distributions to a dissenting class of creditors, the court must ensure that the present value of those distributions equals the allowed amount of the creditor’s claim….The Debtors have created an allegedly impaired class to ensure approval of the Plan.”

The objection continues, “The court should not countenance a situation where the acceptance by an artificially impaired Class 5 would allow for confirmation of the Plan even if it has been rejected by the principal creditors in interest in these chapter 11 cases (Class 3) and, potentially, holders of subordinated claims (if any) and equity interests in Class 4 and Class 6, respectively.” Read more bankruptcy news.