Rochelle's Daily Wire

Bill--interesting decision, but as I read this it didn't seem like a Jevic issue to me at all. If all estate assets are encumbered, and a sale process would not result in anything for unsecured creditors (including administrative claimants, who are just the first unsecured creditors in line) beyond the senior secured debt, why is this a Jevic issue? The decision seems to suggest that somehow if administrative claimants didn't agree to the sale process with the distinct possibility there would be insufficient sales proceeds to cover admin expenses (hence the implied consent aspect), the sale process would violate Jevics (and cited to 1129 for the proposition that administrative claimants must be paid). Respectfully, to me that is simply wrong. 1129 applies in a plan confirmation context--hence, if this sale were to occur in a plan, I suppose that would be the case. But as this case (like most cases) involved a 363 sale process, so 1129 isn't applicable. In fact, attempting to take sales proceeds without the consent of the senior secured lender (such as thru carve outs for at least some admin expenses, or a surcharge) would violate Jevics--the first party in line in the bankruptcy pecking order is the secured creditor to the value of its collateral being sold. So a proposed sale which would not produce proceeds beyond basic costs of sale, with nothing for admin claims or other unsecured creditors is not a Jevics problem, it's an economic problem. This is precisely what would happen in a sale in Ch. 7. The court (and unsecured/admin creditors) have a choice--either: (1) try to negotiate carve outs (as they did here) and support the sale process (with the hope that an economic miracle occurs and there's sales proceeds that gets them paid); or (2) object to the sale, in which case the secured lender seeks stay relief to foreclose or conversion to Ch. 7--both of which result in a loss of the asset and unsecured creditors (including admin claims) aren't paid. Given the fact that the DIP financing was tied to approval of the sale process (again, a very common occurrence in these cases), failure to approve the sale process likely results in conversion to a Ch. 7 because there's no money to operate (and with an airline, that is immediate death). That's just economic reality. Conversely Jevics involved the use of cash sales proceeds and an attempt to skip over some admin/priority claims and give money to other, junior group of creditors in the pecking order. The facts of this case are not that at all. Am I missing something here?