Opinion
IP 99-1037-C-B/S, District Court Cause Number; IP 98-4342-RLB-11, Bankruptcy Court Cause Number; IP 98-428, Adversary Proceeding Number.
March 23, 2001.
ENTRY VACATING THE JUDGMENT OF THE BANKRUPTCY COURT AND REMANDING
Appellants Stephen A. Moyer ("Moyer") and Ralph J. Baughey ("Baughey"), appeal the Bankruptcy Court's decision to grant summary judgment against them and to equitably subordinate their claims against the bankruptcy estate of the Debtor, Paint Assembly Corporation ("PAC" or "Debtor"), to the claims of the Debtor's general unsecured creditors. For the following reason, the Bankruptcy Court's decision is VACATED and the case is REMANDED for further action consistent with this ruling.
Background
The Debtor, PAC, was founded by Appellants, Moyer and Baughey (collectively "Appellants"), in the summer of 1985 after Moyer had been approached by Fisher Guide Division (later known as Inland Fisher Guide) ("IFG"), a Division of General Motors Corporation ("GM"), about putting together a fascia painting and taping facility. Defs.' App. of Evidentiary Materials, Ex. A, Aff. of Stephen A. Moyer ("Moyer Aff.") ¶ 2. IFG had initially attempted to locate and lease a facility of its own, but after its attempts failed, IFG approached Appellants to form PAC, and to locate, purchase and manage a facility to do this work.Id. ¶¶ 2-4. PAC purchased a building to serve as the physical plant and remodeled it, spending in excess of $1 million which had been loaned to it by Anderson Bank, now known as Star Financial Bank. Id. ¶ 8-9. Appellants' initial total investment personally was $1,005.00.Id. ¶ 6. Because PAC was a new corporation without any business history and without significant capital, the Bank required a guaranty for the loan, which was provided by IFG or GM. Id. ¶ 8. Additional funds to remodel, equip, and operate the physical plant were obtained from loans by IFG, repayment of which was included in the piece price IFG paid PAC for painting the fascia. Id. ¶¶ 7, 10.
There was a third investor initially, Judy Dudgeon; however, her interest was sold after her death but prior to the events at issue here. Appellant's Br. at 5 n. 2. We follow the bankruptcy court's lead and simplify the facts when discussing the formation of PAC by referring only to Moyer and Baughey.
By the mid-1990s, IFG had reduced the volume of fascia it was processing through PAC, which forced PAC to seek alternative sources of business. Id. ¶¶ 16-24. At approximately the same time, Moyer and Baughey had decided that they wanted to retire from the business and had been contacted by a representative of Aluminum Finishing as a potential purchaser. Id. ¶ 23. PAC now owned the property free of the original bank loans and in June, 1996, had purchased the machinery and equipment from IFG, about the same time it became apparent that GM would not be placing more work with PAC. Id. ¶ 25. Also in 1996, Thomas Bielski ("Bielski"), Michael Robertson ("Robertson"), and Robertson's father became interested in acquiring the facilities and Moyer and Baughey allowed Bielski and Robertson to operate PAC's facilities in anticipation of selling the corporation to them the following year. Id. ¶¶ 26, 28. Moyer believed they had a business plan in place to allow PAC to continue as a viable business. Id. ¶ 26.
In January, 1997, Moyer and Baughey entered into a Stock Purchase and Redemption Agreement ("January, 1997, Agreement") with Bielski and Robertson, pursuant to which Bielski and Robertson became the owners of PAC. See United States Bankruptcy Court of Southern District of Indiana, Entry on Motion for Summary Judgment of June 28, 1999 ("Bankruptcy Ct. Entry") at 3. PAC, together with Bielski and Robertson, agreed to redeem all of Appellants' stock for a total payment of $5 million. Moyer Aff. ¶ 31. Moyer and Baughey each received $1,600,000.00 at the January 21, 1997, closing, and the parties agreed that the balance of the purchase price would be paid to Moyer and Baughey in the form of two $900,000.00 notes. Id. The two notes were secured by a mortgage on the plant and real estate which was recorded in Madison County, Indiana on January 22, 1997. Id.; Real Estate Mortgage executed January 21, 1997, by PAC in favor of Moyer and Baughey, recorded in Madison County, Indiana on January 22, 1997, Doc. No. 9701030.
Robertson and Bielski, together with PAC, borrowed $3,296,925.35 from Charter One Bank ("Charter One") to finance the stock purchase. PAC granted several security interests in its property to Charter One as collateral for the loan. Bankruptcy Ct. Entry at 4. GM, PAC's largest creditor and primary customer, was aware of the transfer in ownership, attended the closing, and executed a standstill agreement. Moyer Aff. ¶ 29; Affidavit of Richard F. Brock, CPA, Ex. 6, January 22, 1997, Standstill Agreement between PAC, GM, Delphi (successor in interest to IFG), and Charter One ("Standstill Agreement").
PAC made regular monthly interest payments on the notes to Moyer and Baughey until August of 1997, but Appellants received no payments thereafter. Moyer Aff. ¶ 31. On November 4, 1997, Appellants each returned $100,000.00 of the sale proceeds they had received on January 21, 1997, and took promissory notes from PAC for those amounts, to be secured by the January 21, 1997 mortgages. Am. Compl. ¶ 16, Exs. K, L.
Approximately fifteen months after the January 1997, Agreement was entered into, PAC filed for bankruptcy protection. Bankruptcy Ct. Entry at 4. The Official Creditors' Committee of PAC ("Committee") responded with a complaint seeking to subordinate the secured claims of Appellants to the claims of PAC's general unsecured creditors. The Committee contended that Appellants' claims should be equitably subordinated, pursuant to 11 U.S.C. § 510(c), on the grounds that Appellants' claims were in the nature of equity, not credit. The Bankruptcy Court agreed with the Committee and granted summary judgment in its favor, equitably subordinating Appellants' claims to those of the general unsecured creditors, pursuant to § 510(c)(1), and transferring the liens securing these claims to the bankruptcy estate, pursuant to § 510(c)(2). For the reasons discussed below, we VACATE this ruling by the Bankruptcy Court and REMAND the case for further proceedings consistent with our determinations in this appeal.
Discussion A. Jurisdiction and Standard of Review
We have jurisdiction to consider this bankruptcy appeal pursuant to 28 U.S.C. § 158(a). We review the bankruptcy court's findings of fact under a clearly erroneous standard and its conclusions of law de novo. See Fed.R.Bankr.P. 8013; In re Lifschultz Fast Freight, 132 F.3d 339, 343 (7th Cir. 1997); In re A-1 Paving and Contracting, Inc., 116 F.3d 242, 243 (7th Cir. 1997); In re Generes, 69 F.3d 821, 824 (7th Cir. 1995). Reversal under the clearly erroneous standard is inappropriate so long as the bankruptcy court's "`account of the evidence is plausible in light of the record viewed in its entirety.'"Lifschultz, 132 F.3d at 343 (quoting Anderson v. City of Bessemer City, 470 U.S. 564, 573-74 (1985)). It is not enough that "`we would have weighed the evidence differently'" (id.); the decision must "strike us as wrong with the force of a five-week-old, unrefrigerated dead fish."Piraino v. Int'l Orientation Resources, Inc., 137 F.3d 987, 990 (7th Cir. 1998). We must be "left with the definite and firm conviction that a mistake has been committed." In re Love, 957 F.2d 1350, 1354 (7th Cir. 1992) (citing E.E.O.C. v. Sears, Roebuck Co., 839 F.2d 302, 309 (7th Cir. 1988)).
Because the bankruptcy court granted the Committee's motion for summary judgment, we must determine first whether a genuine issue of material fact exists such that a reasonable trier of fact could return a judgment in Appellants' favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In considering a motion for summary judgment, any inferences drawn from the facts must be viewed in the light most favorable to the non-moving party, but only reasonable inferences need be made. Mills v. Health Care Serv. Corp., 171 F.3d 450, 459-60 (7th Cir. 1999). After reviewing the factual findings, we conduct our de novo review of the conclusions of law.
B. Standards for Equitable Subordination
The Bankruptcy Code provides the general rules and ordering by which property should be distributed in bankruptcy proceedings. 11 U.S.C. § 726. However, the Code allows for certain claims to be subordinated, thereby altering the distribution from the order which would be otherwise required by § 726. 11 U.S.C. § 510. Section 510 contains two provisions by which claims can be subordinated. Subpart (b) provides for mandatory subordination of claims "arising from rescission of a purchase or sale of a security . . ., for damages arising from the purchase or sale of such a security, or for reimbursement or contribution . . . on account of such a claim." § 510(b). In contrast, to the mandatory language found in subpart (b), subpart (c) allows for the "equitable subordination" of claims:
Subsection (a) provides that the parties may execute a subordination agreement and that such an agreement is "enforceable in a case under this title to the same extent that such agreement is enforceable under applicable nonbankruptcy law." 11 U.S.C. § 510 (a).
Notwithstanding subsections (a) and (b) of this section, after notice and a hearing, the court may —
(1) under principles of equitable subordination, subordinate for purposes of distribution all or part of an allowed claim to all or part of another allowed claim or all or part of an allowed interest to all or part of another allowed interest; or
(2) order that any lien securing such a subordinated claim be transferred to the estate.
§ 510(c).
A problem can arise in bankruptcy proceedings if a claimant dresses up a claim she has against the debtor to look like something else of higher priority. Lifschultz, 132 F.3d at 343. "Equityholders come last in bankruptcy . . . [t]o avoid this, an owner might disguise her equity claim as debt. The doctrine of equitable subordination empowers a bankruptcy court to foil this queue-jumping." Id. A court may equitably subordinate a claim "in a given case . . . when justified by particular facts." United States v. Noland, 517 U.S. 535, 540 (1996). However, the subordination of a class of claims does not "fall within the judicial powers of equitable subordination . . . [such an action is] a legislative type of decision." Id. at 541; see also United States v. Reorganized CF I Fabricators of Utah, Inc., 518 U.S. 213, 229 (1996) (holding that "categorical reordering of priorities that takes place at the legislative level of consideration is beyond the scope of judicial authority to order equitable subordination under § 510(c)").
Although inequitable conduct is normally a precondition for the equitable subordination of a claim, a court may "equitably subordinate claims to other claims on a case-by-case basis without requiring in every instance inequitable conduct on the part of the creditor." In re Virtual Network Servs. Corp., 902 F.2d 1246, 1250 (7th Cir. 1990) (discussing the equitable subordination of a general unsecured creditor's claims to those of other unsecured creditors); see also In re Vitreous Steel Prods. Co., 911 F.2d 1223, 1237 (7th Cir. 1990) ("[I]t is not necessarily required that the creditor be found to have engaged in misconduct . . . [instead] the inquiry is to be made on a case-by-case basis focussing [sic] on fairness to the other creditors.") (discussing claim of secured but non-perfected creditor). Although Virtual Network considered the subordination of a tax penalty, the Seventh Circuit has since expanded its holding to allow for a case-by-case consideration of the no-fault equitable subordination of any claim. Lifschultz, 132 F.3d at 349; see also In re Envirodyne Indus., 79 F.3d 579, 582 (7th Cir. 1996) (adoptingVirtual Network and holding that the "court must look at the origin and nature of the unsecured claim and decide whether equity requires it to be subordinated to claims of other general unsecured claims").
Still, even after Virtual Network, the general rule in the Seventh Circuit remains that inequitable conduct is required for equitable subordination, but "creditor misconduct is no longer an absolute requirement in this circuit `in all circumstances' and `in every instance.'" Lifschultz, 132 F.3d at 348 (quoting Virtual Network, 902 F.2d at 1250). Bankruptcy is not a "`free-for-all equity balancing act.'" In re Stoecker, 179 F.3d 546, 551 (7th Cir. 1999), aff'd sub nom.Raleigh v. Ill. Dep't of Revenue, 530 U.S. 15 (2000). The power of equitable subordination can not be exercised in such a way that the "`inevitable result'" would be the equitable subordination of every claim that falls within a certain category. Lifschultz, 132 F.3d at 348 n. 7 (quoting Noland, 517 U.S. at 539); see also Stoecker, 179 F.3d at 551 (holding that equitable subordination must be exercised case by case and not over a whole class of claims).
C. The Bankruptcy Court's Factual Findings and Conclusions of Law
With these standards in mind, we clarify the specific factual findings and conclusions of law reached by the bankruptcy court. First, the court held that the January, 1997, Agreement, whereby Appellants were assigned their security interests in PAC, "was . . . a stock redemption." Bankruptcy Ct. Entry at 11. This finding was driven by the fact that Moyer and Baughey did not put any new money into PAC in exchange for these security interests. Id. at 11-12.
Significantly, in reaching this conclusion, the Court rejected the relevance of several of Appellants' arguments. First, Appellants contended that all of PAC's current unsecured creditors had knowledge of, or should be deemed to have knowledge of, their secured claims (including the largest unsecured creditor, GM, who was represented at the January 1997 closing). Second, they asserted that none of the current creditors was harmed in any way by the January 1997, transaction; PAC had paid in full all of the debt owed to unsecured creditors as of January 1997 and had a positive net worth both before and after the closing. Bankruptcy Ct. Entry at 14-15. The Court held that "[w]hile all these assertions by [Moyer and Baughey] may be true, they are irrelevant to the central point here." Id. at 15.
The Court stated the legal issue confronting it as:
The Court, then, must determine whether the facts of the instant case fall into the Lifschultz-general rule-category, where creditor misconduct is required in order to apply equitable subordination, or fall into the Envirodyne — exception to the rule-category for stock redemption, where creditor misconduct is not a requirement for the application of equitable subordination.Id. at 11. Armed with the single factual determination that the transaction leading to Appellants' claims was a stock redemption, the Court held that: "the claims of Moyer and Baughey, although formally debt, are in substance based on equity interests. Pursuant to the holding of the Seventh Circuit in Envirodyne, the claims of [Moyer and Baughey] should be subordinated to the claims of the Debtor's unsecured creditors." Id. at 12.
D. Analysis
To effectively analyze the Bankruptcy Court's decision, we must delve further into those cases establishing no-fault equitable subordination.Virtual Network, which established the exception with respect to tax penalties, specified that the power to equitably subordinate such a claim was to be wielded on a case-by-case basis. Virtual Network, 902 F.2d at 1250. The importance of such a case-by-case analysis was highlighted by the United States Supreme Court's decision in Noland which reversed the Sixth Circuit's precedent allowing for the "categorical" equitable subordination of all tax penalties. Noland, 517 U.S. at 543. The Supreme Court's holding in Noland that § 510(c) "may allow for the bankruptcy court to reorder a tax penalty in a given case . . . when justified by particular facts" left Virtual Network's holding intact. See id. at 540. The unanimous Court continued,
But if the provision also authorized a court to conclude on a general, categorical level that [a class of claims] should be [subordinated], it would empower a court to modify the operation of the priority statute at the same level at which Congress operated when it made its characteristically general judgment to establish the hierarchy of claims in the first place. . . . `Decisions about the treatment of categories of claims in bankruptcy proceedings . . . are not dictated or illuminated by principles of equity and do not fall within the judicial power of equitable subordination. . . .'Id. (quoting Burden v. United States, 917 F.2d 115, 122 (3d Cir. 1990) (Alito, J., concurring in part and dissenting in part)) (last two alterations in original); see also Noland, 517 U.S. at 543 (reserving the issue of whether inequitable conduct is a prerequisite to equitable subordination).
In Envirodyne, decided three months prior to Noland, the Seventh Circuit reaffirmed Virtual Network's holding. Envirodyne, 79 F.3d at 582. In fact, that opinion clarified that the case-by-case allowance for equitable subordination absent inequitable conduct was in no way limited to tax penalties. Id. In Envirodyne, the defendants were former shareholders who had neglected to tender their shares during a merger and were in essence "cashed out," given non-interest-bearing shares instead; defendants then failed to redeem their non-interest-bearing shares for over three years after the merger. Id. at 580. The Seventh Circuit "adopted the flexible approach of Virtual Network in which a court must look at the origin and nature of the unsecured claim and decide whether equity requires it to be subordinated to claims of other general unsecured claims." Id. at 582. Analogizing the defendants' claims to those of former shareholders in stock redemption cases, the court noted that "courts generally use equitable subordination to subordinate the claims of former shareholders who redeemed their stock to the issuing corporation in exchange for debt." Id. (emphasis added). Although the claim is formally one of credit, the "substance of the transaction . . . is simply a . . . distribut[ion of] a proportion of the assets to stockholders." Id. The court found that the defendants' claims were "in substance, based on equity interests" and further that "[t]heir current status as creditors arose from their failure to tender shares in the [company's] short-form merger under Delaware law, as well as their failure to redeem their non-interest-bearing shares of Former Envirodyne in the three years subsequent to the merger. . . . [T]heir dilatory behavior is inexplicable given that they merely held non-interest-bearing cancelled shares of Former Envirodyne. Thus their claims in bankruptcy are far weaker than other general unsecured creditors." Id. at 583.
Several points bear emphasis from this analysis. First, Envirodyne did not establish the categorical equitable subordination of all claims resulting from a stock redemption; rather, the court noted that such claims are "generally" equitably subordinated and held that "equitable subordination was appropriate on the facts of this case." Id. at 584. In addition to the nature of the claim, the court cited several other reasons that required subordination in that case: the plaintiffs' unsecured status; that plaintiffs' status as creditor was not the result of actions taken on their part, but instead resulted from inaction; and that they had been "dilatory" in not previously redeeming their non-interest-bearing shares. Id. at 583.
We do not read Envirodyne to establish the per se equitable subordination of all creditor claims resulting from stock redemptions. Even if it could be read in such a manner, the Supreme Court's opinion inNoland, issued three months later, would have overruled such a "categorical" determination. Noland, 517 U.S. at 539; see also Reorganized CF I Fabricators of Utah, Inc., 518 U.S. at 229;Lifschultz, 132 F.3d at 348 n. 7. The Seventh Circuit recently confirmed that Envirodyne had not created a per se category of claims to be equitably subordinated. See Lifschultz, 132 F.3d at 349. WhileEnvirodyne held that the shareholders' claims were in substance "`based on equity interests'" in the target corporation, Lifschultz emphasized that those claims were also unsecured and that the debtor had received no assets in exchange for the debt. Id. at 349 (quoting Envirodyne, 79 F.3d at 582). In fact, the Seventh Circuit has never upheld the equitable subordination of a secured claim absent inequitable conduct.Lifschultz, 132 F.3d at 349 n. 11. Thus, while the nature and substance of a former shareholder's claim is an important issue to be resolved by the bankruptcy court, it cannot be the only factor in determining when equitable subordination is appropriate.
While we defer as we must to the Bankruptcy Court's conclusion that Moyer's and Baughey's interests resulted from a stock redemption, there is additional evidence that could distinguish the facts of this case from those of Envirodyne. Although the Bankruptcy Court is correct that the "fact that a claim to be subordinated `may be secured is of no consequence to the issue of subordination,'" Bankruptcy Ct. Entry at 13 (citations omitted), Envirodyne specifically refers to the unsecured status of defendants as a factor distinguishing it from an asset purchase case, in which inequitable conduct is required for subordination.Envirodyne, 79 F.3d at 582 (citing In re EDC, 930 F.2d 1275 (7th Cir. 1991) and noting that asset purchase cases "involve subordination of secured claims to unsecured claims"). In addition, Lifschultz distinguished the unsecured claims in Envirodyne from the secured claims therein in concluding that no-fault equitable subordination was inappropriate; Lifschultz even noted that the Seventh Circuit has never upheld the equitable subordination of a secured claim absent inequitable conduct. Lifschultz, 132 F.3d at 349. The discussion cited by the Bankruptcy Court is intended to highlight that a court has the power to peer beyond the secured nature of a claim and if the circumstances indicate that a claimant has "breached `rules of fair play and good conscience' vis-a-vis the company and its creditors, the bankruptcy court can send her back to the end of the line." Lifschultz, 132 F.3d at 344. The fact that Moyer's and Baughey's claims are secured does not preclude their subordination; rather, such status must be considered when the bankruptcy court wields its broad equitable power.
As we discuss more fully below, we do not view this factual conclusion to be entirely accurate.
Also distinguishing the present case from Envirodyne are the actions of the claimants. The Envirodyne defendants did not achieve their creditor status by any affirmative means; on the contrary, they had failed to tender their shares during a short-form merger. Enirodyne, 79 F.3d at 583. They further neglected to take the opportunity to redeem their non-interest-bearing shares during the three years that followed the merger. Id. The Seventh Circuit found that this "dilatory" behavior, while not rising to the level of inequitable conduct, made "subordination even more compelling here than in a stock redemption case." Id.
In contrast, Moyer and Baughey affirmatively sought their status as PAC's creditors. Their decision to accept notes in partial payment for selling their shares to Robertson and Bielski was what allowed PAC to remain solvent after the transfer in ownership. Had Moyer and Baughey required that payment be received up front at the January, 1997, closing, it is reasonable to infer that PAC would have become insolvent and been unable to continue as an on-going concern. These actions are in clear contrast to the passive acceptance of creditor status and dilatory behavior that was present in Envirodyne. See In re Rabex of Colo., Inc., 226 B.R. 905, 909 (D.Colo. 1998) (noting that the opinion inEnvirodyne focused both on the equity nature of defendants' claims as well as the creditors' "`dilatory behavior'" in concluding that equitable subordination was appropriate); cf. In re Audre, Inc., 210 B.R. 360, 369 (Bankr.S.D.Cal. 1997) ("[In Envirodyne, t]he Seventh Circuit's analysis stated that the fact that the claims were really based on equity interests made the argument for subordination more compelling. However, the court did not state that all such claims are subject to subordination, only that a case-by-case analysis is required.").
Finally, the Bankruptcy Court did not even consider the impact of Appellants' November 4, 1997, gesture whereby each returned $100,000 of the January, 1997, payment to Charter One in exchange for additional notes issued by PAC and secured by the January 21, 1997, mortgages. Am. Compl. ¶ 16, Exs. K, L. This capital contribution occurred ten months after Moyer and Baughey had ceased being PAC shareholders or were otherwise involved in its activities. Lifschultz recognized that such an infusion of new assets was not present in Envirodyne and counseled against applying no-fault subordination in that case. Compare Lifschultz, 132 F.3d at 349 (specifying that plaintiffs had provided the debtor with assets in exchange for the debt), with Envirodyne, 79 F.3d at 582 (distinguishing asset purchase cases in that they involved an exchange of assets for incurring debt). Section 510(c)(1) allows the bankruptcy court to "subordinate . . . all or part of an allowed claim."Id. (emphasis added). Even if further, more detailed fact-finding by the bankruptcy court leads to the conclusion that the portion of Appellants' claims stemming directly from the stock redemption must be subordinated, the bankruptcy court must also address whether the evidence requires that the respective $100,000.00 portions of Appellants' claims receive separate treatment.
In addition, the Bankruptcy Court did not consider the equity of subordinating Appellants' claims to those of GM, the largest of the unsecured creditors. The record contains evidence that reasonably could be construed as requiring the court to equitably subordinate the claims of GM. Even if Moyer's and Baughey's claims deserved to be reordered in the bankruptcy proceedings, Section 510(c)(1) authorizes the court to "subordinate for purposes of distribution . . . an allowed claim to all or part of another allowed claim." This language does not require that Appellants' claims necessarily be sent to the end of the line, but the court is to determine what the equitable ordering of claims should be. If the facts bear out the contention that PAC was operated as a "mere instrumentality" or "alter ego" of IFG or GM, fairness and equity might require that GM's claims be sent to the end of the line, effectively placing Appellants' claims behind those of all of the general unsecured creditors except GM.
Moreover, GM's presence at the January, 1997, closing and its acquiescence thereto could counsel that equity does not require Appellants' claims to be subordinated to those of GM. GM executed a standstill agreement which effectively allowed the transaction to be consummated and granted Charter One assurances that it would not seek, and PAC would not grant, any security interest to secure its claims.See Standstill Agreement, sec. 2. While we disagree with Appellants that the standstill agreement evidences that GM has necessarily acquiesced in being paid after Appellants, the Bankruptcy Court must consider whether the standstill agreement and other circumstances surrounding the January 1997, closing require GM's claims to be ordered after Appellants' claims.
Conclusion
The Bankruptcy Court elevated what was intended to be a case-by-case exception to the rule requiring inequitable conduct for equitable subordination to a categorical rule that all claims stemming from a stock redemption must be placed at the end of the line during a bankruptcy distribution. In so doing, the court neglected to consider other factors that may be relevant or to make other factual findings that may require that all or part of Appellants' claims be paid before those of the general unsecured creditors, or before those of certain unsecured creditors. The Bankruptcy Court's opinion is therefore VACATED and this case is REMANDED for further proceedings consistent with this Entry.