The Debtors’ overzealous efforts to obtain the Unsecured Term Loan Lenders’ support for the Equity Holder Settlement has resulted in the proposal of a Plan that is patently unconfirmable as it relates to NWHI. The Plan seeks to bully certain NWHI unsecured creditors by deducting all confirmation-related expenses from such creditors’ already paltry recoveries. Of course, the Plan carves out the Unsecured Term Loan Lenders from this indefensible provision, so their inflated recoveries will not be diminished by confirmation-related expenses. The Debtors have not and cannot identify any legal basis for charging NWHI—let alone a disfavored subset of NWHI’s unsecured creditors—for all expenses associated with confirmation of a Plan that principally benefits NWHI’s subsidiaries and those subsidiaries’ creditors to the detriment of NWHI…. The Plan, as it relates to NWHI, further violates section 1129(b) of the Bankruptcy Code by unfairly discriminating against NWHI’s unsecured creditors other than the Unsecured Term Loan Lenders in multiple respects. In addition to burdening only a subset of NWHI’s unsecured creditors with the confirmation-related expenses, the Plan also provides the Unsecured Term Loan Lenders with 92.5% of the non-cash consideration from the Equity Holders Settlement. This favored treatment for the Unsecured Term Loan Lenders may have been part of the price for getting their support for the Plan, but it cannot be justified under the Bankruptcy Code.”
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