Hal Luftig Company, Inc.

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK FOR PUBLICATION

In re: Chapter 11 (Subchapter V)

HAL LUFTIG COMPANY, INC., Case No. 22-11617 (JPM)

Debtor.

MEMORANDUM OPINION AND ORDER ON CONFIRMATION OF DEBTOR’S

THIRD AMENDED SMALL BUSINESS PLAN OF REORGANIZATION UNDER CHAPTER 11

A P P E A R A N C E S:

RUSKIN MOSCOU FALTISCHEK, P.C.

Counsel for Debtor Hal Luftig Company, Inc.

East Tower, 15th Floor, 1425 RXR Plaza

Uniondale, NY 11556

By: Michael S. Amato, Esq.

Sheryl P. Giugliano, Esq.

MARTIN J. FOLEY, PLC

Counsel for Hal Luftig

601 S. Figueroa Street, Suite 2000

Los Angeles, CA 90017

By: Martin J. Foley, Esq.

LIPPES MATHIAS LLP

Counsel for FCP Entertainment Partners, LLC

50 Fountain Plaza, Suite 1700

Buffalo, New York 14202–2216

By: John A. Mueller, Esq.

Christopher M. Fisher, Esq.

BEDERSON, LLP

Subchapter V Trustee

347 Mount Pleasant Avenue

West Orange, NJ 07052

By: Charles N. Persing, CPA

WILLIAM K. HARRINGTON

United States Trustee

One Bowling Green, Room 534

New York, NY 10004

By: Paul Schwartzberg, Esq.

I. INTRODUCTION .............................................................................................................................................. 1

II. JURISDICTION ................................................................................................................................................ 3

III. BACKGROUND ................................................................................................................................................ 4

A. THE DEBTOR’S SUBCHAPTER V BANKRUPTCY AND THE LUFTIG STAY ................................................................. 4

1. Key Claims Against The Debtor’s Estate ................................................................................................... 6

2. The Debtor’s Initial Plan and The Filing of The Third Amended Plan ...................................................... 7

B. SUMMARY OF THE THIRD AMENDED PLAN ......................................................................................................... 11

C. THE PLAN’S VOTING RESULTS............................................................................................................................ 13

D. THE PARTIES’ CONTENSIONS .............................................................................................................................. 14

1. The Debtors’ Memorandum of Law in Support of Confirmation .............................................................. 14

2. The FCP Final Objection ......................................................................................................................... 17

E. TESTIMONY AT THE CONFIRMATION HEARING ................................................................................................... 18

IV. ANALYSIS ....................................................................................................................................................... 22

A. THE CONFIRMATION REQUIREMENTS ................................................................................................................. 22

B. THE LUFTIG STAY EXTENSION ............................................................................................................................ 24

1. The Law on Extending The Automatic Stay to Non-Debtor Parties ......................................................... 24

2. The Luftig Stay Extension’s Duration Does Not Render It Impermissible ............................................... 27

3. The Luftig Stay Extension is Necessary to The Debtor’s Successful Reorganization ............................... 29

4. The Luftig Stay Extension Does Not Render The Third Amended Plan “Unfair and Inequitable” .......... 33

C. FCP’S OTHER ARGUMENTS CONCERNING THE THIRD AMENDED PLAN’S FAIRNESS AND EQUITABILITY ........... 35

V. CONCLUSION ................................................................................................................................................ 38

JOHN P. MASTANDO III

UNITED STATES BANKRUPTCY JUDGE

I. INTRODUCTION

This case presents the question of whether a Chapter 11 Subchapter V debtor can confirm,

over the objection of its main unsecured creditor, a plan of reorganization that includes a continued

extension of the automatic stay to a non-debtor — Hal Luftig (“Mr. Luftig”), the Debtor’s president

— for the five-year life of the contemplated plan.

Pending before the Court is the request of Debtor Hal Luftig Company, Inc. (the “Debtor”)

to confirm the Debtor’s Third Amended Small Business Plan of Reorganization Under Chapter 11

of the Bankruptcy Code (the “Third Amended Plan”). Docket No. 172.1 The Debtor supports its

request with the Memorandum of Law (I) in Support of Confirmation of Debtor’s Third Amended

Small Business Plan of Reorganization under Chapter 11 of the Bankruptcy Code, and (II) in

Response to the Objection to Confirmation Filed by FCP Entertainment Partners, LLC (the

“Memorandum of Law”).2 Docket No. 173. The Third Amended Plan is also supported by: (i)

the Declaration of Brian Ryniker in Support of Confirmation of Debtor’s Chapter 11 Plan of

Reorganization under Subchapter V of the Bankruptcy Code, and (II) in Response to the Objection

to Confirmation Filed by FCP Entertainment Partners, LLC, and the exhibits thereto (the

1 References to “Docket No. __” are to filings entered on the docket in this bankruptcy case, No. 22–11617.

References to “Claim No. __” are to proofs of claim filed on the claims register in this bankruptcy case. References

to “AP Docket No. __” are to filings entered on the docket in the related adversary proceeding styled Hal Luftig

Company, Inc. v. FCP Entertainment Partners, LLC, Adversary Proceeding No. 22-01176. References to

“Bankruptcy Code § __ or Code § __” are to Title 11 of the United States Code. References to “Bankruptcy Rule __”

are to the Federal Rules of Bankruptcy Procedure.

2 The Memorandum of Law, the November 2024 Ryniker Declaration, and the November 2024 Luftig

Declaration contain responses to certain arguments raised by the Debtor’s unsecured judgment creditor, FCP

Entertainment Partners, LLC (“FCP”) in its objection to prior versions of the Debtor’s proposed plan. Since the Third

Amended Plan’s filing, FCP has filed a Final Objection to Confirmation of Amended Plan (the “Final Objection”) and

explicitly withdrawn its prior objections. Final Obj’n at 4, Docket No. 190 (“By filing [the Final] Objection, FCP

hereby expressly withdraws the Objection to the Second Amended Plan…”). Accordingly, for the analysis in this

opinion, the Court only considers FCP’s arguments set forth in the Final Objection, and will not address any responses

to arguments that have since been withdrawn.

“November 2024 Ryniker Declaration”),3 Docket No. 174; (ii) the Declaration of Hal Luftig (I) in

Support of Confirmation of Debtors’ Small Business Plan of Reorganization under Chapter 11 of

the Bankruptcy Code, and (II) in Response to the Objection to Confirmation Filed by FCP

Entertainment Partners, LLC, and the exhibits thereto (the “November 2024 Luftig Declaration”),4

Docket No. 175; (iii) the Declaration of Sheryl P. Giugliano Regarding Solicitation of Votes and

Tabulation of Ballots Accepting and Rejecting Debtor’s Small Business Plan of Reorganization

under Chapter 11 of the Bankruptcy Code (the “Giugliano Voting Declaration”), Docket No. 90;

and (iv) the Supplemental Declaration of Sheryl P. Giugliano Regarding Solicitation of Votes and

Tabulation of Ballots Accepting and Rejecting Debtors Small Business Plan of Reorganization

Under Chapter 11 of the Bankruptcy Code (the “Giugliano Supplemental Declaration,” together

with the Giugliano Voting Declaration, the “Giugliano Declarations”), Docket No. 179.

The confirmation hearing for the Third Amended Plan was originally scheduled for

December 19, 2024. However, at FCP’s request, the Court adjourned the confirmation hearing

and instead held a status conference on December 19, 2024. See Memorandum Endorsed Order

Re: Status Conference, Docket No. 184. At that conference, the Court addressed certain procedural

issues regarding the confirmation timeline, adjourned the confirmation hearing to January 17,

2025, and extended the deadline for FCP to object to confirmation to January 10, 2025. See Hr’g

3 The November 2024 Ryniker Declaration incorporates by reference the Declaration of Brian Ryniker in

Support of Confirmation of Debtor’s Second Amended Chapter 11 Plan of Reorganization Under Subchapter V of the

Bankruptcy Code (the “July 2024 Ryniker Declaration”), Docket No. 156. See November 2024 Ryniker Declaration

¶ 5, Docket No. 174. The July 2024 Ryniker Declaration was previously filed on July 25, 2024 in support of

confirmation of the Debtor’s prior plan.

4 The November 2024 Luftig Declaration incorporates by reference the Declaration of Hal Luftig in Support

of Confirmation of Debtor’s Second Amended Small Business Plan of Reorganization Under Chapter 11 of the

Bankruptcy Code (the “July 2024 Luftig Declaration”), Docket No. 157. See November 2024 Luftig Declaration ¶ 3,

Docket No. 175. The July 2024 Luftig Declaration was previously filed on July 25, 2024 in support of confirmation

of the Debtor’s prior plan.

Tr. from December 19, 2024, Docket No. 186. On January 10, 2025, FCP filed its Final Objection.

See Final Obj’n, Docket No. 190.

On January 10, 2025, the parties submitted the Amended Joint Pretrial Order (the

“Amended Pretrial Order”), which was so-ordered by the Court on January 13, 2025. See Am.

Pretrial Order, Docket No. 192.

The Court heard evidence and arguments of counsel at a hearing on January 17, 2025 (the

“Confirmation Hearing”). In considering the parties’ requests and arguments, the Court has

reviewed (i) the Third Amended Plan; (ii) the Memorandum of Law; (iii) the November 2024

Ryniker Declaration; (iv) the November 2024 Luftig Declaration; (v) the Giugliano Declarations;

(vi) the Final Objection; (vii) the Pretrial Order; (x) the testimony and arguments presented at the

Confirmation Hearing; and (xi) all other relevant material in the record. For the reasons set forth

below, the Court finds that the Debtor’s request to temporarily continue the extension of the

automatic stay to its non-debtor president should be APPROVED, and the Third Amended Plan

should be CONFIRMED.

II. JURISDICTION

The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157(a), 157(b)(1), and

1334, and the Amended Standing Order of Reference dated January 31, 2012 (Preska, C.J.). Plan

confirmation is a “core” proceeding pursuant to 28 U.S.C. § 157(b)(2)(L).

III. BACKGROUND

A. THE DEBTOR’S SUBCHAPTER V BANKRUPTCY AND THE LUFTIG

STAY

The Debtor is a New York corporation engaged in the production of theatrical works both

on and off Broadway. See Third Am. Plan at 1–2, ECF No. 172. Shows produced by the Debtor

include Fiddler on the Roof in Yiddish, American Utopia, Plaza Suite, Becoming Nancy, Legally

Blonde the Musical, Evita, Catch Me If You Can the Musical, and Come Fly Away. Id. The

Debtor’s president and sole shareholder is Mr. Hal Luftig. See Am. Pretrial Order ¶ 30, Docket

No. 192.

In August 2019, FCP — one of the Debtor’s investors and business partners — initiated an

arbitration (the “Arbitration”) against the Debtor for breach of contract and against Mr. Luftig for

breach of fiduciary duty.5 See DECLARATION OF HAL LUFTIG UNDER LOCAL RULE 1007-

2 IN CONNECTION WITH CHAPTER 11 FILING, AND LOCAL RULE 9077-1 IN SUPPORT OF

CERTAIN FIRST DAY MOTIONS (the “First Day Declaration”) ¶¶ 5–7, Docket No. 5. FCP

alleged in the Arbitration that, pursuant to a 2007 agreement, FCP was entitled to but did not

receive certain income from the Debtor’s productions of Kinky Boots and Elephant Man. See id.

¶¶ 20–21, 24. On April 1, 2022, the arbitrator issued a final award (the “Final Award”) finding

that, inter alia, the Debtor and Mr. Luftig were jointly and severally liable to FCP for

approximately $2.6 million for the breach of contract claim brought against the Debtor. Id. ¶¶ 28–

29. Subsequently, the District Court confirmed the Final Award on October 26, 2022, and entered

5 The Court will not recount here all details concerning the arbitration dispute between the Debtor and FCP,

as the Court discussed details of that dispute in its previous proposed findings of fact and conclusions of law

recommending the confirmation of the Debtor’s initial plan. See In re Hal Luftig Co., Inc., 655 B.R. 508, 516-517

(Bankr. S.D.N.Y. 2023), objections sustained, 657 B.R. 704 (S.D.N.Y. 2024), certificate of appealability denied, No.

24CV166 (DLC), 2024 WL 1892256 (S.D.N.Y. Apr. 30, 2024), and appeal withdrawn sub nom. Hal Luftig Co., Inc.

v. United States Tr., No. 24-1119, 2024 WL 3291603 (2d Cir. May 29, 2024).

a Clerk’s Final Judgment (the “Judgment”) on November 2, 2022. The Judgment’s enforcement

was automatically stayed for 30 days, until December 2, 2022. Id. ¶¶ 34–38. Mr. Luftig appealed

the District Court’s confirmation of the Final Award, but the Debtor did not. Id. ¶¶ 39–40.

On December 1, 2022 (the “Petition Date”) — one day before the stay of the Judgment’s

enforcement expired — the Debtor filed this voluntary Subchapter V small business reorganization

case (the “Petition”). Third Am. Plan at 2, Docket No. 172. On the Petition Date, the Debtor also

commenced an adversary proceeding (the “Adversary Proceeding”) seeking to extend the

automatic stay to non-debtor Mr. Luftig, and seeking a preliminary injunction enjoining FCP from

executing on the Judgment against Mr. Luftig. See Hal Luftig Company, Inc. v. FCP

Entertainment Partners, LLC, Case No. 22–01176. In support of its request for relief, the Debtor

argued that there were unusual circumstances warranting extension of the automatic stay to Mr.

Luftig. Specifically, the Debtor argued that it derives profits from the shows produced by Mr.

Luftig, and that if Mr. Luftig was not protected by the stay, “he [would] be forced on a daily basis

to deal with [FCP’s enforcement collection efforts,]” which will “irreparably harm the Debtor’s

chance of a successful reorganization…”. Mem. L. Supporting the Luftig Stay at 18, AP Docket

No. 3. Moreover, the Debtor argued that the requisite elements for a preliminary injunction against

FCP’s efforts to enforce the Judgment were satisfied. Id. at *6.

The Court held hearings on December 1 and 16, 2022, concerning the stay extension issue.

On January 5, 2023, the Court issued an opinion finding that: (i) the enforcement of the Final

Judgment against Mr. Luftig would impact his efforts on behalf of the Debtor; (ii) the Debtor was

likely to successfully reorganize; (iii) the Debtor would likely suffer irreparable harm without the

requested relief; (iv) the balance of harms weighed in favor of the injunction; (v) the injunction

was not adverse to the public interest; and (vi) the Debtor did not have another adequate remedy

at law. See Hal Luftig Co. v. FCP Ent. Partners, LLC (In re Hal Luftig Co.), Case No. 22-01176,

2023 Bankr. LEXIS 19, at *13–17 (Bankr. S.D.N.Y. Jan. 5, 2023) (the “Luftig Stay Ruling”).

Then, on January 23, 2023, the Court entered an order extending the automatic stay to Mr. Luftig

(such stay, the “Luftig Stay”) pursuant to Bankruptcy Code §§ 105 & 362, over FCP’s objection

(such order, the “Luftig Stay Order”). FCP did not appeal the Court’s Luftig Stay Order. Am.

Pretrial Order ¶ 35, Docket No. 192.

1. Key Claims Against The Debtor’s Estate

Various proofs of claim were filed against the estate. The largest unsecured claim against

the estate is Claim 6-1 filed by FCP. Claim 6-1 seeks $2,638,925.78 in connection with the

Judgment FCP obtained against the Debtor. On May 31, 2023, the Court so-ordered a stipulation

wherein the Debtor and FCP agreed that the liquidated and unliquidated portions of the Final

Award together gave rise to a claim of $2,862,776 against the estate (the “FCP Claim”). See

Stipulation and Order Allowing Unsecured Claim of FCP Entertainment Partners, LLC, Docket

No. 81.

Mr. Luftig also filed two claims — Claim 2-1 and Claim 7-1. See Claim No. 2-1; see also

Claim No. 7-1. Claim 2-1 asserts that the Debtor is obligated to indemnify Mr. Luftig for “certain

liabilities related to [Mr. Luftig’s] position as President and sole shareholder of the Debtor, and

his work with and involvement in the Debtor’s Business.” Claim No. 2-1 Rider § 1(c) (such claim,

the “Luftig Indemnification Claim”). The amount of Claim 2-1 is undetermined, but includes any

amounts of the Final Award recovered from Mr. Luftig in addition to amounts resulting from

certain loans Mr. Luftig made to the Debtor. Id.; see also Hr’g Tr. from July 11, 2023, 26:17–24,

Docket No. 97. Claim 7-1 seeks an undetermined amount owed to Mr. Luftig for deferred and

unpaid compensation from January 1, 2020, through the Petition Date (such claim, the “Luftig

Deferred Compensation Claim”). Claim No. 7-1 Rider § 1(d); see also Hr’g Tr. from July 11,

2023, 28:8–24. Relatedly, the Debtor also included in its schedules a debt owed to Mr. Luftig in

the amount of $164,505.74, based on a “Promissory Note for loan to Debtor” (such claim, the

“Luftig Note Claim”). Schedule E/F 3.9, Docket 23.

2. The Debtor’s Initial Plan and The Filing of The Third Amended Plan

On March 1, 2023, the Debtor filed the Small Business Plan of Reorganization Under

Chapter 11 of the Bankruptcy Code (the “Initial Plan”). See Docket No. 55. The Debtor

supplemented the Initial Plan with a Plan Supplement (the “Initial Plan Supplement”) on March

27, 2023. See Statement/Notice of Filing of Plan Supplement, Exs. A–D, Docket No. 63. The

Initial Plan Supplement includes certain financial projections, and a liquidation analysis prepared

by the Debtor’s expert witness, Brian Rynkier, and certain proposed employment and security

agreements between the Debtor and Mr. Luftig. See id. On June 30, 2023, the Debtor filed the

Memorandum of Law in Support of Confirmation of Debtor's Small Business Plan of

Reorganization Under Chapter 11 of the Bankruptcy Code, Docket No. 84; the Declaration of Hal

Luftig in Support of Confirmation of Debtor's Small Business Plan of Reorganization Under

Chapter 11 of the Bankruptcy Code (the “June 2023 Luftig Declaration”) (Docket No. 85)

(together with the July 2024 Luftig Declaration and November 2024 Luftig Declaration, the

“Luftig Declarations”); and the Declaration of Brian Ryniker in Support of Confirmation of

Debtor's Chapter 11 Plan of Reorganization Under Subchapter V of the Bankruptcy Code (the

“June 2023 Ryniker Declaration”) (Docket No. 86) (together with the July 2024 Ryniker

Declaration and November 2024 Ryniker Declaration, the “Ryniker Declarations”).

The Initial Plan proposed a nonconsensual third-party release of FCP’s direct claim against

Mr. Luftig, in exchange for, inter alia, Mr. Luftig’s one-time cash contribution of $500,000 into

the plan (the “Luftig Release”). See Initial Plan at 8, 12, 17–18. Both the United States Trustee

(the “U.S. Trustee”) and FCP objected to the Initial Plan’s confirmation, and argued that the Luftig

Release was inequitable and that it did not satisfy the various requirements for a third party release

pursuant to the Second Circuit’s ruling in In Re Purdue Pharma L.P., 69 F.4th 45 (2d Cir. 2023)

(“Purdue III”), rev'd and remanded sub nom. Harrington v. Purdue Pharma L.P., 603 U.S. 204

(2024). See Objection to Chapter 11 Small Business Subchapter V Plan (the “U.S. Trustee Initial

Plan Objection”), Docket No. 87; see also Objection to Confirmation of Plan (the “FCP Initial

Plan Objection”), Docket No. 89. In Purdue III, the Second Circuit held that bankruptcy courts

have statutory authority and jurisdiction to approve third party releases if the proposed release

satisfies a seven-factor test, including whether:

(i) there is identity of interests between the debtor and released third parties, including

indemnification relationships, such that suit against non-debtor is, in essence, suit

against debtor, or will deplete assets of the estate;

(ii) claims against the debtor and nondebtor are factually and legally intertwined,

including whether debtor and released parties share common defenses, insurance

coverage, or levels of culpability;

(iii) scope of releases is appropriate;

(iv) releases are essential to reorganization;

(v) non-debtor contributed substantial assets to reorganization;

(vi) impacted class of creditors “overwhelmingly” voted in support of plan with

releases; and

(vii) plan provides for fair payment of enjoined claims.

Purdue III, 69 F.4th at 78–79 (citations and quotation marks omitted). With respect to the Luftig

Release, the U.S. Trustee argued that such release did not satisfy Purdue III factors (iv), (vi), and

(vii). See U.S. Trustee Initial Plan Obj’n. at 7–8. FCP argued that the Luftig Release did not

satisfy any Purdue III factors besides factor (ii). See FCP Initial Plan Obj’n. at 9–11.

The Court held a confirmation hearing with respect to the Initial Plan on July 11, 2023, and

issued a confirmation opinion on November 22, 2023. See In re Hal Luftig Company, Inc., 655

B.R. 508 (Bankr. S.D.N.Y. 2023) (the “Initial Confirmation Opinion”). The Initial Confirmation

Opinion included proposed findings of fact and conclusions of law, subject to approval by the

District Court, that the Luftig Release was “important to the success of the [Initial] Plan” under

Purdue III. Specifically, the Court reviewed each Purdue III factor and found that the Luftig

Release satisfied all but the third and the sixth Purdue III factors, as the Luftig Release was overly

broad, and FCP’s vote to reject the Initial Plan reduced that plan’s approval rating. See id. at 537–

547. Nonetheless, the Court concluded that, with certain modifications it noted in the Initial

Confirmation Opinion, the Luftig Release would satisfy the third Purdue III factor. See id. at 539–

541. The Court also concluded that the sixth Purdue III factor is “of minimal significance under

the specific facts of this case” because the undisputed evidence in the record indicated that FCP

would “recover more on [its claim in the Initial Plan with the Luftig Release] than [it] would

recover if .… Mr. Luftig was driven into bankruptcy himself.” See id. at 544–545. Moreover, the

Initial Confirmation Opinion found that the Initial Plan, subject to the Court’s above-mentioned

modifications, should be confirmed. Id. at 551–552.

On December 6 and 26, 2023, the U.S. Trustee and FCP, respectively, filed objections to

the Initial Confirmation Opinion. The U.S. Trustee and the FCP argued that no rare and unusual

circumstances existed to support the Court’s approval of the Luftig Release, and that the creditors

did not overwhelmingly support the Luftig Release, as required by the Second Circuit’s seven-

factor test in Purdue III. See Objection to Proposed Findings of Fact and Conclusions of Law by

United States Trustee at 6–7, Docket No. 122; see also Objection to Proposed Findings of Fact

and Conclusions of Law at 9–11, Docket No. 134.

On March 19, 2024, the District Court issued an opinion sustaining the U.S. Trustee and

FCP’s objections, rejecting the Court’s findings of facts and conclusion of law as to the Luftig

Release, and denying the Initial Plan’s confirmation. The District Court found it “critical” that,

with FCP’s vote to reject the Initial Plan, that plan did not satisfy the sixth Purdue III factor —

“whether the impacted class of creditors overwhelmingly voted in support of the plan with the

releases.” See In re Hal Luftig Company, Inc., 657 B.R. 704, 708–709 (S.D.N.Y. 2024) (quoting

Purdue III, 69 F.4th at 78.). Further, the District Court stated the fact that the Initial Plan was “the

best possible means of enabling FCP’s recovery, and there will be no tangible financial harm from

the third-party release[,]” does not excuse the Initial Plan’s failure to satisfy the sixth Purdue

factor. Id. at 709. Thereafter, the District Court referred this matter back to this Court. Id.

Subsequently, in June 2024, the United States Supreme Court issued its ruling in Harrington v.

Purdue Pharma L.P., 603 U.S. 204 (2024) (“Purdue Pharma”), which reversed the Second

Circuit’s ruling in Purdue III and held that the Bankruptcy Code does not authorize non-consensual

third party releases.

Following the District Court’s opinion denying the Initial Plan’s confirmation and the

Supreme Court’s ruling in Purdue Pharma, the Debtor filed, on July 25, 2024, a new plan that

removed the Luftig Release-related provisions. See Second Amended Chapter 11 Small Business

Subchapter V Plan, Docket No. 155 (the “Second Amended Plan”).6 However, the Second

Amended Plan added language that extends in full force and effect all injunctions or stays existing

on the confirmation date — including the Luftig Stay from the Adversary Proceeding — until the

close of this Chapter 11 case:

UNLESS OTHERWISE PROVIDED HEREIN, ALL INJUNCTIONS OR STAYS

PROVIDED FOR IN THE CHAPTER 11 CASE PURSUANT TO SECTIONS 105 OR

362 OF THE BANKRUPTCY CODE, OR OTHERWISE, AND IN EXISTENCE ON

6 The Court omits here discussions of the Debtor’s First Amended Chapter 11 Small Business Subchapter V

Plan, Docket No. 116, dated November 27, 2023, as that amended plan predates the District Court’s opinion denying

the Initial Plan’s confirmation, and still contained provisions related to the Luftig Release.

THE CONFIRMATION DATE, SHALL REMAIN IN FULL FORCE AND EFFECT

UNTIL THE CHAPTER 11 CASE IS CLOSED.

Id. at 12. Subsequently, the Debtor filed the Third Amended Plan on November 21, 2024. The

Third Amended Plan qualified the proposed stay extension to terminate upon the earliest of this

Chapter 11 case’s closure, dismissal, or the grant or denial of discharge, and clarified that the scope

of the Adversary Proceeding’s Luftig Stay only applies to FCP. See Third Am. Plan at 12–13,

Docket No. 172.

B. SUMMARY OF THE THIRD AMENDED PLAN

Besides the removal of the Luftig Release provisions and the added language extending the

existing stays, the Third Amended Plan is substantially similar to the Debtor’s Initial Plan: the life

of the Third Amended Plan will be five years, and all administrative expenses and priority claims

will be paid in full. See Third Am. Plan at 1, 7. Further, as set forth in Article II, the Third

Amended Plan creates six classes and provides the following treatments for each class:

Class Description Amount in Treatment Impairment

Class

Class 1 Priority wage $13,650.00 Paid in full at the Effective Date7 Unimpaired

claims under

Bankruptcy

Code § 507(a)(4)

Class 2 Secured Claims $163,946.92 Paid in full at the Effective Date Unimpaired

Class 3 FCP Claim $2,862,776.00 Paid a portion of the Luftig Impaired

Settlement Payment (as defined

below) at the Effective Date plus

Pro Rata Share8 of the Debtor’s

7 “Effective Date” is defined as “the first day on which the Confirmation Order has become a Final Order and

on which all the conditions to the Effective Date in the Plan have been satisfied or waived.” Third Am. Plan at 18,

Docket No. 172.

8 “Pro Rata Share” is defined as “the proportion that the Allowed Claim bears to the sum of all Allowed Claims,

Disputed Claims, and Undetermined Claims of that particular Class. In the case of the FCP Claim, after receiving its

portion of the Luftig Cash Contribution, any unpaid portion of the FCP Claim shall be treated as a Class 4 Claim for

purposes of distributions of Disposable Income under the Plan.” Third Am. Plan at 20.

Disposable Income9 over the life

of the Plan10

Class 4 General $328,628.92 Pro Rata Share of Disposable Impaired

Unsecured (estimated) Income over the life of the Plan

Claims

Class 5 Insider Claims11 Unliquidated No distribution12 Fully

Impaired

Class 6 Equity n/a No distribution, but Mr. Luftig Unimpaired

retains all equity

The Third Amended Plan is to be funded by: (i) the Debtor’s Disposable Income; (ii) a

$50,000.00 payment (the “Luftig Settlement Payment”) by Mr. Luftig to settle a certain avoidance

claim related to the Debtor’s partial repayment in October 2022 of a loan from Mr. Luftig, in

exchange for Mr. Luftig receiving a $50,000.00 claim against the estate (such claim, the “Luftig

Settlement Claim”); and (iii) an agreement by Mr. Luftig to contribute up to $100,000 to the extent

necessary to satisfy Section 1191(c)(2)(B)13 of the Bankruptcy Code (the “Back-Stop

Commitment”). See Third Am. Plan at 9–11, 16, 19. The Third Amended Plan also requires Mr.

Luftig to enter into the Employment Agreement with the Debtor, whereby Mr. Luftig would be

paid a salary of $210,000 to spend approximately 50% of his “business time and efforts” acting as

9 “Disposable Income” is defined as having “the meaning given to it in Bankruptcy Code § 1191(d), as

calculated and projected by RKC and set forth in the Plan Supplement.” Third Am. Plan at 17. The Debtor’s expert

forecasts that the Debtor’s Disposable Income over the next five years will total approximately $700,000. See July

2024 Ryniker Decl. Ex. A–2, Docket No. 156.

10 The Debtor’s expert estimates the recovery on the FCP Claim will be approximately $720,000 —

approximately a 25% recovery. See July 2024 Ryniker Decl. Ex. A–2, Docket No. 156.

11 “Insider Claims” is defined as “the following Claims which shall be determined to be Allowed Claims under

the Plan without any further action, and the Debtor anticipates that the Claims shall be subordinated in right of payment

to the payment of all other Allowed Claims under the Plan: (i) the Luftig Note Claim; (ii) the Luftig Settlement Claim;

(iii) the Luftig Indemnification Claim; and (iv) the Luftig Deferred Compensation Claim; and (v) the general

unsecured claim of Luftig-Haffner-Chapman Theatrical Development Fund LLC in the amount of $50,000.00.” Third

Am. Plan at 18, Docket No. 172.

12 Mr. Luftig is agreeing to subordinate Insider Claims, as discussed supra.

13 Section 1191(c)(2)(B) of the Bankruptcy Code requires that, for a plan to be “fair and equitable,” the value

of property to be distributed must not be “less than the projected disposable income of the debtor.” 11 U.S.C. §

1191(c)(2)(B).

President of the Debtor. Id.; see also Initial Plan Supplement Ex. C, Docket No. 63. (Proposed

Luftig Employment Agreement). Under the Third Amended Plan, Mr. Luftig would also not

charge the Debtor rent for operating in his home. See Third Am. Plan at 9. In exchange for these

contributions, the Debtor will issue a secured promissory note to Mr. Luftig that will be

subordinated until after the Third Amended Plan expires. Id. at 10, 19.

C. THE PLAN’S VOTING RESULTS

Classes 3 and 4 (together, the “Voting Classes”) were the only classes entitled to vote.14

The Debtor solicited votes on its Initial Plan in April 2023, and the voting deadline was May 17,

2023. See Giugliano Voting Declaration ¶¶ 3, 7, Docket No. 90. When the voting deadline

expired, Class 3 (i.e., FCP) voted to reject the Initial Plan, while Class 4 (non-insider general,

unsecured claims) voted to accept the Initial Plan.15 Id. ¶ 12.

When the Debtor eventually filed the Second and the Third Amended Plans, it did not re-

solicit votes on the new plans, and instead relied on the voting results for the Initial Plan. See

Mem. L. at 4–5, Docket No. 173. (“The Debtor did not resolicit votes to accept or reject the

[Second and the Third Amended Plans], because the modifications did not adversely change the

treatment of any claim of any creditor who did not accept the modifications in writing.”). On

December 12, 2024, the Debtor filed the Giugliano Supplemental Declaration and informed the

Court that both members of Class 4 have changed their votes to reject the Third Amended Plan.

See Giugliano Supp. Decl. at ¶¶ 3 & 4, Docket No. 179. Therefore, as of the date of the

14 Classes 1, 2, and 6 are unimpaired and are therefore deemed to accept the Third Amended Plan without

voting. Third Am. Plan at 6–8. Class 5 is fully impaired and is therefore deemed to reject the Third Amended Plan

without voting. Third Am. Plan at 8–9, Docket No. 172.

15 Class 4 consists of Amy Deutsch, a friend of Mr. Luftig, and Kevin Connor, an employee of the Debtor. See

Giugliano Voting Declaration at 4 n.2, Docket No. 90.

Confirmation Hearing, all classes entitled to vote on the Third Amended Plan have rejected the

plan.

D. THE PARTIES’ CONTENSIONS

1. The Debtors’ Memorandum of Law in Support of Confirmation

First, the Debtor argues that the Third Amended Plan satisfies all the confirmation

requirements set forth in Chapter 11 of the Bankruptcy Code and applicable caselaw. See Mem.

L. at 5, 24, Docket No. 173. Specifically, the Debtor argues that the Third Amended Plan is a

qualifying Subchapter V reorganization plan under Code § 1190 because it (i) contains a brief

history of the Debtor’s business operations, in addition to the liquidation analysis and disposable

income analysis prepared by the Debtor’s expert, Brian Ryniker (“Mr. Ryniker”); and (ii) provides

that the Debtor will fund the Third Amended Plan with all its Disposable Income over the Plan’s

5-year life. Id. at 9–10. Moreover, the Debtor argues that the Third Amended Plan satisfies all

applicable requirements under Bankruptcy Code § 1191, which incorporates § 1129(a),16 as it (i)

complies with Code §§ 1122 & 1123; (ii) provides the creditors with greater recoveries than they

would receive in a hypothetical liquidation; and (iii) is supported by a disposable income analysis

demonstrating that the plan is feasible. Id. at 21–24.

Notwithstanding the Voting Classes’ votes to reject the Third Amended Plan, the Debtor

argues that the plan may be confirmed as a nonconsensual plan pursuant to Bankruptcy Code §§

1191(b) & (c). Id. at 10–12. Code §§ 1191(b) & (c) permit a bankruptcy court to confirm a plan

rejected by certain impaired classes if the plan “does not discriminate unfairly, and is fair and

equitable” with respect to each impaired rejecting class. 11 U.S.C. §§ 1191(b) & (c). The Debtor

argues here that the Third Amended Plan is “fair and equitable” with respect to the rejecting Voting

16 The Debtor argues that Bankruptcy Code §§ 1129(a)(6), (8), (10), and (12)–(16) are inapplicable with respect

to the confirmation of the Third Amended Plan. See Mem. L. at 24, Docket No. 173.

Classes because the Debtor (i) will be paying into the plan all its Disposable Income for the 5-year

plan period; (ii) has demonstrate a reasonable likelihood that it will make all payments under the

Third Amended Plan. Id. at 11–12.; see also November 2024 Ryniker Decl. ¶ 9, Docket No. 174.

Additionally, the Back-Stop Commitment provides a sufficient remedy to the claimholders if the

Debtor fails to make any plan payments. Id.

Second, the Debtor argues that the Bankruptcy Code’s applicable provisions support

extending the Luftig Stay’s duration for the Third Amended Plan’s 5-year life (such extension, the

“Luftig Stay Extension”).17 See Mem. L. at 17. The Debtor argues that the Court should extend

the Luftig Stay to the time when the Debtor’s automatic stay may be terminated pursuant to Code

§ 362(c)(2)18 because Mr. Luftig is “essential to the Debtor’s successful reorganizations.” Id. at

18; see also id. at 17. Specifically, the Debtor asserts that its ability to generate revenue — and in

turn, successfully reorganize — “depends entirely” on Mr. Luftig’s assistance and “ability to

develop and produce shows and to pursue new opportunities.” Id. at 17–18. The Debtor argues

that if the Court denies the Luftig Stay Extension, the Third Amended Plan “will not succeed

[because] Mr. Luftig [will be] chased-down by FCP’s judgment enforcement and collection

efforts.” Id. at 18. Moreover, such collection efforts against Mr. Luftig will allegedly distract him

from working on revenue-generating projects for the Debtor, and tarnish “his reputation in the

17 The Third Amended Plan’s extension language refers broadly to “ALL INJUNCTIONS OR STAYS … IN

EXISTENCE ON THE CONFIRMATION DATE[.]” Third Am. Plan at 12, Docket No. 172. However, the only stay

extension being challenged by a creditor (i.e., FCP) here is the Luftig Stay. See Final Obj’n, Docket No. 190. The

Debtor’s filings in support of the Third Amended Plan’s confirmation also focus their arguments on the Luftig Stay.

See, e.g., Mem. L. at 16–20, Docket No. 173. (“The Debtor is asking the Court to leave in place the protections granted

by this Court to the Debtor and Mr. Luftig on day one of the case.”).

18 The Debtor asserts that the “earliest opportunity for termination of the automatic stay as to the Debtor will

be when the discharge is granted[,]” which will take place after the Debtor completes the last plan payment at the end

of the Third Amended Plan’s 5-year life. See Mem. L. at 17, Docket No. 173; see also 11 U.S.C. §362(c)(2). (“[T]

the stay of any other act under subsection (a) of this section continues until the earliest of — (A) the time the case is

closed; (B) the time the case is dismissed; or (C) … the time a discharge is granted or denied.”).

industry as a fundraiser[.]” Id. at 19. Therefore, the Debtor argues that the Court should approve

the Luftig Stay Extension for the same reasons it originally approved the Luftig Stay. See id. at

17. (“[C]ircumstances that existed at the initial stages of the Debtor’s case, which served as the

basis for the [Luftig] Stay Order, continue to exist and are even more significant for a successful

reorganization under the Plan.”); see also In re Hal Luftig Co., 2023 Bankr. LEXIS 19, at *12–13.

Third, the Debtor also argues that the Luftig Stay Extension is “the law of the case[,]” and

the Court should reject FCP’s challenge here. See Mem. L. at 19. The Debtor argues that FCP

should have raised its challenge with respect to the Luftig Stay Extension in prior proceedings, but

failed to do so:

FCP did not appeal the [Luftig] Stay Order, did not reserve its rights under the [Luftig]

Stay Order to contest its application through the Debtor’s discharge, and did not contest

the portion of the [Initial Confirmation Opinion] denying FCP’s request to terminate the

extension of the stay.

Id. at 19–2019 (citing County of Suffolk v. Stone & Webster 20 Engineering Corp., 106 F.3d 1112,

1117 (2d Cir. 1997)). Additionally, the Debtor argues that FCP does not identify any new

compelling reasons, new evidence, manifest injustice, or clear error to warrant a last-minute

challenge to the Luftig Stay Extension. Id. at 20. Lastly, with respect to the cases that FCP cited20

19 In the Initial Confirmation Opinion, the Court denied FCP’s request to dismiss the Adversary Proceeding and

alter the Luftig Stay because the Court had found the Initial Plan confirmable:

Finally, FCP requests that the Court dismiss the Adversary Proceeding and rescind the stay protections that

the Court extended to Mr. Luftig because the Plan cannot be confirmed. The Debtor, in turn, argues that no

change in circumstances or law warrants termination of the stay protection extended to Mr. Luftig in the

Adversary Proceeding. As discussed herein, the Court finds that the Plan is confirmable, subject to certain

modifications to the Luftig Release. Accordingly, the Court finds that there is no reason at this time to alter

the stay protections extended to Mr. Luftig. The Court likewise declines to dismiss the Adversary Proceeding.

In re Hal Luftig Co., Inc., 655 B.R. at 551 (internal citations omitted).

20 FCP cited Harrington v. Purdue Pharma L.P., 603 U.S. 204 (2024), and Intl. Petroleum Products and

Additives Co., Inc. v. Black Gold S.A.R.L., 115 F.4th 1202, 1216 (9th Cir. 2024) in arguing that “an injunction against

collecting on or recovering a debt against a debtor that accompanies a confirmed plan” should only apply to the debtor,

and not any other entity. See Final Obj’n. at 4–5, Docket No. 190. The Court will address these cases infra, Section

IV. B. 4.

in support of its argument, the Debtor argues that the cases are distinguishable and do not support

FCP’s proposition that the Luftig Stay is unlawful. Id.

2. The FCP Final Objection

FCP’s Final Objection does not contest the Debtor’s contentions that the Third Amended

Plan satisfies the various confirmation requirements set forth in Bankruptcy Code § 1129(a), as

incorporated by Code § 1191. Instead, FCP solely argues that the Third Amended Plan should not

be confirmed because it does not provide “fair and equitable” treatment for FCP, thus failing to

satisfy the confirmation requirement under Code § 1191(b). See Final Obj’n. at 4, Docket No.

190. Specifically, FCP argues that the 5-year Luftig Stay Extension in the Third Amended Plan

“renders [the Third Amended Plan] unfair and inequitable.” Id. at 5. Although FCP recognizes

that Code § 1191(c) provides a list of requirements that would generally render a plan “fair and

equitable,” it argues that those requirements “are merely the baseline,” and urges the Court to

impose additional requirements when considering the fairness and equitability of the Third

Amended Plan. Id. at 4.

According to FCP, the Third Amended Plan’s provision for extending the Luftig Stay

“essentially amounts to a discharge over the life of the plan and will continue to enjoin FCP from

enforcing its rights in the Final Award” against Mr. Luftig. Id. at 5. FCP argues that such provision

is untenable because the United States Supreme Court in Harrington v. Purdue Pharma L.P., 603

U.S. 204 (2024) “soundly rejected the ability of a bankruptcy court to extend to nondebtors the

benefits of a Chapter 11 discharge usually reserved for debtors.” Final Obj’n. at 4–5. (quoting

Purdue Pharma L.P., 603 U.S. at 215. (emphasis in original) [internal quotation marks omitted])

(citing Intl. Petroleum Products and Additives Co., Inc. v. Black Gold S.A.R.L., 115 F.4th 1202,

1216 (9th Cir. 2024)). Moreover, FCP also argues that the Third Amended Plan is not “fair and

equitable” because it does not provide creditors with any remedies if the Debtor defaults on its

plan payments. Id. at 5. Accordingly, FCP argues that the Third Amended Plan should not be

confirmed. Id. at 6.

E. TESTIMONY AT THE CONFIRMATION HEARING

At the Hearing on January 17, 2025, the Court received into evidence the Luftig

Declarations, the Ryniker Declarations, and the exhibits to each declaration. See Hr’g Tr. from

January 17, 2025, 9:3–21, Docket No. 194. Mr. Luftig was cross-examined by FCP and examined

on re-direct by the Debtor and his counsel. See id. at 30:22–38:13, 38:19–45:22. Mr. Ryniker was

also cross-examined by FCP. See id. at 46:13–51:15.

Mr. Luftig’s Testimony. Mr. Luftig is the Debtor’s president and sole shareholder. See

July 2024 Luftig Decl. ¶ 1, Docket No. 157. He stated that he has attended almost every hearing

in this case and has worked to gather information required to be filed with the Court and needed

to analyze the Debtor’s finances. Id. at ¶ 14. According to Mr. Luftig, the Debtor’s ability to

succeed in generating revenue relies entirely upon his ability to develop and produce shows, and

pursue new opportunities. See November 2024 Luftig Decl. ¶ 24. Docket No. 175. Moreover, Mr.

Luftig asserts that if he has to defend against FCP’s efforts to enforce the Judgment, the Third

Amended Plan will fail because his ability to promote Debtor’s business efforts will be undermined

and his reputation as a fundraiser will be ruined. Id. at ¶ 31. To support his statements, Mr. Luftig

first alleged that there had been certain instances where the Debtor’s business operations were

disrupted by FCP’s enforcement efforts. See June 2023 Luftig Decl. at ¶ 45, Docket No. 85.

Further, Mr. Luftig also alleged certain instances where potential investors declined to invest in

the Debtor’s projects after learning about FCP’s enforcement efforts and the pending Chapter 11

case. See July 2024 Luftig Decl. ¶¶ 36, 37.

Additionally, Mr. Luftig also reaffirmed his willingness and ability to provide the

contributions described above and in the Third Amended Plan, even though he is no longer seeking

the Luftig Release. Id. at ¶ 15. Mr. Luftig stated that FCP would receive a greater recovery on its

claim under the Third Amended Plan with the Luftig Stay Extension than it would pursuing

enforcement efforts of the Judgment against Mr. Luftig. Id. at ¶ 29. Specifically, Mr. Luftig stated

that he has virtually no non-encumbered or non-exempt assets to satisfy the Final Award, and may

be forced to file a personal bankruptcy if FCP seeks to collect from him individually. See

November 2024 Luftig Decl. at ¶ 32. Mr. Luftig also further supported his statements with a

summary of his personal assets and liabilities, including: (i) a bank account with less than $100,000

liquid cash; (ii) $2.2 million in qualified retirement plans; (iii) a beneficial interest in a trust that

owns a limited liability company that owns one-third of Mr. Luftig’s primary residence, the value

of which third is estimated to be $1.15 million;21 and (iv) an estimated $500,000 interest in a

second home.22 See June 2023 Luftig Decl. at ¶¶ 56–58.23

On cross-examination, Mr. Luftig testified about the efforts he has made to ensure the

Debtor’s successful reorganization. See Hr’g Transcript from January 17, 2025, 32:4–35:9. For

instance, he testified that he has been heavily involved in preparing one of the Debtor’s legacy

production projects for new international and domestic tours, and making script revisions for the

Debtor’s other legacy projects before turning them into Broadway stage productions. Id.

21 Mr. Luftig’s primary residence is subject to two mortgages securing debt of approximately $1 million. See

June 2023 Luftig Decl. at ¶ 56, Docket No. 85.

22 Mr. Luftig’s second home is subject to a mortgage securing a debt of approximately $300,000. See June

2023 Luftig Decl. at. at ¶ 56, Docket No. 85.

23 Mr. Luftig did not provide an updated summary of assets and liabilities in the July 2024 Luftig Declaration

or the November 2024 Luftig Declaration, and instead incorporated in these declarations the summary he provided in

the June 2023 Luftig Declaration. See July 2024 Luftig Decl. ¶ 2, Docket No. 157 (“[Mr. Luftig] respectfully submit[s]

[the July 2024 Luftig Declaration] ... as a supplement to the [June 2023 Luftig Declaration], which together with

exhibits annexed thereto is incorporated herein by reference…”); see also November 2024 Luftig Declaration at n.2,

Docket No. 175 (“The July [2024] Luftig Declaration is incorporated by reference into the November [2024] Luftig

Declaration.”).

Mr. Luftig also testified on cross-examination that a significant amount of work still

remains before certain legacy production projects could begin new production runs. Id. at 36:19–

37:6. Further, Mr. Luftig testified that the remaining work on those legacy projects cannot be

delegated to the Debtor’s two other employees, who mostly handle administrative — and not

creative — tasks. Id. at 37:7–38:9. On re-direct, Mr. Luftig testified regarding the specific tasks

he handles in connection with the Debtor’s production projects, including organizing and

conducting script readings and marketing the shows, all of which has consumed more than 50%

of his time over the past year. Id. at 38:19–40:12; 42:9 –22. Mr. Luftig also testified that the

Debtor would likely see more future production opportunities with technological advancements

such as TV streaming. Id. at 41:2–42:3.

Finally, Mr. Luftig testified on re-direct that he has artistic, financial, and managerial

control over each of the Debtor’s current legacy production projects because he is a lead producer

of all those titles. Id. at 43:22–45:8.

Mr. Ryniker’s Testimony. Mr. Ryniker is a member of RK Consultants LLC — a

financial advisory service firm that the Debtor retained as its financial advisor in this case. See

July 2024 Ryniker Decl. ¶¶ 1, 3, Docket No. 156. Mr. Ryniker prepared an updated liquidation

analysis (the “Liquidation Analysis”) estimating that $1,305,498.00 would be available to creditors

in a hypothetical liquidation of the Debtor, and that FCP would receive approximately $496,119.00

on the FCP Claim. Id. Ex. B–2 (Liquidation Analysis). Mr. Ryniker also stated that he believes

each class of claims in the Third Amended Plan would receive more under the plan than in a

hypothetical chapter 7 liquidation of the Debtor. Id. at ¶ 6.

Mr. Ryniker also prepared the updated disposable income analysis (the “Disposable

Income Analysis”) that forecasts the Debtor’s aggregate disposable income over the next five years

to be $755,122.00. Id. Ex. A–2; id. at ¶¶ 13. Further, the Disposable Income Analysis shows that,

from the Debtor’s projected disposable income and Mr. Luftig’s contributions (i.e., the Luftig

Settlement Payment), FCP is projected to receive a distribution of $720,000 — approximately 25%

— distribution on the FCP Claim under the Third Amended Plan. Id. Ex. A–2. Additionally, Mr.

Ryniker stated that, based on his projections, the Debtor will have sufficient income to fund the

payments under the Third Amended Plan using solely its disposable income (i.e., without Mr.

Luftig making any contribution). Id. at 11.

On cross-examination, Mr. Ryniker testified that, in preparing the Liquidation Analysis

and Disposable Income Analysis, he presumed that Mr. Luftig will remain an employee of the

Debtor, and accounted for the services Mr. Luftig performs for the Debtor. See Hr’g Transcript

from January 17, 2025, 47:13–22. Moreover, he testified that if Mr. Luftig’s services were factored

out of the analysis, the Debtor’s liquidation value and projected income would both reduce. Id. at

47:23–48:11. Mr. Ryniker also testified on cross-examination that four of the Debtor’s legacy

productions with currently active projects will be the primary sources of revenue for the Debtor,

but the Debtor also has other legacy productions that may bring in small streams of revenue. Id.

at 49:9–17. According to Mr. Ryniker, the Debtor’s legacy productions without active projects

may also generate greater revenue in the future, even though they are currently not projected to do

so. See id. at 49:19–50:15. Finally, Mr. Ryniker testified that, comparing the projections he

prepared for the Debtor’s Initial Plan and the latest projections, he found that the Debtor’s timing

estimations with respect to its revenue receipts have been generally accurate so far. See id. at

50:16–51:5.

IV. ANALYSIS

The Court will first address the statutory requirements for confirmation of a Subchapter V

Chapter 11 plan, and then consider FCP’s objection to the Luftig Stay Extension.

A. THE CONFIRMATION REQUIREMENTS

Code § 1191 sets forth the requirements to confirm a plan of reorganization under

Subchapter V of Chapter 11 of the Bankruptcy Code. See 11 U.S.C. § 1191. Specifically, Code

§ 1191(a) provides for confirmation of a consensual plan if all the requirements of Code § 1129(a)

are met, other than Code § 1129(a)(15).24 See 11 U.S.C. § 1191(a). However, if a plan is not fully

consensual, Code § 1191(b) nonetheless permits confirmation where all of the requirements of

Code § 1129(a) are met, other than §§ 1129(a)(8),25 (10),26 and (15), if the Court finds that the plan

“does not discriminate unfairly, and is fair and equitable, with respect to each class of claims” that

is impaired27 and has not accepted the plan. See 11 U.S.C. § 1191(b).

24 Bankruptcy Code § 1129(a)(15) provides that the Court shall not confirm a plan in a case where the Debtor

is an individual and where the holder of an allowed unsecured claim objects to the confirmation of the plan unless:

(A) the value . . . of the property to be distributed under the plan on account of such claim is not less than

the amount of such claim; or (B) the value of the property to be distributed under the plan is not less than the

projected disposable income of the debtor (as defined in section 1325(b)(2)) to be received during the 5-year

period beginning on the date that the first payment is due under the plan, or during the period for which the

plan provides payments, whichever is longer.

11 U.S.C. § 1129(a)(15). Notably, even if § 1129(a)(15) was applicable to Subchapter V cases, that provision only

applies to individual debtors and not corporations. See 11 U.S.C. § 1129(a)(15) (“In a case in which the debtor is an

individual…”).

25 Bankruptcy Code § 1129(a)(8) provides that each class of claims must either accept the plan or not be

impaired under the plan. See 11 U.S.C. § 1129(a)(8).

26 Bankruptcy Code § 1129(a)(10) provides that, if a class of claims is impaired under the plan, at least one

class of impaired claims has to accept the plan, excluding insiders. See 11 U.S.C. § 1129(a)(10).

27 A claim is “impaired” within the meaning of Bankruptcy Code § 1124 if “the plan of reorganization, rather

than the [Bankruptcy] Code, alters the creditor's legal, equitable, or contractual rights.” In re LATAM Airlines Group

S.A., 55 F.4th 377, 385 (2d Cir. 2022), cert. denied sub nom. TLA Claimholders Group v. LATA M Airlines Group

S.A., 143 S. Ct. 2609 (2023).

Further, Bankruptcy Code § 1191(c) clarifies what it means for a Subchapter V plan to be

“fair and equitable.” See 11 U.S.C. § 1191(c). That section provides, in relevant part:

For purposes of this section, the condition that a plan be fair and equitable with respect to

each class of claims or interests includes the following requirements:

(1) With respect to a class of secured claims, the plan meets the requirements of section

1129(b)(2)(A) of this title.

(2) As of the effective date of the plan — … (B) the value of the property to be distributed

under the plan in the 3-year period, or such longer period not to exceed 5 years as the court

may fix, beginning on the date on which the first distribution is due under the plan is not

less than the projected disposable income of the debtor.

…

(3)(B)(i) there is a reasonable likelihood that the debtor will be able to make all payments

under the plan; and (ii) the plan provides appropriate remedies, which may include the

liquidation of nonexempt assets, to protect the holders of claims or interests in the event

that the payments are not made.

11 U.S.C. § 1191(c) (emphasis added).

Courts in this Circuit have not examined in detail whether additional factors may be

considered in analyzing the “fair and equitable” requirement set forth in Code § 1191(b).

However, other courts have held that Code § 1191(c)’s “includes” language denotes baseline

requirements that a plan must satisfy, and courts have discretion to consider other factors when

appropriate. See In re Curiel, 651 B.R. 548, 561 n.7 (B.A.P. 9th Cir. 2023) (“[Bankruptcy Code

§ 1191(c)] states that whether the plan is fair and equitable includes those requirements. Because

the term ‘includes’ is not limiting, a court may consider other relevant factors as well.”); see also

In re Trinity Fam. Prac. & Urgent Care PLLC, 661 B.R. 793, 816 (Bankr. W.D. Tex. 2024)

(“[M]eeting the baseline requirements of § 1191(c) is a necessary condition for the subchapter V

plan to be fair and equitable, but does not assure that the plan is fair and equitable.”) (emphasis in

original).

Here, the Third Amended Plan is non-consensual because the Voting Classes both voted

to reject the plan. See Giugliano Voting Decl. ¶ 12, Docket No. 90; Giugliano Supp. Voting Decl.

¶¶ 3, 4, Docket No. 179. Accordingly, confirmation of the Third Amended Plan is only possible

pursuant to Bankruptcy Code § 1191(b).

With respect to the confirmation requirements under Bankruptcy Code § 1191(b), neither

the U.S. Trustee nor FCP argues that any of the subsections of Code § 1129(a) incorporated by

Code § 1191(b) has not been satisfied. Moreover, in examining whether the Third Amended Plan

complies with the Code § 1191(b), the Court also reviewed the Luftig Declarations, the Ryniker

Declarations, the Giugliano Voting Declarations, the testimony at the Confirmation Hearing, and

all other relevant records. After due deliberation, the Court concludes that the Debtor has carried

its burden of proof with respect to the confirmation requirements of Bankruptcy Code § 1191(b),

and the Third Amended Plan is confirmable subject to the Court’s finding on the only remaining

question — whether the plan is fair and equitable under Code § 1191(c).

B. THE LUFTIG STAY EXTENSION

The Court will first address FCP’s argument that the Luftig Stay Extension is

impermissible, and that the inclusion of such extension renders the Third Amended Plan “unfair

and inequitable.” Final Obj’n. at 5, Docket No. 190.

1. The Law on Extending The Automatic Stay to Non-Debtor Parties

The Court previously examined the law on non-debtor stay extensions in the Luftig Stay

Ruling. Generally, “the automatic stay under [Bankruptcy Code § 362(a)] does not apply to non-

debtors.” In re Hal Luftig Co., 2023 Bankr. LEXIS 19, at *11 (citing Mardice v. Ebony Media

Operations LLC, No. 19-CV-8910 (VSB), 2021 U.S. Dist. LEXIS 8520, 2021 WL 146358, at *3

(S.D.N.Y. Jan. 15, 2021)); see also In re Durr Mechanical Construction, Inc., 604 B.R. 131, 136

(Bankr. S.D.N.Y. 2019). However, as noted in the Luftig Stay Ruling, the Second Circuit

recognized an exception to this rule in Queenie, Ltd. v. Nygard Int'l., 321 F.3d 282 (2d Cir. 2003).

See id. at *11. Specifically, the Second Circuit held that “‘the automatic stay can extend to non-

debtors [under Code §§ 105 & 362(a)] … where a claim against the non-debtor will have an

immediate adverse economic consequence for the debtor's estate,’” such as in “actions where there

is such identity between the debtor and the third-party defendant that the debtor may be said to be

the real party defendant.” Queenie, Ltd., 321 F.3d at 287–88 (quoting A.H. Robins Co. v. Piccinin,

788 F.2d 994, 999 (4th Cir. 1986)) (internal quotations omitted). Other courts have also recognized

this exception to the general rule and found that such relief stemmed from bankruptcy courts’

authority to enter preliminary injunctions. See, e.g., In re Parlement Techs., Inc., 661 B.R. 722,

724 (Bankr. D. Del. 2024) (“cases have long recognized that bankruptcy courts may enter a

preliminary injunction that operates to stay actions against non-debtors.”).

Indeed, following the Second Circuit’s ruling in Queenie, Ltd., this Court granted the Luftig

Stay, finding that “[the] enforcement of the Final Award and [the] Judgment would have an

immediate adverse impact on Plaintiff’s reorganization efforts.” In re Hal Luftig Co., 2023 Bankr.

LEXIS 19, at *12. Further, similar to other bankruptcy courts in this Circuit reviewing requests

for non-debtor stay extensions,28 the Court also conducted a traditional four-factor preliminary

injunction analysis, which requires the movant to establish (in addition to applying the Queenie,

Ltd. test):

(1) ‘a likelihood of success on the merits or . . . sufficiently serious questions going to the

merits to make them a fair ground for litigation and a balance of hardships tipping

28 See, e.g., Lyondell Chem. Co. v. Centerpoint Energy Gas Servs. (In re Lyondell Chem. Co.), 402 B.R. 571,

587–594 (Bankr. S.D.N.Y. 2009) (applying the traditional four-factor preliminary injunction analysis and finding that

a 60-day non-debtor stay extension was warranted); see also In re Calpine Corp., 365 B.R. 401, 409–414 (S.D.N.Y.

2007) (affirming the bankruptcy court’s ruling extending the automatic stay to a non-debtor party and noting that “a

bankruptcy court has discretion to enjoin a civil proceeding against a non-debtor under [Bankruptcy Code § 105] .…

[and in granting such stay extensions,] courts have applied the traditional preliminary injunction standard as modified

to fit the bankruptcy context.”) (internal quotation marks omitted).

decidedly in the plaintiff's favor’; (2) a likelihood of ‘irreparable injury in the absence of

an injunction’; (3) that ‘the balance of hardships tips in the plaintiff’s favor’; and (4) that

the ‘public interest would not be disserved’ by the issuance of an injunction.

Id. at *10–11 (citing Benihana, Inc. v. Benihana of Tokyo, LLC, 784 F.3d 887, 895 (2d Cir.

2015)).29

As discussed above, in June 2024, the Supreme Court held that non-consensual third party

releases are not authorized by the Bankruptcy Code. Purdue Pharma, 603 U.S. at 204 (“The

bankruptcy code does not authorize a release and injunction that, as part of a plan of reorganization

under Chapter 11, effectively seek to discharge claims against a nondebtor without the consent of

affected claimants.”). The Supreme Court did not address the bankruptcy courts’ authority to grant

non-consensual third party automatic stay extensions in Purdue Pharma.

Post–Purdue Pharma, certain courts have indicated that non-consensual third party stay

extensions survived the Supreme Court’s ruling. For example, the bankruptcy court in Parlement

Techs., Inc., 661 B.R. at 724 examined the effects of Purdue Pharma on non-debtor stay

extensions, and concluded that “Purdue Pharma does not preclude the entry of [] a preliminary

injunction [extending the stay to non-debtor parties.]” Other courts that have examined this issue

post-Purdue Pharma have also reached similar conclusions. See Purdue Pharma L.P. v.

Massachusetts, 2024 Bankr. LEXIS 2916, at *26 (applying the four-factor preliminary injunction

analysis and noting that “[n]othing in [Purdue Pharma] alters this well-settled law on the

29 Pre-Purdue Pharma, at least one bankruptcy court explained that it extended the automatic stay to non-debtor

parties on a temporary basis to facilitate negotiations of a plan that included a nonconsensual channeling order. See,

e.g., In re Diocese of Buffalo, N.Y., 656 B.R. 323, 326 (Bankr. W.D.N.Y. January 9, 2024) (“[The court previously]

granted a general stay of the stay litigation [against the debtor’s non-filing affiliates] in order to facilitate the

development of a plan … [and] the implicit expectation was that any such plan would include a nonconsensual

channeling order…”). Moreover, the bankruptcy court in Purdue Pharma v. Massachusetts also noted a similar

purpose in its ruling dated November 6, 2019, when it renewed the non-debtor stay extension it had initially granted

on October 19, 2019. See Hr’g Tr. from November 6, 2019, at 82:10–24, Docket No. 119 at Adversary Proceeding

No. 19-08289 (“The purpose of this [non-debtor stay extension] is to enable all of the states and all of the other

claimants in this case…. to perform the due diligence to decide whether a plan in this case should consider a

contribution by [non-debtor] parties, who are protected by this injunction, to obtain a permanent release.”).

permissibility of an injunction [extending the stay to non-debtors, as being] sought here.”); see

also Coast to Coast Leasing, LLC v. M&T Equip. Fin. Corp. (In re Coast to Coast Leasing, LLC),

661 B.R. 621, 624 (Bankr. N.D. Ill. 2024) (finding that “a temporary restraining order to enjoin

creditors from bringing claims against [a non-debtor party]” is “distinguishable from the much

broader relief sought in Purdue Pharma.”).

However, the bankruptcy court in Parlement Techs. stated that Purdue Pharma still

changed the standard of review for non-debtor stay extensions. Specifically, the Parlement Techs.

court noted that, with respect to the “likelihood of success on the merits” preliminary injunction

factor, courts can no longer base their findings on “the likelihood that the non-debtor would be

entitled to a non-consensual third-party release through the plan process.” Parlement Techs., 661

B.R. at 724. Instead, the Parlement Techs. court suggested that alternative outcomes may be

viewed as “success on the merits” when considering non-debtor party stay extensions, including:

(a) providing the debtor's management a breathing spell from the distraction of other

litigation is necessary to permit the debtor to focus on the reorganization of its business or

(b) because [the court] believes the parties may ultimately be able to negotiate a plan that

includes a consensual resolution of the claims against the non-debtors.

Id. Indeed, the bankruptcy court in Purdue Pharma L.P. v. Massachusetts has already adopted the

standard proposed by the Parlement Techs. court while reviewing a request to extend the automatic

stay to non-debtor parties. See Purdue Pharma L.P. v. Massachusetts, 2024 Bankr. LEXIS 2916,

at *28 (“This Court whole-heartedly agrees with the analysis of the Parlement court.”).

The Court will consider the Luftig Stay Extension under the standards discussed above.

2. The Luftig Stay Extension’s Duration Does Not Render It Impermissible

Unlike the non-debtor stay extensions that many cases have examined, the Luftig Stay

Extension differs in one significant aspect: the Debtor here is seeking, as part of its plan, to extend

the duration of the Luftig Stay — an existing non-debtor stay extension — for the life of its Third

Amended Plan.30 Notwithstanding the wealth of precedents extending the automatic stay to non-

debtors pursuant to Bankruptcy Code §§ 105 & 362(a), it appears to be an issue of first impression

as to whether a non-debtor stay extension should remain in place for the life of a plan. Indeed,

many courts that have written on non-debtor stay extensions, including the few that have done so

post-Purdue Pharma, have reviewed such stay extensions as temporary injunctive relief to

facilitate negotiations among the parties. See, e.g., Parlement Techs., Inc., 661 B.R. at 724–25

(debtor sought to extend the automatic stay to its former officers as co-defendants in certain state

court litigations while the bankruptcy case proceeded); see also Purdue Pharma L.P. v.

Massachusetts, 2024 Bankr. LEXIS 2916, at *6–11 (granting three-week non-debtor stay

extension to allow the debtor and the interested parties to continue negotiations towards a global

settlement).

With respect to debtors, Bankruptcy Code § 362(c)(2) provides that the automatic stay

under Code § 362(a) “continues until the earliest of — (A) the time the case is closed; (B) the time

the case is dismissed; or (C) if a case is under … chapter 11 … of this title, the time a discharge is

granted or denied[.]” 11 U.S.C. § 362(c)(2). When bankruptcy courts extend the automatic stay

to non-debtor parties as preliminary injunctive relief, the durational limits of such stays are often

not clear.

However, the Court also notes that the duration of certain non-debtor stay extensions, in

the aggregate, can amount to a preliminary injunction with a comparable duration as the proposed

Luftig Stay Extension. See, e.g., Purdue Pharma L.P. v. Massachusetts, Fortieth Amended Order

30 As set forth supra, Parts (III)(A) & (III)(A)(2), the Luftig Stay Extension, as proposed by the Debtor, would

extend the duration of the Luftig Stay — the automatic stay and the injunction enjoining FCP from enforcing the

Judgment against Mr. Luftig — for the 5-year life of the Third Amended Plan. See Third Am. Plan at 12–13, Docket

No. 172.

Dated December 2, 2024, Granting Motion For A Preliminary Injunction at 3, Docket No. 610 at

Adversary Proceeding No. 19-08289 (order accompanying the court’s ruling found at 2024 Bankr.

LEXIS 2916 noting that the initial non-debtor stay extension was granted on October 11, 2019,

more than 5 years prior to the court’s ruling granting a three-week extension to the ongoing non-

debtor automatic stay). The Court concludes that, under the facts and circumstances of this case

as described herein, the non-debtor stay extension should not be for a limited duration and may

extend for the life of the plan, consistent with Bankruptcy Code § 362(c)(2). Accordingly, the

Court finds that the Luftig Stay Extension’s duration does not render the relief facially

impermissible.

3. The Luftig Stay Extension is Necessary to The Debtor’s Successful

Reorganization

At the outset, the Court finds, as it did in the Luftig Stay Ruling, that the circumstances

here satisfy the requirement for invoking the limited exception to the automatic stay general rule

recognized by the Second Circuit in Queenie, Ltd. Specifically, the record suggests, and FCP does

not dispute, that the enforcement of the Judgment against Mr. Luftig will have an immediate

adverse economic effect on the debtor's estate. As the Court noted in the Luftig Stay Ruling,

“[m]ost of the [Debtor]’s business is generated through Mr. Luftig’s efforts,” and the Debtor’s

reorganization depends on Mr. Luftig’s ability to “continue his efforts towards current projects

and new opportunities for the company.” In re Hal Luftig Co., 2023 Bankr. LEXIS 19, at *13.

The Debtor has also presented further evidence showing that FCP’s Judgement enforcement efforts

against Mr. Luftig have impacted the Debtor’s ability to generate revenue. See July 2024 Luftig

Decl. ¶¶ 36, 37, Docket No. 157 (Mr. Luftig noting certain instances where potential investors

declined to invest in the Debtor’s projects over concerns of FCP’s lawsuit against Mr. Luftig).

Since FCP has not explained why the Court should deviate from its relevant reasoning in the Luftig

Stay Ruling, and in light of the additional evidence in the July 2024 Luftig Declaration, the Court

finds that the Debtor’s request for the Luftig Stay Extension here is warranted.

The Court now turns to the four-factor preliminary injunction analysis to examine whether

the Debtor has sufficiently demonstrated that the Luftig Stay Extension should be approved.

Regarding the first factor, “‘a likelihood of success on the merits,” the Court agrees with the

Purdue Pharma L.P. v. Massachusetts court, and adopts the post-Purdue Pharma standards

proposed by the bankruptcy court in Parlement Techs. Specifically, as relevant here, one

consideration is whether “providing the debtor's management a breathing spell from the distraction

of other litigation is necessary to permit the debtor to focus on the reorganization of its business[.]”

Parlement Techs., 661 B.R. at 724. The Court concludes that this factor is satisfied. As the record

indicates, Mr. Luftig is responsible for the success of the Debtor’s productions, and the Debtor is

reliant on Mr. Luftig’s assistance to generate revenue. See Mem. L. at 17–19, Docket No. 173.

(detailing the success of the Debtor’s various projects under Mr. Luftig’s direction); see also Hr’g

Tr. from January 17, 2024, 35:7–38:9, 44:23–45:8, Docket No. 194 (Mr. Luftig’s testimony that

he has artistic controls over the Debtor’s production projects and such responsibility cannot be

delegated to the other employees). If FCP is permitted to pursue its claim against Mr. Luftig, such

litigation would distract Mr. Luftig from dedicating his time to the Debtor’s business operations,

and frustrate the Debtor’s ongoing productions. See June 2023 Luftig Decl. ¶ 45, Docket No. 85

(Mr. Luftig detailing certain instances where FCP’s prior enforcement efforts have caused

disruptions and caused Mr. Luftig to divert his attention from the Debtor’s business); see also Hr’g

Tr. from January 17, 2024, 38:21–42:22 (Mr. Luftig testifying on his contributions in producing

shows and finding new opportunities for the Debtor, and that he spent “much more” than 50% of

his time working on the Debtor’s projects last year). Considering Mr. Luftig’s substantial

contribution to the Debtor’s business, the Court finds that providing Mr. Luftig with relief from

the potential FCP litigation is necessary for the Third Amended Plan’s success.

For similar reasons, the Court also finds that the Debtor will face irreparable harm without

the Luftig Stay Extension. If Mr. Luftig cannot focus on the Debtor’s business operations, it will

be difficult or impossible for the Debtor to carry out the Third Amended Plan and successfully

reorganize. See Mem. L. at 17 (“The Debtor’s ability to succeed in developing revenue generating

projects still depends entirely on Mr. Luftig’s ability to develop and produce shows and to pursue

new opportunities.”); see also Hr’g Tr. from January 17, 2024, 47:13–48–11 (Mr. Ryniker’s

testimony that the projections he prepared in support of the Third Amended Plan rely on the

assumption that Mr. Luftig will be working for the Debtor as he “did historically”). Moreover,

Mr. Luftig is indemnified by the Debtor for liabilities he incurs relating to his involvement in the

Debtor’s business, and “any judgment enforced against Mr. Luftig will ultimately become a claim

against the estate[.]” See In re Hal Luftig Co., 2023 Bankr. LEXIS 19, at *16 (citing Durr

Mechanical, 604 B.R. 131 at 137; A.H. Robins Co., 788 F.2d at 1008); see also Claim No. 2-1

Rider § 1(c). This indemnification relationship between the Debtor and Mr. Luftig would pose

further challenges to the Debtor’s reorganizational efforts if FCP is permitted to pursue its

Judgment claim against Mr. Luftig. Thus, the Court finds that Plaintiff is likely to suffer

irreparable harm in the event injunctive relief is not granted.

Further, the Court also finds that the balance of the hardships weighs in the Debtor’s favor.

Because Mr. Luftig is responsible for the Debtor’s revenue-generating projects, any burdens

placed upon Mr. Luftig will impair his ability to manage the company and reduce the likelihood

of a successful reorganization. See Mem. L. at 19 (“Mr. Luftig always has been [] dedicated to

ensuring the success of the Debtor … [but his] ability to continue those efforts will be thwarted if

he is distracted by judgment enforcement efforts by FCP, and his reputation in the industry as a

fundraiser could be tarnished.”) Mr. Luftig’s work on various productions, reputation in the

industry and business contacts are the basis for the company’s reorganization. Id. at 5–6. As such,

potential Judgment collection efforts from FCP against Mr. Luftig will likely undermine the

Debtor’s ability to reorganize. In contrast, since the Luftig Stay Extension does not provide for

permanent relief, the hardship posed by it poses to FCP is minimal. Unlike the Luftig Release

proposed by the Initial Plan, FCP’s rights to collect the Judgment from Mr. Luftig will not be

extinguished under the Luftig Stay Extension. Once the Third Amended Plan is complete, FCP

will be able to pursue its claim against Mr. Luftig. The balance of the harms here clearly weighs

in the Debtor’s favor.

Lastly, granting the Luftig Stay Extension is not adverse to the public interest. Indeed, as

the Court noted in the Luftig Stay Ruling, “courts have found that removing obstacles to plan

formation and promoting a successful bankruptcy reorganization benefit the public interest.” In

re Hal Luftig Co., 2023 Bankr. LEXIS 19, at *17 (citing In re Johns-Manville Corp., 26 B.R. 420,

428 (Bankr. S.D.N.Y. 1983); In re Phila. Newspapers, LLC, 407 B.R. 606, 617 (E.D. Pa. 2009)).

In examining the other factors above, the Court’s analysis has already shown that FCP’s Judgment

enforcement efforts against Mr. Luftig would create a significant obstacle to confirmation of a plan

and a successful reorganization. The Court finds that granting the Luftig Stay Extension would

not be adverse to the public interest.

Accordingly, the Court finds that the extraordinary circumstance of this case satisfies the

four-factor test for preliminary injunctive relief, and that the Luftig Stay Extension should be

approved.

4. The Luftig Stay Extension Does Not Render The Third Amended Plan

“Unfair and Inequitable”

Having found that the Luftig Stay Extension satisfies the test for preliminary injunctive

relief pursuant to Bankruptcy Code §§ 105 & 362(a), the Court will now address FCP’s argument

that the Luftig Stay Extension renders the Third Amended Plan “unfair and inequitable.” FCP first

argued that the Luftig Stay Extension is prohibited under the Supreme Court’s ruling in Purdue

Pharma. See Final Obj’n. at 4–5, Docket No. 190. According to FCP, the Supreme Court held in

Purdue Pharma that “an injunction against [] recovering a debt against a debtor that accompanies

a confirmed plan operates only for the benefit of the debtor against its creditors and does not affect

the liability of any other entity.” Id. (quoting Purdue Pharma, 603 U.S. at 215) (internal quotation

marks omitted) (also citing Intl. Petroleum, 115 F.4th at 1216). Relatedly, FCP also argued that

the Supreme Court in Purdue Pharma rejected “the ability of a bankruptcy court to extend to

nondebtors the benefits of a Chapter 11 discharge usually reserved for debtors.” Id. at 5 (quoting

Purdue Pharma, 603 U.S. at 215). Accordingly, FCP asserts that the Luftig Stay Extension offends

the concepts of fairness and equity because it “essentially amounts to a discharge over the life of

the plan….”. Id.

First, the Court disagrees with FCP’s analysis of the Supreme Court’s Purdue Pharma

ruling. Indeed, the Supreme Court explicitly noted that it was ruling on the narrow question of

whether a bankruptcy court may effectively extend to non-debtors the benefits of a Chapter 11

discharge:

Confining ourselves to the question presented, we hold only that the bankruptcy code does

not authorize a release and injunction that, as part of a plan of reorganization under Chapter

11, effectively seeks to discharge claims against a nondebtor without the consent of

affected claimants.

Purdue Pharma, 603 U.S. at 227 (emphasis added); see also id. at 215 (noting that the question

before the Court was “whether a court in bankruptcy may effectively extend to nondebtors the

benefits of a Chapter 11 discharge usually reserved for debtors”) (emphasis in original omitted).

Thus, FCP’s argument that Purdue Pharma prohibits bankruptcy courts from, as part of a plan,

temporarily enjoining creditors’ collection efforts against non-debtors is without merit.

Second, regarding FCP’s reliance on the Ninth Circuit’s decision in Intl. Petroleum, the

situation here is also distinguishable. In Intl. Petroleum, the Ninth Circuit examined the issues of

(i) whether the automatic stay, under Code § 1520, could be retroactively triggered, and (ii)

whether such stay could be extended to the foreign debtor’s sole owners for certain alter ego

claims. See Intl. Petroleum, 115 F.4th at 1206. Only the second question is relevant here. On that

issue, the Ninth Circuit held that the automatic stay under Code § 1520 does not extend to the

foreign debtor’s sole owners with respect to “a creditor’s garden-variety alter ego claim against

[such] sole owners[.]” See id. In the portion of the opinion declining the non-debtor’s request to

recognize an exception to the general rule that the automatic stay only applies to the debtor, the

Ninth Circuit noted that its decision was based on the laws of that Circuit. See id. at 1217 (“We

have declined to adopt the Fourth Circuit's unusual situation exception on several occasions …

[T]he vitality of the Fourth Circuit's unusual situation exception has, in this Circuit, remained

unclear.”) (internal quotation marks and citations omitted); see also id. (“[T]his case is not in the

correct procedural posture for us to decide whether to adopt A.H. Robins as the law in this

Circuit.”). This is not the law within the Second Circuit. As noted supra, Part (IV)(B)(1), the

Second Circuit has adopted the Fourth Circuit’s reasoning in A.H. Robins, and recognized that the

automatic stay may be extended to non-debtors in certain circumstances. See also In re Hal Luftig

Co., 2023 Bankr. LEXIS 19, at *1. Hence, the Ninth Circuit’s ruling in Intl. Petroleum does not

affect the Court’s analysis above.

Lastly, the Court also disagrees with FCP’s assertion that the Luftig Stay Extension

“amounts to a discharge” over the life of the Third Amended Plan. A discharge under Bankruptcy

Code § 1141(d)(1)(A) — as incorporated by Code § 1192 for Subchapter V cases — “void[s] any

past or future judgments on the discharged debt [and] operat[es] as an injunction ... prohibit[ing]

creditors from attempting to collect or to recover the debt.” Purdue Pharma, 603 U.S. at 215

(quoting Tennessee Student Assistance Corp. v. Hood, 541 U.S. 440, 447 (2004)); see also 11

U.S.C. § 1141(d)(1)(A). Here, the Luftig Stay Extension does not seek to extinguish FCP’s claim

against Mr. Luftig, but only to enjoin FCP from enforcing the Judgment against Mr. Luftig for 5

years — the Third Amended Plan’s life. The Luftig Stay Extension does not leave FCP without

recourse. Indeed, at all times, FCP’s Judgment claim against Mr. Luftig will remain valid. Further,

once the Debtor completes its payments under the Third Amended Plan and obtains a discharge,

FCP will be free to pursue its claim against Mr. Luftig. Since the Luftig Stay Extension maximizes

recovery for unsecured creditors — including FCP — and is necessary for the Debtor’s successful

reorganization, the Court rejects the argument that such relief “goes against all concepts of fairness

and equity.”

Therefore, the Court also finds that the Third Amended Plan’s inclusion of the Luftig Stay

Extension does not render the plan “unfair and inequitable.”

C. FCP’S OTHER ARGUMENTS CONCERNING THE THIRD AMENDED

PLAN’S FAIRNESS AND EQUITABILITY

FCP also argued that the Third Amended Plan is “unfair and inequitable” because (i) the

plan does not provide appropriate remedies to the interested parties in scenarios where the Debtor

fails to make its plan payments, and (ii) FCP — the Debtor’s largest creditor “by a substantial

margin” — voted to reject the Third Amended Plan. See Final Obj’n. at 5, Docket No. 190.

First, the Court disagrees with FCP’s argument that the Third Amended Plan does not

satisfy Code § 1191(c)(3)(B)(ii), or that the plan provides no appropriate remedies to protect

claimholders in a hypothetical plan payment default by the Debtor. The Court previously

addressed this issue in the Initial Confirmation Opinion by noting that, “[g]iven that the Debtor’s

profitability has apparently been volatile in the past, the Court finds that the Back-Stop

Commitment is necessary to satisfy 11 U.S.C. § 1191(c)(2)(B).” In re Hal Luftig Company, Inc.,

655 B.R. at 526 (internal citation omitted). Consistent with the Court’s prior ruling, the Third

Amended Plan here explicitly provides for the Back-Stop Commitment31 “in the event the Debtor

cannot make the payments requirement by the Third [Amended] Plan.” Third Am. Plan at 9, 16,

Docket No. 172. Further, as a condition precedent to the Third Amended Plan’s effective date, the

Debtor must confirm the availability of the Back-Stop Commitment. Id. at 14. FCP did not dispute

the Court’s finding in the Initial Confirmation Opinion that the Back-Stop Commitment is an

appropriate remedy to protect the interested parties from a plan payment default, and does not do

so here. Therefore, the Court finds FCP’s argument that the Third Amended Plan fails to satisfy

Code § 1191(c)(3)(B) unconvincing.

Second, the Court also disagrees with FCP’s contention that, as the Debtor’s largest

unsecured creditor, FCP’s vote to reject the Third Amended Plan rendered the plan “unfair and

inequitable,” as such argument conflicts with the plain text of Bankruptcy Code § 1191(b). As the

Court already discussed supra, Part (IV)(A), Code § 1191(b) permits small business debtors to

31 As noted supra, Parts (III)(B), the Back-Stop Commitment requires Mr. Luftig “to contribute up to an

aggregate of $100,000.00” to fund the Third Amended Plan if the Debtor defaults on its plan payments. See Third

Am. Plan at 9, 16, Docket No. 172.

confirm a plan over the objections of its unsecured creditors if certain conditions are met. See 11

U.S.C. § 1191(b). Notably, nothing in Code § 1191(b) and the applicable Code § 1129(a)

requirements suggests that an unsecured creditor’s vote to reject a plan would automatically render

the plan “unfair and inequitable.”

Moreover, to the extent that FCP is urging the Court to impose additional requirements to

the “fair and equitable” standard pursuant to Code § 1191(c), and to thus consider FCP’s status as

the Debtor’s largest unsecured creditor, the Court also declines to do so here. The Court agrees

that Code § 1191(c)’s permissive language provides bankruptcy courts with discretion to consider

additional factors related to the “fair and equitable” requirements. However, FCP did not present

any compelling reasons to warrant a requirement that the Third Amended Plan must be supported

by the Debtor’s largest unsecured creditor. In fact, the Court finds it inappropriate to impose any

requirement that would effectively allow an objecting unsecured creditor to derail an otherwise

confirmable plan — as FCP seeks to do here — solely because that creditor holds the largest

unsecured claim against the estate.

Thus, the Court also finds FCP’s remaining “unfair and inequitable” arguments

unconvincing. Having rejected each of FCP’s arguments that the Third Amended Plan is

unconfirmable because it does not satisfy Code § 1191(b)’s “fair and equitable” requirement, the

Court also finds that FCP’s Final Objection should be overruled.

V. CONCLUSION

For the foregoing reasons, the Court finds that the Debtor has satisfied its burden with

respect to the statutory requirements set forth in 11 U.S.C. § 1191 to confirm the Third Amended

Plan. Accordingly, FCP’s Final Objection is OVERRULED, and the Third Amended Plan is

CONFIRMED. The Debtor shall submit a proposed order in accordance with Local Bankruptcy

Rule 9074-1.

IT IS SO ORDERED.

Dated: February 24, 2025

New York, New York /s/ John P. Mastando III

THE HONORABLE JOHN P. MASTANDO III

UNITED STATES BANKRUPTCY JUDGE