Gift Plans: Death Knell or Still on Life Support?

This 2-1 decision is the first to directly address the viability of gift plans in the Second Circuit, and has gained much notoriety in the bankruptcy bar. This article, however, does not focus on the circuit court's ruling that the absolute priority rule bars gift plans. Instead, we focus on whether the circuit court's finding that an out-of-the-money unsecured creditor with an unliquidated claim has standing to object to a gift plan, since that issue appears not to have been fully briefed and therefore not fully considered by the circuit court.

As the circuit court observed: “[e]ven if it were appropriate for us to consider the merits or ultimate worth of Sprint's claim, we would have no way to make that determination, lacking any briefing from the parties or much information in the record on appeal regarding the merits of that claim, which will turn not only on the potential offset of its obligations to the government (as the dissent recognizes) but also on the date that the relevant DBSD subsidiary occupied a specific band of the transmission spectrum. Because the parties do not brief the issue and did not raise it below, moreover, our evaluation of Sprint's claim would require piecing together the evidence without a guide.” (citation omitted)