Century Glove v. First American Bank of New York
United States Court of Appeals for the Third Circuit
860 F.2d 94 (1988)
Century Glove, Inc. (plaintiff) filed for Chapter 11 bankruptcy and proposed a reorganization plan that its unsecured creditors committee supported over a rival plan floated by creditor First American Bank of New York (FAB) (defendant). After the bankruptcy court approved Century's disclosure statement and it was distributed to creditors, FAB contacted other creditors, Latham Four Partnerships and Bankers Trust New York Corporation (BTNY) (defendants), sharing a draft of FAB's own competing plan and privileged committee communications to persuade them to vote no on Century's plan. Latham Four then voted against the plan; BTNY had independently already decided to reject it. Century asked the bankruptcy court to disqualify the votes of FAB, Latham Four, and BTNY as unlawfully solicited, and the bankruptcy court agreed as to FAB and Latham Four (also sanctioning FAB) but not BTNY. The district court affirmed as to BTNY but reversed on FAB, Latham Four, and the sanctions, and Century appealed.
Whether a creditor violates the Bankruptcy Code's vote-solicitation rules by sharing its own draft competing plan and other information with fellow creditors after the debtor's plan and disclosure statement have already been distributed.