In re Lionel Corporation
United States Court of Appeals for the Second Circuit
722 F.2d 1063 (1983)
Lionel Corporation (Lionel) (debtor), a toy train manufacturer in Chapter 11, held its most valuable asset in 82% ownership of Dale, a profitable independent electronics company representing 34% of Lionel's total assets; the creditors' committee wanted Lionel to sell the Dale stock to finance reorganization, and Lionel applied to sell the stock under §363(b), which the bankruptcy judge approved for $50 million, reasoning only that the creditors' committee insisted on it and that delaying would slow reorganization. The equity holders' committee appealed, arguing the sale deprived them of chapter 11's procedural safeguards like disclosure, solicitation, and voting.
Whether a bankruptcy judge may approve a debtor's sale of property outside the ordinary course of business under §363(b), when the only justification offered is that the creditors' committee insisted on the sale.