Eighth Circuit Upholds Backstopped Rights Offerings for Chapter 11 Plans

The Eighth Circuit joined three other circuits by holding that a plan with better treatment for creditors who backstop a rights offering does not violate the “same treatment” requirement in Section 1123(a)(4). On an appeal challenging confirmation, the circuit court did not rule on whether the plan was equitably moot. By reaching on the merits and not taking the easy way out, the Eighth Circuit provided valuable guidance for lower courts regarding a frequently used device in major reorganizations.

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