First Mariner U.S. trustee seeks denial of proposed liquidation plan

By Kali Hays

New York, Nov. 18 – First Mariner Bancorp’s U.S. trustee, Judy A. Robbins, objected to confirmation of the company’s proposed Chapter 11 plan of liquidation, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Maryland.

The company received approval of the plan disclosure statement Oct. 17.

According to the objection, First Mariner’s plan includes provisions for “broad immunity” from “nearly all forms of liability” for the company’s officers, directors, creditors’ committee, indenture trustees of certain bonds and other bankruptcy professionals.

Robbins said that these provisions are only necessary or permitted “in the most unusual and extraordinary circumstances” and that the “authors of the plan are using the plan to shield themselves from potential liability solely for their own personal benefit.”

Moreover, Robbins claimed that the plan’s proposed payment of post-bankruptcy fee claims of the indenture trustees by equating the claims with priority administrative expense claims “circumvents the court’s authority to regulate and control administrative expenses.”

The objection went on to accuse First Mariner of treating the general unsecured claims of the same indenture trustees “more favorably than other general unsecured claims by paying these favored creditors 100% of their claims while all of the other creditors in the same class will only receive 20% to 21% of their claims from a general fund.”

“This treatment reinforces the overarching theme of this plan: favor and protect the indentured trustees and leave the crumbs for the remaining creditors to give the (inaccurate) impression of a fair and equitable proposal,” the objection stated.

Robbins asked the court to deny confirmation of the plan and order revisions consistent with her objection.

A hearing to confirm the plan is scheduled for Dec. 8.

First Mariner, the Baltimore-based holding company for 1st Mariner Bank, filed for bankruptcy on Feb. 10, 2014. The Chapter 11 case number is 14-11952.

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