Chapter 11 plans are a form of stakeholder democracy. Elaborate rules govern voting and its consequences, and, in Section 1125(b), how acceptances—and rejections—may be solicited. Well, sort of.

It’s clear enough that once a case is commenced, no one may solicit a yea or a nay from a stakeholder who hasn’t received an approved disclosure statement. But after the disclosure statement goes out, what sort of campaigning is permitted? The Bankruptcy Code is silent. In Boy Scouts of America (In re Boy Scouts of America, Bankr. D. Del.), a mass tort case, votes on a proposed plan are now being solicited from alleged victims of abuse and other creditors.

Recently a brawl erupted when a tort creditors’ committee distributed—in error, it maintains—a tort lawyer’s plan denunciation to the committee’s entire creditor email list. The debtors say the denunciation is full of half-truths and full-on falsehoods. How Judge Silverstein will resolve the tension between the urgency of fair disclosure to unsophisticated creditors, the code’s silence, and the commands of the First Amendment remains to be seen.

What we are already seeing is the larger context in which the dispute arrives. The tort lawyer-author of the denunciation broadcast by the tort committee used social media to post that other lawyers in the case are “dimwits,” “mobsters,” “Old Yeller,” and the judge a “jellyfish.” Some of the posts include pictures, like one of opposing counsel with his wife, another of an opposing lawyer’s home, and so on. This sort of discourse is the stuff of social media culture these days but has not heretofore been the stuff of bankruptcy cases. Perhaps, more than a confrontation over the law of plan solicitation, the Boy Scouts fracas is a confrontation over culture. Is this case a one-off, or is a change in culture coming to Chapter 11? Stay tuned.

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