Economic Benefits of Consolidation. A factor frequently considered by courts is the potential profitability of consolidating the debtor and its related entities. See, e.g., In re Vecco Constr. htdus., Inc., 4 B.R. at 410. Consolidation has been granted where it improved the debtor's chances for a successful financial reorganization. See, e.g., In re Xxxx Coip., 129 B.R. at 414-15 (citing In re X.X. Xxxxx & Co., Inc., 23 B.R. 569, 572 (Bankr. E.D. Pa. 1982)).
Economic Benefits of Consolidation. A factor frequently considered by courts is the potential “benefit to creditors or the bankruptcy estate” of consolidating the debtor and its entities, e.g., In re Vecco Construction Indus. Inc., 4 B.R. 407, 410 (Bankr. E.D. Va. 1980). As discussed above, consolidation has been granted in some cases in part because it improved a debtor's chances for a successful financial reorganization. EXHIBIT X-000 Application of the Factors Courts generally agree that the central inquiry in evaluating a motion for substantive consolidation should be whether the economic prejudice resulting from continued recognition of the entities' separateness outweighs the economic prejudice that would be caused by the entities' consolidation. E.g., Eastgroup, 935 F.2d at 249 (quoting Xxxxxx Bros., 18 B.R. at 234). No single factor is likely to be determinative, nor is a particular combination always decisive. Not all of the factors favoring consolidation need be present in order to justify consolidation. E.g., Xxxx, 129 B.R. at 415. Implicit in substantive consolidation analysis is the general assumption that creditors will deal with apparently separate entities as separate, and therefore should be entitled to rely on their separateness. The standards upon which substantive consolidation is determined varies among the circuit courts. A number of reported cases have relied on a recitation of some subset of the foregoing factors, and performed a case-by-case application to the relevant facts. See, e.g., Vecco Construction, 4 B.R. at 410. Generally in these cases consolidation has been regarded as an extraordinary remedy, putting the burden on the proponent of consolidation to prove that the benefits would outweigh any resulting prejudice. Augie/Xxxxxxx, 860 F.2d at 518; Xxxxxx Bros., 18 B.R. at 238. Three circuits have articulated similar, but not identical, standards of proof for substantive consolidation analysis; no single approach has been embraced as the determinative test. See Xxxxxxx Xxxxxxx, Redefining into Reality: Substantive Consolidation of Parent Corporations and Subsidiaries, 24 Emory Bankr. Developments J. 469, 486 (Spring 2008).
Economic Benefits of Consolidation. A factor frequently considered by courts is the potential “benefit to creditors or the bankruptcy estate” of consolidating the debtor and its entities, e.g., In re Vecco Construction Indus. Inc., 4 B.R. 407, 41...
