Free Designated Record on Appeal - District Court of Delaware - Delaware


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Case 1:08-cv-00025-JJF

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
)

In re:

1
)

Chapter 11 Case No. 06-1 1045 (BLS) Jointly Administered
(Conjrmation Order Appeal) D.I. 2240

1
GLOBAL POWER EQUIPMENT GROUP ) INC., et al., 1 Debtors.

1 1
)

APPELLANT'S DESIGNATION OF RECORD AND STATEMENT OF ISSUES PURSUANT TO FEDERAL RULE OF BANKRUPTCY PROCEDURE 8006 Appellant SNC-Lavalin Power Ontario, Inc.

("m), filed a Notice of Appeal on having

December 27,2007, from the order of the Bankruptcy Court (Shannon, J.), entered on December 2 1,2007 (D.I. 2233), which Order entered final judgment confirming the First Amended Joint Chapter 11 Plan of Reorganization for Global Power Equipment Group Inc. and its Affiliated Debtors (the

"my)by Global Power Equipment Group, Inc. ("GPEG"), its whollyproposed

owned subsidiary Deltak, L.L.C. ("Deltak") and their affiliated debtors and debtors-in-possession (collectively, the "Debtors"), as appellees, overruling the objections of SNC, as Appellant, hereby designates the following items for inclusion in the record on appeal and sets forth a statement of issues to be presented on appeal: DESIGNATION OF CONTENT OF RECORD ON APPEAL I. D.l. # Bankruptcy Court Pleadings Document (filed date) SNC Proof of Claim filed against Deltak, Claim No. 1099 (March 24,2007) SNC Proof of Claim filed against GPEG, Claim No. 1100 (March 24,2007) 5 Debtors' Motion Pursuant to Bankruptcy Rule 1007(c) and Local Rule 1007-l(b) for an Extension of Time to File Schedules of Assets and Liabilities, Schedules of

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Executory Contracts and Unexpired Leases, and Statements of Financial Affairs (912912006) Debtor's Motion Pursuant to 11 U.S.C. $5 105,363 and 365 for an Order Authorizing Debtors to (I) Wind Down Operations of the Heat Recovery Steam Generation Business Segment Operated by the Deltak Debtors, (11) Reject Certain Executory Contracts in Connection Therewith, and (111) Implement Procedures for the Orderly Completion of Work in Progress (912912006) Affidavit of John M. Matheson in Support of First Day Motions and Applications (912912006) Order Pursuant to Bankruptcy Rule 1007(c) and Local Rule 1007-1(b) Granting Extension of Time to File Schedules of Assets and Liabilities, Schedules of Executory Contracts and Unexpired Leases, and Statement of Financial Affairs (101312006) Order Granting in Part Debtors' Motion Pursuant to 11 U.S.C. $$ 105,363 and 365 for an Order Authorizing Debtors to (I) Wind Down Operations of the Heat Recovery Steam Generation Business Segment Operated by the Deltak Debtors, (11) Reject Certain Executory Contracts in Connection Therewith, and (111) Implement Procedures for the Orderly Completion of Work in Progress (101312006) Notice of Appointment of Committee of Unsecured Creditors (1011012006) Debtors' Motion Pursuant to Bankruptcy Rule 1007(c) and Local Rule 1007-1(b) for an Additional Extension of Time to File Schedules of Assets and Liabilities, Schedules of Executory Contracts and Unexpired Leases, and Statement of Financial Affairs (1011912006) Order Establishing Procedures for Interim Compensation and Reimbursement of Chapter 11 Professionals and Committee Members (1012612006) Interim Order Regarding Creditor Access to Information and Setting and Fixing Creditor Information Sharing Procedures and Protocols Under 11 U.S.C. $9 105(a), 1 102(b)(3) and 1103(c) (1012612006) Objection of the United States Trustee to the Debtors' Motion Pursuant to Bankruptcy Rule 1007(c) and Local Rule 1007-1(b) for an Additional Extension of Time to File Schedules of Assets and Liabilities, Schedules of Executory Contracts and Unexpired Leases, and Statements of Financial Affairs (Docket Entry #13 1) (1 11212006) Order Pursuant to Bankruptcy Rule 1007(c) and Local Rule 1007-1(b) Granting an Additional Extension of Time to File Schedules of Assets and Liabilities, Schedules of Executory Contracts and Unexpired Leases, and Statements of Financial Affairs

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Debtors' Emergency Motion to Approve Certain Heat Recovery Steam Generation Completion Agreements (1 111512006) Order Granting Debtors' Emergency Motion to (I) Supplement and Clarify the Amended Wind Down Order to Allow the Debtors to Enter into Certain HRSG Completion Agreements and (11) Approve Procedures for the Assumption and Assignment of Executory Contracts Relating to HRSG Projects (1 1/21/2006) Schedules (1 1/27/2006) (Schedule G omitted) Debtors' Monthly Operating Report, for October, 2006 (11812007) Notice of Filing of Amendment to Schedule " G of Schedule of Assets and Liabilities for Deltak, L.L.C. (312312007) Notice of Filing of Amendment to Schedule "F" of Schedule of Assets and Liabilities for Global Power Equipment Group Inc. (312312007) Affidavit of Gregory Tardanico (1011612007) Affidavit of Patrick P. Dinardo (1011612007) Excerpt from Disclosure Statement Relating to the First Amended Joint Chapter 11 Plan of Reorganization for Global Power Equipment Group Inc. and its Affiliated Debtors (Section V (Certain AfJiliate Transactions)) (1013 112007) Debtors' Response to First Set of Interrogatories by Claimant SNC-Lavalin Power Ontario, Inc. to Debtors Global Power Equipment Group Inc., et al. (1 1/7/2007) Supplement to Debtors' Responses to First Set of Interrogatories by Claimant SNC2014 Lavalin Power Ontario, Inc. to Global Power Equipment Group Inc., et al. 2017 (Amended) (1 111612007) Debtors' Responses to Second Set of Interrogatories by Claimant SNC-Lavalin Power Ontario, Inc. to Debtors (121312007) Objection of SNC-Lavalin Power Ontario, Inc. to Confirmation of the First Amended Joint Chapter 11 Plan of Reorganization for Global Power Equipment Group Inc. and Its Affiliated Debtors (12113/07) Supplemental Objection of SNC-Lavalin Power Ontario, Inc. to Confirmation of the First Amended Joint Chapter 11 Plan of Reorganization for Global Power Equipment Group Inc. and Its Affiliated Debtors (12119107)

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2236

Order Confirming the First Amended Joint Chapter 11 Plan of Reorganization for Global Power Equipment Group, Inc. and its Affiliated Debtors, entered on December 2 1,2007. Transcript of Hearing on the Estate Parties' objections to Proofs of Claim Nos. 1099 and 1100 filed by SNC (December 14,2007). Notice of Appeal (dated December 27,2007). Transcript of Hearing on the Estate Parties' objections to Proofs of Claim Nos. 1099 and 1100 filed by SNC (December 17,2007). Transcript of Hearing on Confirmation of the First Amended Joint Chapter 11 Plan of Reorganization (December 20,2007)

2237 2240

2249

Clerk's Notice Regarding Filing of Appeal (11412008).
Trial Exhibits (as filed with the Bankruptcy Court on December 12-13,2007) (SNC Binders I-V)
1. 1

A. Affidavit of Gilles Laramee, dated December 12, 2007

Ex. A: Purchase Order No. 59000010 Ex. B: PR Newswire Article, dated September 28,2006 Ex. C: Letter from Jacques Lamarre to Larry Edwards, dated October 20,2006 Ex. D: Letter fiom Patrick Dinardo to Jeffrey Sabin, dated October 30,2006 Ex. E: Letter from Jeffrey Sabin to Patrick Dinardo, dated November 4,2006 Ex. F: Global Notes and Statement of Limitations, Methodology, and Disclaimer Regarding Debtor's Schedules and Statements Ex. G: Completion Agreement, dated November 30,2006 Ex. H: E-Mail from John Franks to Timothy Sambrano, dated November 8,2006 Ex. I: E-Mail from John Franks to Elayna Conner, dated March 15,2007 Ex. J: Historic GPEG Net Activity: GPEG IIC Cash Account Activity
B.

Second Affidavit of Gregory Tardanico, dated December 12,2007

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Ex. 1: Handwritten Notes, dated January 24 and 26 Ex. 2: E-Mail from Bob Black to Jack Terranova and Daniel Girard, dated September 14,2006 Ex. 3: E-Mail from Jack Terranova to Scott Neurneister, dated September 20,2006 Ex. 4: E-Mail from Greg Tarandico to Jack Terranova and Bob Black, dated September 25,2006 Ex. 5: E-Mail from Jack Terranova to David Lund, dated October 10,2006
C. Affidavit of Martin Tollefson, dated December 12,2007

Ex. 1: Relevant Portions of the Completion Agreement D. Affidavit of Stephen Darr, dated December 11, 1007 Ex. A: Cirriculum Vita of Stephen B. Darr Ex. B: Report of Stephen B. Darr Ex. C: E-Mail from John Franks to Elayna Conner, dated March 15,2007 E. Affidavit of Roger P. Bridges, dated December 12,2007

F. SNC's Designation of the Deposition of Larry Edwards, including Edwards Deposition Exhibits ("LDE")1 and 2:
LDE 1 Global Power Equipment Group Inc. Minutes of the Special Meeting of the Board of Directors, dated June 27,2006 LDE 2 Global Power Equipment Group Inc. Minutes of the Special Meeting of the Board of Directors, dated August 29,2006

G. SNC's Designation of Deposition of James P. Wilson, including Wilson Deposition Exhibits ("WDE") 1-13:

WDE 1 WDE 2 WDE

Confidential GPEG Intercompany Account Reconciliations (After Interest and Admin Allocation), dated September 30,2006 Declaration Concerning Debtor's Schedules, dated November 20,2006, signed by James P. Wilson, Officer (Deltak) Email Memorandum from Steven D. Pohl to Diane Sitkowski, dated November 22,

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3

2006 at 9:5 1 a.m., re: 713 1/06 Intercompany Reconciliation, attaching email of Keoni McGill (White & Case) to Yoon Song, dated November 15,2006 Confidential email from Jay Bradford to M. Hanson, dated November 5,2006, at 2:52 p.m. re: I/C Reporting and Williams Bonding Confidential emails tolfrom John Cunningham, dated October 18-19,2006 Confidential GPEG Balance Sheet, dated September 30,2006 Summary of Schedules filed by Deltak LLC in U.S. Bankruptcy Court/District of Delaware (Subject to Global Notes and Specific Notes to these Schedules) Global Notes and Statements of Limitations, Methodology, and Disclaimer Regarding Debtor's Schedules and Statements, filed by Deltak LLC in U.S. Bankruptcy Court/District of Delaware Confidential GPEG Inter-Company Cash Account Summary, prepared by Alvarez & Marsal, dated March 16,2007 Confidential email from Ron Sepiol to Jack Terranova, dated January 18,2006 at 8:35 p.m. re: 5976- SNCIGoreway Outstanding Commercial Issues Response Email from Ron Sepiol to Jack Terranova, dated January 18, 2006 at 7:35 p.m., re: 5976-SNC/Goreway Outstanding Commercial Issues Response Change Order No. 1 to Purchase Order No. 59000010, dated February 23,2006 and (Purchase Order No. 59000010 between SNC and Deltak, dated January 26,2006) Agreement titled PARENT COMPANY GUARANTEE to Maasvlakte Energie B.V. given and delivered by Global Power Equipment Group, Inc. and dated January 13, 2005

WDE 4 WDE 5 WDE 6 WDE 7 WDE 8

WDE 9
WDE
10

WDE
11

WDE 12 WDE 13

H. SNC's Designation of Monte Ness's Deposition Transcript, including Ness Deposition Exhibits ("NDE") 1-15:
NDE 1 Change Order No. 1 to Purchase Order No. 59000010, dated February 23,2006 and (Purchase Order No. 59000010 between SNC and Deltak, dated January 26,2006) NDE 2 Email from John Davies to Jack Terranova, dated January 17,2006 at 6: 17 p.m., with attached Deltak Commercial Proposal IVo. 5976-7, dated January 12,2006 NDE 3 Email from Victor Ferris to Ron Sepiol, dated January 18,2007 at 9:07 p.m., re: 5976-SNC/Goreway Outstanding Commercial Issues Response, attaching email from Ron Sepiol to Jack Terranova, dated January 18,2006 at 7:35 p.m., re: 5976SNCIGoreway Outstanding Commercial Issues Response

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NDE 4 Email from Carol Kollodge to Jeff Ehm, dated September 12,2006 at 5:43 p.m., with attached Deltak Parental Guarantees List of 6.13.06 NDE 5 GP Investor Relations Press Release: "Global Power Equipment Group Inc. Expects to Restate Fiscal 2004 and Quarterly 2005 Results Due to Misreported Gross Profit on Two Completed Projects in China and Provides Preliminary Fourth Quarter Earnings Estimate" NDE 6 Completion Agreement (Execution Copy), dated November 30,2006 NDE 7 Direct Payment Agreement, dated November 22,2206, between SNC-Lavalin Power Ontario Inc., Deltak LLC, and Deltak Power Equipment China Co., Ltd. NDE 8 Email from Greg Tardanico to Tom Edgar, Monte Ness and Edmund Tan, dated January 17,2007 at 6:25 p.m. re" DPEC payment methodology for Goreway Module Shipments NDE 9 Purchase Order, dated November 2,2006, between Deltak LLC and Deltak Power Equipment China NDE 10 Letter dated February 15,2007, from Greg Tardanico, VP of Procurement/Contracts (SNC) to Monte Ness, President (Deltak) re: SNC-Lavalin Power Ontario, Inc./Deltak LLC Completion Agreement-Sithe Global Power Goreway ULC Project, attaching email from Monte Ness to Edmund Tan, Liu Xiaosong, Yanjinlan, dated February 2,2007, at 1:33 p.m. re: Payment on SNC Goreway Letter dated February 20,2007, from Mike Ranz to Monte Ness, President (Deltak), re: SNC-Lavalin Power Ontario, Inc./Deltak LLC Completion Agreement-Sithe Global Power Goreway ULC Project Qualcon, Inc. Technical Report, dated February 8-9,2007 re: Material Failure Analysis; SA2 10-C Fin Tubes Deltak Report, dated February 18,2007, re: Rejection and replacement of four tubes during shop hydro test at Deltak Power Equipment China, attaching (i) materials Evaluation and Engineering, Inc. Laboratory Report, dated February 15,2007, re: Evaluation of Four Heat Exchanger Tube Sections; and (ii) Report on the Leaking Tubes of GO6003 Agreement Letter (Translated Copy) from Jiangxi Hongdu Steel Works to Deltak Power Equipment (China) Co., Ltd., dated December 30,2006, translated January 26,2007 Handwritten notes [of Greg Tardanico], dated January 24-26, [2006].

NDE 11 NDE 12 NDE 13

NDE 14 NDE 15

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I. SNC's Designation of Michael Hanson's Deposition Transcript, including Hanson Deposition Exhibits ("HDE") 1- 10:
HDE 1 Disclosure Statement Relating to the First Amended Joint Chapter 11 Plan of Reorganization for Global Power Equipment Group Inc. and its Affiliated Debtors, dated October 30,2007 HDE 2 Confidential GPEG Intercompany Account Reconciliations (After Interest and Admin Allocation), dated September 30,2006 HDE 3 Confidential GPEG Balance Sheet, dated September 30,2006 HDE 4 Confidential GPEG Inter-Company Cash Account Summary, dated March 16,2007 HDE 5 Confidential Letter from Donald Harer, Sr. Director (Alvarez & Marsal) to Frank Eaton (White & Case LLP), dated March 15,2007 HDE 6 Global Notes and Statements of Limitations, Methodology, and Disclaimer Regarding Debtor's Schedules and Statements, dated November 27,2006 HDE 7 GPEG MONTHLY OPERATlNG REPORT, dated October, 2006, filed with the U.S. Bankruptcy Court/District of Delaware on January 8,2007 and signed by Michael Hanson, CFO of Debtor HDE 8 GP Investor Relations Press Release: "Global Power Equipment Group Inc. Files Voluntary Chapter 11 Reorganization," dated September 28,2006 HDE 9 Global Power Equipment Group 2004 Annual Report (pp. 1, 12,23,27-28) HDE 10 Email Memorandum from Steven D. Pohl to Diane Sitkowski, dated November 22, 2006 at 9:5 1 a.m., re: 713 1/06 Intercompany Reconciliation, attaching email of Keoni McGill (White & Case) to Yoon Song, dated November 15,2006

J. SNC's Designation of the Deposition of Candice Cheeseman, including Cheeseman Deposition 1-4: Exhibits

("w)

CDE 1 Notice of Deposition Pursuant to Fed. R. Civ. P. 30(b)(6) and Fed. R. Bankr. P 7030(b)(6), dated November 27,2007 CDE 2 Email from Kate Sallie to Bill Sullivan, dated December 7,2007, containing: (i) Global Power Equipment Group Inc. Memorandum of Action of the Audit Committee of the Board of Directors, dated March 3 1,2006; (ii) Global Power Equipment Group Inc. Minutes of the Special Meeting of the Audit Committee of the Board of Directors, dated March 26,2006; (iii) Global Power Equipment Group Inc. Minutes of the Meeting of the Audit Committee of the Board of Directors, dated May

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3,2006; (iv) Global Power Equipment Group Inc. Minutes of the Special Meeting of the Board of Directors, dated June 27,2006; (v) Global Power Equipment Group Inc. Minutes of the Special Meeting of the Audit Committee of the Board of Directors, dated June 27,2006; (vi) Global Power Equipment Group Inc. Minutes of the Special Meeting of the Board of Directors, dated July 20,2006; (vii) Memorandum to File, from Candice Cheeseman, dated March 27,2006 re: Board Call
CDE
2A

Global Power Equipment Group Inc. Minutes of the Special Meeting of the Audit Committee of the Board of Directors, dated June 27,2006

CDE 3 Affidavit of Candice Cheeseman, General Counsel and Secretary of the Debtors, dated October [29], 2007 CDE 4 Amended Affidavit of Candice Cheeseman, General Counsel and Secretary of the Debtors, dated October [29], 2007

K. SNC's Designation of the Deposition of Mardi DeVerges (no Exhibits) L. John Franks Deposition Exhibits

("m7) 3-1 1:

FrEx 3 Alix Partners Agreement for Bankruptcy Administration Services, dated September 15,2006 FrEx 4 e-mail correspondence from Timothy Sambrano to John Franks dated October 23, 2006 re: intercompany balances FrEx 5 GPEG, Inc. Intercompany Detail. Source: 813 112006 Trial Balances FrEx 6 Global Notes and Statement of Limitations, Methodology, and Disclaimer Regarding Debtor's Schedules and Statements FrEx 7 e-mail correspondence from John Franks to Timothy Sambrano dated November 8, 2006 re: Summary Report FrEx 8 e-mail correspondence from John Franks to Dalton Ryan dated November 10,2006 FrEx 9 e-mail correspondence from John Franks to Meade Monger, dated March 14,2007 re: GPEG Claims Call This Week FrEx 10 FrEx 11 e-mail correspondence from John Franks to Meade Monger, dated March 14,2007 re: Intercompany e-mail correspondence from John Franks to Elayna Conner, dated March 15,2007 re: Braden Europe Claims

M. Robert Caruso Exhibits ("CaEx"):

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CaEx 3 CaEx 5

e-mail correspondence from John Cunningham to David Hillman, dated November 16,2006 e-mail correspondence from Jay Bradford to Brent Williams et a1 re : Pre-Petition Intercompany Summary, dated January 15,2007

N. Affidavit of Pal11Summit Documents ("SumEx") A-G: Sum Ex A Sum Ex B Sum Ex C Sum Ex D Sum Ex E Sum Ex F Sum Ex G e-mail from Kevin McGill to Thomas Kiriakos et a1 dated November 14,2006 e-mail from Brian Lavarnway to Robert Caruso dated October 13,2006 e-mail from Curtis Weidler to Matthew Brown dated November 2,2006 e-mail from Jeffrey Sabin to Kevin McGill et al, dated November 3,2006 e-mail from David Hillman to Gerard Uzzi et al, dated November 3,2006 e-mail from John Madden to Gerard Uzzi, dated November 3,2006 e-mail from John Franks to Timothy Sambrano, dated November 8,2006

0 . Affidavit of Patrick P. Dinardo Exhibits A-F: Ex. A Ex. B Ex. C Ex. D Ex. E Ex. F Summary of Schedules Excerpt from proposed Disclosure Statement, filed September 10,2007 GPEG MOR 3 - Inter-Company Balances Listing at October 3 1,2006 Letter from Jeffrey Sabin to Patrick Dinardo, dated November 4,2006 Direct Payment Agreement, dated November 22,2006 PR Newswire Article, dated September 28,2006 ISSUES PRESENTED ON APPEAL 1. 2. Did the Bankruptcy Court err in confirming the Plan over the objections of SNC?

In particular, did the Bankruptcy Court err as a matter of law in concluding that

the Plan and the Debtors (as Plan proponents) complied with applicable provisions of title 11 of

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the United States Code, and that the Plan was proposed in good faith by means not forbidden by law, notwithstanding SNC's persuasive proofs of the Debtors' bad faith or willful misconduct
-

including, but not limited to, misrepresentations and/or fraudulent omissions, misleading partial disclosures and other breaches of fiduciary duty, in fraudulently inducing SNC and other creditors to waive rejection damages claims against Deltak? 3. Did the Bankruptcy Court err as a matter of law in confirming a Plan predicated

upon a "settlement" of claims owed by GPEG to Deltak that wiped out $182 million in intercompany debt for not more than $34 million, which benefited shareholders of GPEG to the detriment of creditors of its subsidiaries, including Deltak, who dealt with the Debtors as standalone entities, thereby effectuating a substantive consolidation contrary to law? % In re Owens Corning, 419 F.3d 195 (3rdCir. 2005). 4. Did the Bankruptcy Court err as a matter of law in failing to apply binding Third

Circuit precedent to conclude that the Debtors' failure to disclose to creditors approximately $182 million in inter-company cash obligations owed by GPEG to Deltak, while inducing those creditors to waive claims against Deltak, constituted bad faith? Krvstal Cadillac-Oldsmobile

GMC Truck, Inc. v. General Motors Corp., 337 F.3d 3 14,325 (3rd Cir. 2003) (a debtor's failure to disclose an asset constitutes bad faith because "nondisclosures affect creditors' willingness to negotiate their claims and enhance the debtor's bargaining position by making the pot that creditors look to for recovery appear smaller than it really is"). 5. Did the Bankruptcy Court err as a matter of law in confirming a Plan that by its

terms was not fair and equitable, in that it limited recovery by Deltak Class 5 unsecured claims to a pool of funds totaling not more than $34 million, while leaving equity interests unimpaired?

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6.

Did the Bankruptcy Court err in failing to allow SNC's claim against Deltak in

the claimed amount of at least $55,179,700, and consequently failing to consider (i) whether Deltak Class 5 unsecured claims had rejected the Plan and, in turn, (ii) whether, by reason of the "absolute priority rule" imposed by 11 U.S.C. 5 1129(b)(ii)(B),the Plan could not be confirmed over the rejection of Deltak Class 5 claims where, as here, equity interests in Deltak were unimpaired? 7. Did the Bankruptcy Court err in disallowing SNC's claim against GPEG and

consequently failing to consider whether the claim, asserted in the amount of at least $55,179,700, by increasing GPEG Class 3 claims by a factor of more than six, caused the Plan to fail to satisfy the feasibility requirement set forth in 11 U.S.C. Dated: January 7,2008 Wilmington, Delaware Signed: William D. Sullivan (No. 2820) Elihu E. Allinson, I11 (No. 3476) 4 East 81h Street, Suite 400 Wilmington, DE 19801 (302) 428-8 191 Patrick P. Dinardo Paul E. Summit Pamela Smith Holleman SULLIVAN & WORCESTER LLP One Post Office Square Boston, MA 02109 (617) 338-2800 Attorneys for Appellant, SNC-Lavalin Power Ontario, Inc.

5 1129(a)(1I)?