Latin term meaning something of a more unpleasant fragrance concealed “under the rose.” This is a Bogeyman of the bankruptcy world—rumored to exist but few confirmed sightings since the Lionel case in 1983. This doctrine, applied, the authors believe, by only two bankruptcy courts in published case history, holds that a 363 sale that, in practical effect, resolves the entire bankruptcy case constitutes a sub rosa plan of reorganization—that is, an impermissible attempt to evade the requirements and difficulties of the plan confirmation process.
The doctrine is no longer living in anything but name, but still haunts the dark corners of our psyches. The worry is needless, however, as bankruptcy practitioners quickly discovered how to slay this Bogeyman—by distributing proceeds from the sale only pursuant to a “liquidating” plan of reorganization proposed and confirmed after the sale.
See also Liquidating Plan.