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Showing 3 posts in Releases.

Non-Consensual Third Party Releases Certified Directly to the Third Circuit

In re Millennium Lab Holdings II, LLC, No. 15-12284 (LSS), 2016 WL 155500 (Bankr. D. Del. Jan. 12, 2016)

[Update - Despite the Bankruptcy Court's ruling, the Third Circuit Court of Appeals denied the petition for direct certification in an order issued February 24, 2016.  The appeal will now head to the Delaware District Court.]

The Delaware Bankruptcy Court has granted direct certification of a hot-button issue surrounding confirmation of plans in bankruptcy to the Third Circuit Court of Appeals—namely, whether a bankruptcy court has the authority to release a non-debtor’s direct clams against other non-debtors without the consent of the releasing non-debtor. Read More ›

An Estate Release Does Not Preclude Tort Plaintiffs From Pursuing Direct, Particularized Claims Against Released Parties

In re Caribbean Petroleum Corp. et al., No. 10-12553 (KG), 2014 WL 3360563 (Bankr. D. Del. July 9, 2014)

In this Memorandum Opinion, the Honorable Kevin Gross held (i) that the Bankruptcy Court has post-confirmation jurisdiction to decide the extent and scope of releases contained in plans it considers and confirms and that (ii) the release at issue made by the debtors in favor of their former officers and/or directors did not prevent third-party tort claimants from pursuing their claims against such released parties.  In reaching its jurisdictional conclusion, the Court relied upon the Third Circuit’s holding in In re Resorts Int’l, Inc., 372 F.3d 154 (3d Cir. 2004), to overcome the fact that the dispute before it involved only non-debtors and had no conceivable effect on the bankruptcy estates.  Moreover, in deciding the extent and scope of the estate release, Judge Gross distinguished the Third Circuit’s recent Opinion in In re Emoral, Inc., 740 F.3d 875 (3d Cir. 2014), (analyzed here) to hold that the tort claims asserted against the released parties were personal and thus, not property of the debtors’ estates.  Accordingly, the claims could not have been released by the debtors.  Read More ›

Third Circuit Affirms Bankruptcy Court’s Excision of Inadequately Disclosed Third-Party Release From Plan of Reorganization

In re Lower Bucks Hosp., 2014 WL 2981215 (3d Cir. July 3, 2014)

In this Opinion, the Third Circuit held that non-consensual third-party releases were correctly severed from a proposed plan of reorganization because of significant disclosure deficiencies.  In doing so, the Court reminds all practitioners of a hallmark of plan drafting and solicitation—that “[k]ey terms of a plan of confirmation, particularly those that release a non-debtor from claims by creditors, must be adequately disclosed [and] [f]ailure to do so in a clear and conspicuous manner risks excision of the release from the plan.”  Because the releases at issue failed in “both presentation and placement,” excision was warranted and thus, the lower court’s decision to do so was affirmed. Read More ›