The bankruptcy plan confirmation process typically requires intensive negotiations involving numerous creditor groups and other parties-in-interest. As a result, the scope of the releases embedded within a plan is subject to multiple reviews by such parties and then approval by the bankruptcy court. Even after all of that review, however, as was shown in a recent U.S. Bankruptcy Court for the District of Delaware opinion, the final releases may not accurately reflect the intentions of the parties, much to the disappointment of the drafters. Nevertheless, as Judge Brendan Shannon has now made clear—words matter—and you may be strictly held to those in the release, even if the result was not intended.
In Samson Resources v. Samson Energy (In re Samson Resources), Case No. 15-11934 (BLS), Adv. Proc. No. 17-51224 (BLS), 2018 Bankr. LEXIS 2610 (Bankr. D. Del. Aug. 30, 2018), Judge Shannon granted a motion for summary judgement in favor of certain defendants who were inadvertently released by the debtors’ confirmed Chapter 11 plan. The plan itself was “the result of protracted and hard-fought negotiations between the Debtors and the Creditors’ Committee, achieved only through the intense efforts of the parties and a judicial mediator.” The “central feature” of the plan that led to the committee’s support—required for confirmation—was the creation of a post-confirmation trust that would bring suit against the debtor’s former owners, and certain related entities.
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