It is well-established that a basic foundation of Chapter 11 reorganization is that the debtor receives a discharge of most of its pre-bankruptcy debts. Over the years, Chapter 11 plan proponents increasingly have included provisions in Chapter 11 plans of reorganization that go further and provide for release of claims held by third parties in favor of entities associated with the debtors, including officers, directors, affiliates, and yes — even their attorneys and professionals.
Experienced bankruptcy practitioners know these releases in favor of nondebtors at first were often buried in definitions contained in lengthy reorganization plans. In recent years these releases have attracted greater scrutiny. The question is: When can a Chapter 11 plan release nondebtors’ claims held by objecting third parties? Bankruptcy Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware addressed the issue at length in an opinion issued Jan. 7, 2011, in the Washington Mutual Inc. bankruptcy case.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]
