The U.S. Trustee assigned to the Gymboree case filed with the U.S. Bankruptcy Court an objection to the Company’s Disclosure Statement.
The Trustee asserts, “The Gymboree Corporation and certain of its direct and indirect subsidiaries (collectively, the ‘Debtors’), have proposed a plan containing broad third-party release and exculpation provisions….While the Disclosure Statement recites those provisions verbatim, it fails to disclose or describe any of the factual circumstances rendering those provisions appropriate or even to disclose that such provisions are dis-favored and not generally appropriate.”
In addition, “Furthermore, the disclosure statement incorrectly describes the release provisions as consensual when, in fact, only one out of the eight classes has any say in whether it agrees to the releases and four of the eight classes are deemed to “consent” to the releases by virtue of their unimpaired status. Those failures render the disclosure statement subject to disapproval.”
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