The U.S. Trustee assigned to the A.M. Castle & Co. case filed with the U.S. Bankruptcy Court an objection to the Company’s Plan of Reorganization.
The Trustee asserts, “A plan must divide creditors into classes, describe each class’s class, and permit impaired classes to vote. Under the Debtors’ plan, general unsecured creditors’ claims ‘pass through’ as though the bankruptcy cases were never filed. General unsecured creditors cannot vote on the Plan, because their claims are classified as unimpaired….Releases like the ones contained in the Plan are only appropriate (if they can be granted at all) if the released parties demonstrate that they have all provided consideration and all releasing parties have knowledge of and an opportunity to object to the releases.”
In addition, “Not so here. Most unsecured creditors in these cases have had no notice of the releases, to say nothing of their “related persons”. Many released parties are contributing nothing. Thus, the Debtors have not met their burden and may not grant or receive the requested releases. Further, the Debtors’ proposed exculpations cover many non-estate fiduciaries (like the employees of released parties’ affiliates). This is neither permitted by Delaware bankruptcy courts nor reasonable.”
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