The U.S. Trustee assigned to the Gymboree case filed with the U.S. Bankruptcy Court an objection to Gymboree’s Joint Chapter 11 Plan of Reorganization.
The Trustee asserts, “Gymboree Corporation and certain of its direct and indirect subsidiaries…have proposed a plan containing broad third-party release and exculpation provisions, provisions the Fourth Circuit has ruled ‘should be granted cautiously and infrequently.’…Because the type of exceptional circumstances required to justify such provisions do not exist here, the Plan is confirmable and confirmation should be denied.”
In addition, “As of now, the hearing on confirmation of the Plan has not occurred, and, thus, the United States Trustee does not know what evidence Debtors may present in support of the Third Party Release and the Exculpation Provision. The Disclosure Statement did not disclose any factual or evidentiary support for these provisions and the United States Trustee does not believe any such factual or evidentiary support exists.”
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