Multiple parties–including the SEC, A2D Technologies, Consorcio Western Geco 176-99, TGS Canada, TGS-NOPEC Geophysical, WesternGeco Seismic Holdings, Anadarko Petroleum and Nexen Petroleum–filed with the U.S. Bankruptcy Court separate objections to Cobalt International Energy’s Fourth Amended Joint Chapter 11 Plan of Reorganization.
The SEC asserts, “The Commission objects to confirmation of the Plan because it would release the liability of, and permanently enjoin actions against, non-debtor third parties in contravention of Section 524(e) of the Bankruptcy Code and controlling law in the Fifth Circuit. Section 524(e) of the Bankruptcy Code provides that only debts of the debtor are affected by the Chapter 11 discharge provisions. Yet the Plan includes releases that allow non-debtors to benefit from the Debtors’ bankruptcy by effectively obtaining their own discharges with respect to claims arising from past wrongdoing, including willful misconduct and actual fraud.”
In addition, “Because, as a result, the Plan fails to comply with all applicable provisions of Chapter 11, it cannot be confirmed under Section 1129(a)(1) of the Bankruptcy Code….The Commission urges the Court to deny confirmation of the Plan or, in the alternative, exclude from the definition of ‘Releasing Parties’ any holder of a claim or interest who: (1) voted to or was deemed to reject the Plan, regardless of whether the holder completed the opt-out election; (2) voted to accept the Plan and completed the opt-out election; or (3) abstained from voting on the Plan.”
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