Multiple parties – including the U.S. Trustee, the United States Securities and Exchange Commission, RK Investments, Inc.; Jerry Roger Kent and Selma Poznanovich – filed with the U.S. Bankruptcy Court separate objections to EV Energy Partners Plan confirmation. The U.S. Trustee objection asserts, “The Plan’s releases are inappropriate and too broad, both in the parties being released, the parties doing the releasing, and the time period covered. The Debtors have the burden of proving that each release is fair and necessary, that each Releasing Party consented, and that each particular and specific Released Party contributed to the reorganization. The Debtors have failed to meet that burden. Thus, the releases should not be approved.”
In its objection, the SEC raised concerns relating to release and exculpatory provisions contained in the Plan confirmation, specifically that “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 Sections 524(e) and 1123(a)(4) of 11 U.S.C. §§ 101, et seq . (the ‘Bankruptcy Code’)….The Commission has similar concerns regarding an exculpation clause in the Plan that provides that the exculpated parties shall have no liability for any acts or omissions taken in connection with the restructuring, including certain prepetition conduct, but excluding actual fraud, gross negligence, or willful misconduct….The release and exculpation provisions are particularly concerning because public investors have filed letters and a motion on this Court’s docket, seeking the appointment of an examiner and equity committee and/or objecting to the Plan.”
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