August 13, 2018 – The United States Securities and Exchange Commission (“SEC”) filed an objection [Docket No. 315] to Red Mountain Resources’ Disclosure Statement [Docket No. 308] and Second Amended Joint Plan of Reorganization [Docket No. 307] citing concerns over the adequacy of information contained in the Disclosure Statement. The objection asserts, “The SEC objects to approval of the Disclosure Statement because the Disclosure Statement fails to contain adequate information to permit creditors and shareholders to make an informed judgment about the Plan. Moreover, it describes a Plan that cannot be confirmed pursuant to Sections 524(e), 1145, and 1129(a)(1) of the Bankruptcy Code. The Plan contains an exculpation provision that provides for a release of non-debtor third party liability in contravention of Section 524(e) of the Bankruptcy Code and applicable Fifth Circuit law. Such releases have special significance for public investors because they allow non-debtors to benefit from a debtor’s bankruptcy by effectively obtaining their own discharges with respect to past wrongdoing, including violations of the federal securities laws or breaches of fiduciary duty.”
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