Rex Energy – SEC Objects to Disclosure Statement and Plan Confirmation

August 20, 2018 – The U.S. Securities and Exchange Commission (the “SEC”) filed a limited objection [Docket No. 696] to Rex Energy’s Disclosure Statement and to the confirmation of the Debtors’ Plan of Reorganization.  The SEC states, “The Commission objects to the Disclosure Statement and 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. sections 101, et seq. (the ‘Bankruptcy Code’). As a general matter, nondebtor third party releases (the ‘Third Party Releases’) contravene Section 524(e) of the Bankruptcy Code, which provides that only debts of the debtor are affected by Chapter 11 discharge provisions. Such releases have special significance for public investors because they may enable nondebtors to benefit from a debtor’s bankruptcy by obtaining their own releases with respect to past misconduct, including violations of the federal securities laws or breaches of fiduciary duty under state law. This concern is implicated here where the Debtors are seeking to bar both public shareholders and Section 510(b) claimants, who are receiving nothing under the Plan, and public bond holders from asserting claims against the released parties.”