The United States Trustee assigned to the Atlas Resource Partners’ case filed with the U.S. Bankruptcy Court an objection to confirmation of the Joint Prepackaged Plan of Reorganization and approval of the Disclosure Statement.
The trustee asserts, “For three distinct reasons, neither the Plan nor the Disclosure Statement can be approved by this Court. First, the Plan improperly classifies four classes of creditors as ‘unimpaired.’ The Bankruptcy Code plainly provides that if a creditor’s legal, equitable and contractual rights have been altered by a plan, the claim or interest is impaired….If the release and exculpation provisions of the Plan are so crucial to the success of the Plan, then the Debtors should have properly classified the four classes of creditors as impaired and allowed them to vote on the Plan. Second, even if the imposition of releases and related provisions against impaired nonvoting creditors were appropriate, this Court lacks subject matter jurisdiction to allow the third party releases as to matters not related to the Debtors….Third, even assuming that impaired creditors can be compelled to provide non-consensual third-party releases, the Debtors have not demonstrated the existence of the rare and exceptional circumstances that the Second Circuit has held would justify imposing a release on an impaired non-consenting creditor. There is nothing unusual about these cases that would justify such extraordinary relief. Furthermore, not only are the proposed releases extremely overbroad, but there is no evidence that the released parties have provided or would provide consideration for the releases. As such, the releases do not comport with Second Circuit law or the Bankruptcy Code.”
More on the Atlas Resources bankruptcy.
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