There is longstanding controversy concerning the validity of third-party release provisions in non-asbestos trust chapter 11 plans that limit the potential exposure of various.
Exculpation clauses limiting the liability of certain entities for actions taken in connection with a bankruptcy case are a common feature of chapter 11 plans. However, courts disagree.
On December 16, 2021, in a significant decision, the United States District Court for the Southern District of New York (the “District Court”) vacated the order confirming the chapter.
Chapter 11 plans of reorganization provide creditors with recoveries (cash or new securities) in exchange for a release and discharge of all claims against the debtor. Many Chapter 11.