Multiple parties – including the United States of America, the U.S. Trustee assigned to the case, the official committee of equity security holders and the Texas Comptroller of Public Accounts – filed with the U.S. Bankruptcy Court separate objections to Azure Midstream Partners’ Third Amended Joint Plan.
The Trustee asserts, “The Plan does not satisfy the requirements of section 1129(a) of the Bankruptcy Code and is therefore un-confirmable. First, the Plan improperly provides broad third party releases, exculpations and injunctions, in violation of section 524(e) of the Bankruptcy Code and applicable Fifth Circuit law. Second, although the Debtors are ineligible for a discharge, the Plan, in effect, improperly provides the Debtors with a discharge by operation of the broad third party releases, exculpations and injunctions, in violation of section 1141(d)(3) of the Bankruptcy Code. Third, the Plan improperly permits severance payments when the Debtors have not met their burden to show that all eligible employees under the Severance Plan are not “insiders” and, thus, not subject to the stricter requirements of 11 U.S.C. section 503(c)(2).”
In addition, “Specifically, the United States Trustee would point out to the Court that there are three (3) individuals on the Employee Severance List that may presumptively be ‘insiders,’ such as the SCADA Project Manager, the Area Manager – Logistics, and the Director of Human Resources. The Debtors have failed to comply with section 503(c)(2) of the Bankruptcy Code, and therefore the Plan cannot be confirmed.”
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