The U.S. Bankruptcy Court denied approval of a settlement between Constellation Enterprises, its official committee of unsecured creditors, the purchaser and the ad hoc noteholder group.
As previously reported, “The Settlement before the Court marks a watershed moment in these cases. Since the Petition Date, nearly four (4) months ago, the Debtors have used their best efforts to broker a settlement between the key constituents in these cases. As the Settlement demonstrates, the efforts of the Settlement Proponents have paid off.”
The order continues, “The proposed Settlement provides the holders of general unsecured claims – a constituency which was indisputably out of the money when these cases began – with a pro rata share of $1.25 million, and the potential of additional recoveries based on the outcome of the potential prosecution of certain transferred claims and causes of action. Without the Settlement, this result would likely be unobtainable.”
In addition, “The Settlement also helps clear a path to a final disposition of these cases, as it eliminated potential and actual objections to the Sale Motion, and resolves the Creditors’ Committee’s objections to the DIP Motion. Absent the Settlement, it is likely that the Parties would have continued to litigate these matters potentially to the detriment of the Debtors and their estates and creditors.”
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