Multiple parties – including the U.S. Trustee (UST) assigned to the Ignite Restaurant Group case, Navillus Group, Navigators Specialty Insurance Company and current and former employees represented by operation of the Fair Labor Standards Act (“Class Proof of General Unsecured and Priority Claimants”) – filed with the U.S. Bankruptcy Court separate objections to the Company’s Plan of Reorganization.
The UST asserts, “The Debtors’ Plan should not be confirmed because it does not currently satisfy the requirements of section 1129 of the Bankruptcy Code. First, the Debtors’ must carry their burden of proof to demonstrate and establish that the elements of 11 U.S.C. section 1129 have been met for Plan confirmation. Second, Plan does not provide sufficient information regarding the proposed substantive consolidation and Debtors must demonstrate that the required legal standards have been met to establish the substantive consolidation of the Debtors. Third, 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. Lastly, Debtors are liquidating and the overly broad release, exculpation and release provisions contained in the Plan provide a de facto discharge which is contrary to Section 1141(d)(3) of the Bankruptcy Code.”
In addition, “The Plan does not meet the requirements of 11 U.S.C. section 1129. In the absence of amendments to deal with such matters as are noted below, the UST recommends that the Court deny confirmation of the Joint Chapter 11 Plan of Reorganization….The UST objects that the Plan is deficient because it proposes a substantive consolidation of the respective Debtors’ estates without any discussion as to the legal standards required, how the standard is met in these cases, or the impact on respective creditor recoveries.”
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