Relativity Media – U.S. Trustee Objects to “Inadequate” Disclosure Statement

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November 21, 2018 The U.S. Trustee filed an objection [Docket No. 607] to the Debtors’ Disclosure Statement [Docket No. 571] citing multiple concerns about its adequacy. The objection stated, “The Disclosure Statement should not be approved in its current form because it fails to provide sufficient information to enable creditors to make an informed judgment about the Plan. The Debtors have represented that there will be sufficient funds for a liquidating plan that pays administrative and priority claims and provides for a distribution to unsecured creditors. Despite these representations, the Disclosure Statement fails to provide adequate information regarding how the Plan meets the feasibility and best interest tests of Section 1129 of the Bankruptcy Code. There is no budget, no liquidation analysis, and no explanation for the projected recovery to unsecured creditors. Moreover, the Disclosure Statement fails to explain the legal and factual bases for overly broad discharge, injunction, release, and exculpation provisions, especially in light of the fact that the Plan provides for the liquidation of the Debtors and their estates. Finally, the Proponents fail to explain how they intend to resolve the prior pending chapter 11 cases in which the Debtors and their affiliates remain in default of the confirmed plan, which constitutes cause for conversion or dismissal of those cases. 

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