No Clear Disclosure? No 3rd-Party Release In Ch. 11

Law360, New York (January 28, 2013, 2:39 PM EST) -- A recent appellate decision requires strict adherence to disclosure requirements before third-party releases contained in a Chapter 11 plan may be approved.

In In re Lower Bucks Hospital[1] the U.S. District Court for the Eastern District of Pennsylvania affirmed the decision of the bankruptcy court which excised from the debtors’ plan of reorganization a third-party release provision in favor of an indenture trustee. The bankruptcy court found that neither the debtors’ disclosure statement nor notices provided by the indenture trustee to the bondholder constituency adequately disclosed...
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