Bankruptcy Judge Rejects American West's Ch. 11 Plan

Law360, New York (October 29, 2012, 4:52 PM EDT) -- A federal bankruptcy judge on Monday refused to approve American West Development Inc.'s proposed reorganization plan, citing the U.S. trustee's objections to releases that cover the Las Vegas homebuilder's affiliates.

U.S. Bankruptcy Judge Mike Nakagawa sustained an objection the trustee filed to a provision of the plan that would bar lawsuits against American West affiliates and professionals related to construction defects. That kind of bar is not legal under Ninth Circuit case law, the judge said.

The ruling forces American West to rethink a plan that...
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