LifeCare Settlement Approval Paves Way For Carlyle Sale

Law360, Wilmington (May 28, 2013, 8:11 PM EDT) -- A Delaware bankruptcy judge signed off on a proposed settlement Tuesday between LifeCare Holdings Inc.'s creditors committee and its private equity purchaser, removing the final obstacle to hospital group's $320 million sale to The Carlyle Group LP.

The federal government and the U.S. trustee argued the agreement should be rejected because it would pay junior creditors while more senior claims went wanting, but U.S. Bankruptcy Judge Kevin Gross overruled their objections, finding that the absolute priority rule did not come into play.

The proposed $3.5 million payment to unsecured creditors did not violate the Bankruptcy Code, Judge Gross ruled, because the...

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