There has been a lot of discussion, by both the courts and practitioners, regarding whether the bankruptcy court, as part of a chapter 11 plan, can release a third party from creditors’ claims over the objection of such creditors. We have talked about these non-consensual third-party releases on this blog as well. Courts are not unanimous on this issue, and the controversy provides something to talk about. Less time is spent discussing the less remarkable statement that bankruptcy courts can approve third-party releases when creditors consent to such release. However, what constitutes consent?
Earlier this summer, the bankruptcy court for the Southern District of New York confirmed the chapter 11 plan of reorganization for Chassix Holdings, Inc. and its affiliates. In overruling objections to the plan, the court provided some guidance on what constitutes “consent” by creditors to third-party releases. See In re Chassix Holdings, Inc., et al., 533 B.R. 64 (Bankr. S.D.N.Y. 2015). Continue Reading