In Re SunEdison, Inc.
United States Bankruptcy Court for the Southern District of New York
576 Bankr. 453 (2017)
- Written by Rose VanHofwegen, JD
Facts
SunEdison Inc. and its subsidiaries (SunEdison) (debtors) filed for reorganization and submitted a proposed plan containing an extremely broad third-party release. The release said all claim holders entitled to vote who did not vote to reject the plan would be deemed to consent to release numerous nondebtors. In other words, the release would purportedly bind claimants who simply did not vote to releasing a largely unidentifiable group of nondebtors from liability except for fraud, willful misconduct, or gross negligence. Although no nonvoting claimant objected to the release, the court on its own initiative questioned whether it could be approved. The court directed SunEdison to modify the disclosure statement and the ballots to clearly state in conspicuous language that failure to vote would be deemed consent to the release. After SunEdison made those modifications, the court confirmed the plan but reserved ruling on whether the third-party release could bind nonvoting creditors, whether the court had jurisdiction to release claims as broadly as the release purported, and whether approval was appropriate under precedential standards.
Rule of Law
Issue
Holding and Reasoning (Bernstein, J.)
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