Officers and directors work hard to shepherd their company through bankruptcy. But, even after all that hard work, creditors can still turn around and sue them individually for alleged acts prior to the bankruptcy. What kind of thanks is that? A debtor wishing to protect these hard-working officers and directors may seek to include a third party release in the plan. However, if all parties do not agree, third party releases over objecting classes are closely analyzed because they are considered a “dramatic measure to be used cautiously, and  only appropriate in unusual circumstances.” In re Dow Corning Corp., 280 F.3d 648, 658 (6th Cir. 2002). Fortunately, this post will discuss the steps officers and directors may take with the debtor to increase the likelihood of plan approval, with third party releases intact, over the objections of some parties.
Initially, the debtor must look to where itRead More