By Kathrine A. McLendon and Lily Picón (Simpson Thacher & Bartlett LLP)
There has been increasing focus on what evidences implicit consent to a third-party release in a chapter 11 plan. This article examines the statutory framework underlying consensual third-party releases and then discusses recent cases in which consensual releases have been challenged by the Office of the United States Trustee and by courts sua sponte. Although various forms of implicit consent were often approved in the past with little or no scrutiny, these cases highlight trends toward stronger indicia of consent and greater attention to the factual context of the particular case. These developments also underscore the importance of making the appropriate evidentiary record to support approval of consensual third-party releases. We conclude with practice pointers to support the case for confirmation of chapter 11 plans containing consensual third-party releases.
The full article can be found here.