Washington District Court Overturns Approval of Third-Party Releases in a Settlement Agreement and Related Free-and-Clear Sale

For nearly 25 years, courts in the Ninth Circuit have consistently refused to sanction nonconsensual third-party releases as part of chapter 11 plans. A ruling recently handed down by the U.S. District Court for the District of Washington reaffirms and extends that proposition. In In re Fraser’s Boiler Serv., Inc., 2019 WL 1099713 (D. Wash. Mar.

Filed under:
USA, Washington, Insolvency & Restructuring, Insurance, Litigation, Jones Day, Debtor, Title 11 of the US Code, Ninth Circuit, United States bankruptcy court, Fifth Circuit, Tenth Circuit
Authors:
Daniel J. Merrett (Dan) , Mark G. Douglas
Location:
USA
Firm:
Jones Day
Two Recent Decisions Demonstrate Continued Disagreement Over Whether Economic Value or Face Amount of Liens Is Appropriate Metric in Authorizing Free and Clear Bankruptcy Sale

The ability of a trustee or chapter 11 debtor in possession ("DIP") to sell bankruptcy estate assets "free and clear" of liens on the property under section 363(f) of the Bankruptcy Code has long been recognized as one of the most powerful tools for restructuring a debtor’s balance sheet and generating value in bankruptcy.

Filed under:
USA, Banking, Insolvency & Restructuring, Litigation, Real Estate, Jones Day, Debtor in possession, United States bankruptcy court
Authors:
Jeffrey B. Ellman (Jeff) , Daniel J. Merrett (Dan) , Mark G. Douglas
Location:
USA
Firm:
Jones Day