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Full title: Objection to confirmation of plan (RE: related document(s)700 Chapter 11 plan) filed by U.S. Trustee United States Trustee. (Kippes, Meredyth)

Document posted on Mar 9, 2021 in the bankruptcy, 22 pages and 0 tables.

Bankrupt11 Summary (Automatically Generated)

The proposed releases grant releases of third party claims against nondebtor third parties.Finally, the non-reorganized Debtors reflected on the Plan Supplement Exhibit E (Abandoned Debtors), Exhibit F (Converted Debtors) and Exhibit G (Non-Applicable Debtors who will be subject to a separate plan or other resolution) should not be include as “Releasing Parties,” extinguishing those Debtors’ claims against third parties.Accordingly, the Court should decline to confirm this Plan because it contains release provisions that would extinguish third parties’ (creditors) property rights – potential claims against nondebtor third parties – without the creditors’ affirmative consent by way of the opt-out releases.Moreover, there is no proposed resolution of third party claims of a common type to be released that has been negotiated by the holders of similar claims against third parties. Instead, the proposed opt out release, which will extinguish third party claims against non-debtor third parties, was proposed not by parties similarly situated to proposed releasing parties, but made primarily at the behest of the parties who would be the beneficiaries of the releases.

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United States Department of Justice Office of the United States Trustee 1100 Commerce St. Room 976 Dallas, Texas 75242 (214) 767-1079 Meredyth A. Kippes, for the United States Trustee meredyth.a.kippes@usdoj.gov IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION IN RE: § § Studio Movie Grill Holdings, LLC, et al., § Case No. 20-32633-SGJ-11 § § Debtors-in-Possession. § (Jointly Administered)     United States Trustee’s Objection to Confirmation of Second Amended Joint Plan of Reorganization for Studio Movie Grill Holdings, LLC and Jointly Administered Debtors (Docket Entry No. 700) To the Honorable Stacey G.C. Jernigan, United States Bankruptcy Judge: The United States Trustee for Region 6 files this Objection (the “Objection”) to Confirmation of Second Amended Joint Plan of Reorganization for Studio Movie Grill Holdings, LLC and Jointly Administered Debtors (the “Plan,” Docket Entry No. 700). In support of the relief requested, the United States Trustee would show: Summary The Court should decline to confirm the Plan for the following reasons:  The Plan contains impermissible release and exculpation provisions in contravention of Bank of N.Y. Trust Co. v. Off’l Unsecured Creditors’ Comm. (In re Pacific Lumber Co.), 584 F.3d 229, 252 (5th Cir. 2009).  The release provisions are “opt-out” releases and, therefore, nonconsensual for those parties who are not solicited, who otherwise do not vote on the Plan, or who do not return an opt out form because there is no meeting of the minds with regard to the releases.

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 The United States Trustee requests that language be added to the Plan that provides that no party shall be released from any causes of action or proceedings brought by any governmental agencies in accordance with their regulatory functions.  A separate order converting the cases listed on the Schedule of Converted Cases and a separate order dismissing the cases listed on the Schedule of Abandoned Debtors, attached to the Plan Supplements (Docket Entry No. 702 and 705), should be entered rather than having such relief embedded in any confirmation order. Factual Allegations Releases, Injunction, and Exculpation 1. Article VIII of the Plan sets forth those releases, injunctions, exculpations and related provisions. Upon information and belief, the Debtors’ secured lender required the releases and opt out provisions to be included in the Plan. 2. Article VIII, Section C of the Plan sets forth the following releases by the Debtors: [This space left blank intentionally.]

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3. Article VIII, Section D of the Plan describes releases of holders of claims or interests the (“Third Party Release”) as follows:    

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4. Article VIII, Section F of the Plan sets forth the following Exculpation provision:  

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5. Article VIII, Section G of the Plan contains the following injunction: 6. The term “Releasing Parties” is defined in Article I., Section A of the Plan as follows: [This space left blank intentionally.]

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7. The term “Released Parties” is defined in Article I., Section A of the Plan as follows: 8. The term “Related Person” is defined in Article I., Section A of the Plan as follows:  

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9. The term “Exculpated Parties” is defined in Article I., Section A of the Plan as follows: 10. The term “Holder” is defined in Article I., Section A of the Plan as follows: 11. The term “Claim” is defined in Article I., Section A of the Plan as follows: 12. The term “Interest” is defined in Article I., Section A of the Plan as follows: 13. Article I, Section D of the Plan provides that the governing law for the Plan is as follows:

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14. Article IV, Section C, Paragraph 11 provides as follows: 15. The Plan Supplement (Docket Entry Nos. 702 and 705) attaches a Schedule of Abandoned Debtors (Exhibit E to the Plan Supplement), a Schedule of Converted Cases (Exhibit F to the Plan Supplement), and a Schedule of Non-Applicable Debtors (Exhibit G to the Plan Supplement). Argument and Authority I. The proposed releases are impermissible under 11 U.S.C. § 524(e) and Fifth Circuit authority. A. The proposed releases grant releases of third party claims against nondebtor third parties. 16. The Third Party Release extends to myriad nondebtors including Agent, the Schultz Parties, the Official Unsecured Creditors’ Committee and “current and former officers, directors, principals, employees, direct and indirect shareholders, direct and indirect members (including ex officio members), managers, managed accounts or funds, management companies, fund advisors, portfolio companies, advisory board members, partners, agents, financial advisors, attorneys, accountants, investment bankers, investment advisors, consultants, independent contractors,

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representatives, and other professionals, including such Related Persons’ respective heirs, executors, estates, servants, and nominees” of the Agent, the Schultz Parties, the Debtors, and the Official Committee of Unsecured Creditors. See definition of “Released Parties’ and “Related Person,” Plan, Article I, Section A. 17. The Fifth Circuit struck down all nondebtor releases except those releasing the unsecured creditors’ committee and its members because “its members are the only disinterested volunteers” to be released. Bank of N.Y. Trust Co. v. Off’l Unsecured Creditors’ Comm. (In re Pacific Lumber Co.), 584 F.3d 229, 253 (5th Cir. 2009) (“Pacific Lumber”). See also United Artists Theatre Co. v. Walton (In re United Artists Theatre Co.), 315 F.3d 217, 227 (3d Cir. 2003)(holding that plan release provisions did not render moot United States Trustee’s appeal of indemnity provisions of financial advisor’s employment agreement). The Fifth Circuit reasoned that the release of the debtors’ officers, directors, and professionals should be disallowed because there was no evidence that they “were jointly liable for any… pre-petition debt. They are not guarantors or sureties, nor are they insurers.” Id. at 252. The Fifth Circuit held that 11 U.S.C. § 524(e) was never intended to protect nondebtor parties from “any negligent conduct that occurred during the course of the bankruptcy.” Pacific Lumber, 584 F.3d at 252. See also, Dropbox, Inc. v. Thru, Inc., et al. (In re Thru, Inc.), 2018 WL 5113124, *23 (N.D. Tex. 2018). 18. Finally, the non-reorganized Debtors reflected on the Plan Supplement Exhibit E (Abandoned Debtors), Exhibit F (Converted Debtors) and Exhibit G (Non-Applicable Debtors who will be subject to a separate plan or other resolution) should not be include as “Releasing Parties,” extinguishing those Debtors’ claims against third parties. 19. With regard to the dismissed cases (Abandoned Debtors), they should be dismissed with all of their assets intact (including any claims they may have) and remain unaffected by this

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Plan. Regarding the converted cases, those claims should be preserved for the chapter 7 trustee to evaluate post-conversion. Regarding the Non-Applicable Debtors, who will be subject to a separate plan or other resolution, any release of any claims held by those debtors should be addressed in that further, separate plan, not this one which, by its terms, is not applicable to those debtors. B. Rule 9019 does not solve the problem of nonconsensual third party releases. 20. In the Plan, the Debtors couch the Third Party Releases in terms of a Rule 9019 settlement. The Debtors may not settle non-debtor third party claims against non-debtor third parties. 21. This Court should decline to confirm the Plan unless and until the release, exculpation, and injunction provisions in the Plan are excised or modified so that they comply with Fifth Circuit authority. In re Zale Corp., 62 F.3d 746, 759-60 (5th Cir. 1995) (overturning the bankruptcy court’s injunction against pursuing claims against nondebtor third parties as effectively discharging a nondebtor) (“Zale”). 22. The Fifth Circuit has reaffirmed this principal in the context of an SEC receivership. SEC v. Stanford Int’l Bank, Ltd., 927 F.3d 830, 841 (5th Cir. 2019) (“Stanford”). “[T]he court may not exercise unbridled authority over assets belonging to third parties to which the receivership estate has no claim.” Id. Analogizing the SEC receivership in Stanford to bankruptcy cases, the Fifth Circuit highlighted Zale and other Fifth Circuit authority that prohibits settling unrelated, third party claims against non-debtor third parties. “The prohibition on enjoining unrelated, third-party claims without the third parties’ consent does not depend on the Bankruptcy Code, but is a maxim of law not abrogated by the district court’s equity power to fashion ancillary relief measures.” Id. at 842.

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23. Accordingly, the Debtors cannot use Rule 9019 to obtain this Court’s approval of an otherwise nonconsensual third party release. C. Release and exculpation provisions of professionals violate professional ethical obligations. 24. Attorneys practicing in federal courts in this circuit are subject both to federal and state ethics canons. The Fifth Circuit has held that federal law applies to attorney conduct in federal court. In re Dresser Industries, Inc., 972 F.2d 540, 543 (5th Cir. 1992). In Dresser Industries, the Fifth Circuit applied the ABA Model Rules of Professional Conduct, the ABA Model Code of Professional Responsibility, and the American Law Institute’s Restatement of the Law Governing Lawyers. Id. at 544-45. In Dresser, the Fifth Circuit held, after examining relevant federal ethics canons, that an attorney may not sue a client he represents in another matter. Id. at 544. 25. ABA Model Rule of Professional Conduct 1.8(h)(1) prohibits lawyers from making “an agreement prospectively limiting the lawyer’s liability to a client for malpractice unless the client is independently represented in making the agreement.” Similarly, Texas Disciplinary Rule 1.08(g) of Professional Conduct provides: Texas Disciplinary Rule of Professional Conduct 1.08(g). 26. The Released Parties in the Plan include professionals. The proposed releases therefore prospectively limit various counsels’ liability to the Releasing Parties, and as such are

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not permissible. In re Thru, Inc., 2018 WL 5113124 at *22 (finding that plan’s exculpatory provisions releasing professionals and other third parties from liability incurred in connection with, among other actions, formulating or implementing plan, were improper). 27. Furthermore, Debtors cannot unilaterally release Debtors’ counsel from prospective liability given that counsel owes a duty not only to the Debtors but also to the bankruptcy estate. While the Bankruptcy Code does not specifically impose a fiduciary requirement on counsel for debtors-in-possession, “[i]t is undisputed that counsel of a debtor-in-possession owes certain fiduciary duties to both the client debtor-in-possession and the bankruptcy court.” ICM Notes, Ltd. V. Andrews & Kurth, LLP, 278 B.R. 117, 124 (S.D. Tex. 2002), aff’d. 324 F.3d 768 (5th Cir. 2003). Thus while “counsel to a debtor in possession may not owe a duty directly to creditors, counsel does have an obligation to ensure the debtor properly maintains the estate.” In re Texasoil Enterprises, Inc., 296 B.R. 431, 435 (Bankr. N.D. Tex. 2003). See, e.g., Pacific Lumber, 584 F.3d at 252 (striking third-party releases of attorneys in conjunction with confirmation of plan of reorganization). 28. Accordingly, the Court should not confirm the Plan until the release and exculpation provisions of professionals are stricken from the Plan. D. The opt out releases are not consensual. 29. In the Fifth Circuit, releases must be consensual. See Pacific Lumber, 584 F.3d at 252 (observing that prior Fifth Circuit authority “seem broadly to foreclose non-consensual non-debtor releases and permanent injunctions”). The Fifth Circuit, in the context of an SEC receivership, has reaffirmed the proposition that enjoining unrelated, third-party claims without the third parties’ consent is improper. Stanford, 927 F.3d at 842. “No matter the euphemism, a permanent bar order is a death knell intended to extinguish the [third-party] claims, which are a

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property interest.” Id. at 848. Construing a creditor’s failure to opt out of a release as affirmative consent to the release is every bit as euphemistic as the injunction in Stanford. E. Contract principles govern whether a release is consensual. 30. Contract principals govern whether a release is consensual. In re SunEdison, Inc., 576 B.R. 453, 458 (S.D.N.Y. Bankr. 2017) (“SunEdison”). The SunEdison court, in applying New York state contract principles to opt-out releases, found that an opt-out provision in a ballot was not sufficient “consent” to the release to convert the failure to opt-out into affirmative consent to give the release. Id. 31. “Courts generally agree that an affirmative vote to accept a plan that contains a third-party release constitutes an express consent to the release.” SunEdison, 576 B.R. at 458 Id. “Consent through silence or inaction – ‘deemed consent’ – raises a more difficult question. Absent a duty to speak, silence does not constitute consent.” Id. 32. The SunEdison court observed that, under New York state contract law, an offeror cannot transform an offeree’s silence into acceptance when the offeree does not intend to accept the offer. Id. The only exceptions to this rule are i. when the silence is misleading, ii. when silence as consent is supported by the parties’ ongoing course of conduct, or iii. when the offeree accepts the benefits of the offer despite reasonable opportunity to reject and understand that the offeror expects compensation. Id. at 458-59. F. With silence, there is no meeting of the minds. 33. The Plan provides that the construction and enforcement of the Plan is governed by the laws of the State of Texas. The laws of the State of Texas, like New York, hold that silence does not equal consent except under limited circumstances not applicable in this case. “A contract

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implied in fact is one in which, under the circumstances, the acts of the parties are such as to indicate according to the ordinary course of dealing and the common understanding of men a mutual intention to contract, as where one accepts the tendered service of another under circumstances justifying the inference that such other expected to be paid for such services. Of course, in implied contracts as well as express contracts there must be shown the element of mutual agreement. But the only difference is that such agreement is expressly stated, in the one instance, and is inferred from the circumstances, in the other. A contract implied from the facts and circumstances in evidence is as binding as would be an expressed one.” Marr-Piper Co. v. Bullis, 1 S.W.2d 572, 575 (Tex. Comm. App. 1928, judgment adopted). 34. Silence and inaction, however, will generally not be deemed assent to an offer because, with silence, there is generally no meeting of the minds. Texas Ass'n of Ctys. Cty. Gov't Risk Mgmt. Pool v. Matagorda Cty., 52 S.W.3d 128, 132-33 (Tex. 2000) (quoting 2 Williston on Contracts § 6:49 (4th ed. 1991)). 35. “[A]s a matter of law, when a party is unilaterally informed of [a contract term], ‘mere failure to object within a reasonable time . . ., without more, could not establish an agreement between the parties.’” In re Couture Hotel Corporation, 554 B.R. 369, 381 (Bankr. N.D. Tex. 2016) (quoting Triton Oil and Gas Corp. v. Marine Contractors and Supply, Inc., 665 S.W. 2d 443, 445 (Tex. 1982)). “‘[A] meeting of the minds is an essential element of an implied in fact contract.’” Id. (quoting Excess Underwriters at Lloyd’s, London v. Frank’s Casing Crew & Rental Tools, Inc., 246 S.W.3d 42, 49 (Tex. 2008)). 36. Conspicuous warnings of the effect of silence in the disclosure statement, on the plan ballots, or on an opt out form are not enough to convert a creditor’s silence into consent to the release. In SunEdison, the debtors argued that the warning in the disclosure statement and on

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the ballots regarding the potential effect of silence gave rise to a duty to speak, and the nonvoting creditors’ failure to object to the plan or to reject the plan should be deemed their consent to the release. SunEdison, 576 B.R. at 460. 37. The court rejected this argument because the debtors failed to show that the nonvoting creditors’ silence was misleading or that the nonvoting creditors silence signified their intention to consent to the release (finding that silence could easily be attributable to other causes). Id. The debtors did not contend that an ongoing course of conduct between themselves and the nonvoting creditors gave rise to a duty to speak. Id. 38. “Charging all inactive creditors with full knowledge of the scope and implications of the proposed third-party releases, and implying a ‘consent’ to the third party releases based on the creditors’ inaction, is simply not realistic or fair and would stretch the meaning of ‘consent’ beyond the breaking point.” In re Chassix Holdings, Inc., 533 B.R. 64, 88 (Bankr. S.D.N.Y. 2015). 39. Moreover, the court in SunEdison observed that parties who are solicited, but do not vote, may have failed to vote for reasons other than an intention to assent to the releases. SunEdison, 576 B.R. at 461. 40. On June 4, 2019, this Court, Judge Mullin sitting in Fort Worth, adopted the reasoning of the SunEdison court in considering similar opt-out third party releases in In re Mac Churchill, Inc., Case No. 18-41988-MXM-11 (“Mac Churchill”). Like in SunEdison, Judge Mullin found that inaction in connection with an opt-out provision set forth on a plan ballot is not sufficient an affirmative action on the part of the non-voting creditor to constitute consent. “The courts generally do agree that you have to have an affirmative opt-out and that silence really shouldn’t be deemed consent.” See Transcript of Confirmation Hearing, Mac Churchill, June 4,

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2019, p. 14, ln. 1 to 3. Judge Mullin adopted the reasoning in the SunEdison opinion and sustained the United States Trustee’s objection to confirmation. Id. at ln. 4 to 8. 41. Judge Hale adopted the reasoning of Judge Mullin in Mac Churchill and Judge Bernstein in SunEdison in sustaining the United States trustee’s objection to confirmation, striking any third party release by “a party who does not vote on the plan one way or another” because such non-voting party “has not expressed his consent” to the third party release and “this Court does not have the ability to force the release of an non-debtor against another non-debtor.” See Transcript of Confirmation Hearing on Amended Chapter 11 Plan, In re PHI, Inc., et al., Case No. 19-30923-HDH-11, July 30, 2019, p. 161-62, ln. 22 to 4. 42. In a colloquy with debtor’s counsel in Mac Churchill, Judge Mullin observed than an opt-in release would be acceptable “because that’s clearly an affirmative action taken on behalf of the creditor” and that, under his reading, the opt-out release would not pass muster as a consensual release under Pacific Lumber. Mac Churchill Transcript, p. 16, ln. 9-24.1 43. Accordingly, the Court should decline to confirm this Plan because it contains release provisions that would extinguish third parties’ (creditors) property rights – potential claims against nondebtor third parties – without the creditors’ affirmative consent by way of the opt-out releases.   1 Judge Mullin also distinguished dicta from a recent opinion from the Southern District of Texas, Cole v. Nabors Corp. Serv., Inc. (In re CJ Holding Co.), 597 B.R. 597 (S.D. Tex. 2019) (“CJ Holdings”) that seems to approve of nondebtor third party releases. Mac Churchill Transcript, p. 15, ln. 5 to 10. The Fifth Circuit in Pacific Lumber similarly distinguished Republic Supply Company v. Shoaf, 815 F.2d 1046 (5th Cir. 1987) (“Shoaf”) from other Fifth Circuit authority prohibiting, non-consensual third party releases. See Pacific Lumber, 584 F.3d at 252 n. 27. Like in Shoaf, CJ Holdings essentially involved a question of res judicata of a confirmation order, rather than an appeal of the confirmation order in the first instance. In a collateral attack to the confirmation order, the creditor in CJ Holdings challenged an order enforcing the confirmation order long past the time to appeal the confirmation order, rather than appealing the order confirming a plan in the first place. CJ Holdings, 597 B.R. at 602-05.  

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G. Opt out releases in plans are not analogous to class action opt outs. 44. “The exception for class actions is based on the unique character of class actions – one of the most important of which is the fact that the interests of the absent class members are adequately protected by court-certified class representatives who hold similar claims, who have incentives to pursue them, and who can be trusted to litigate or settle the class of claims in a way that will fully protect the absent parties’ interests.” In re Aegean Marine Petroleum Network, Inc., 599 B.R. 717, 724 (Bankr. S.D.N.Y. 2019). 45. “When third-party releases are proposed, however, no such similar protections exist. In this case, for example, there was no court-certified representative who held claims of the kind that would be released and who acted on behalf of other parties holding similar claims. The Court does not have before it a proposed resolution of claims that has been negotiated by people who hold such claims. Instead, the Court has before it a motion to extinguish third party claims, made primarily at the behest of the people who would be the beneficiaries of the releases.” Id. “[T]he bankruptcy court does not have in rem powers to enjoin one third party from enforcing claims it may have against another third party.” Id. 46. Under Rule 7023, which applies in adversary proceedings, putative class representatives must apply to the Court for certification as a class action representative. To be a class representative, the putative class representative “may sue or be sued as representative parties on behalf of all members of the putative class only if: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and

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(4) the representative parties will fairly and adequately protect the interests of the class.” See Fed. R. Bankr. P. 7023(a). 47. There is no representative in this case that would meet these standards. Any argument that the Unsecured Creditors Committee would fill this role is misplaced. First, the Unsecured Creditors Committee is appointed by the United States Trustee, not approved by the Court after application under Rule 7023. Second, even if the Unsecured Creditors’ Committee were somehow deemed analogous to a class representative for all unsecured creditors, they would not cover the universe of proposed Releasing Parties which include “all Holders of Claims and Interests,” which definitions in turn include creditors holding claims and interests beyond the representation of an official committee of unsecured creditors. 48. Third, by its nature, the Unsecured Creditors’ Committee is not contemplated even to be a uniform body representing common claims of a class of creditors. Indeed, section 1102(b)(1) requires that an unsecured creditors committee be “representative of the different kinds of claims to be represented.” In fact, the Unsecured Creditors Committee in the present case includes a putative class action representative,2 a vendor, two landlords, and a construction contractor claimant. See Appointment of Official Unsecured Creditors Committee, Docket Entry No. 173. The inclusion of a putative class action representative as a member of the Unsecured Creditors’ Committee demonstrates that the committee does not function, itself, as a class representative, but rather as a collective voice if disparate unsecured claims in a bankruptcy case.   2 See Statement of Financial Affairs, Section 7.16, In re Studio Movie Grill, LLC, Case No. 20‐32633‐SGJ‐11, Docket Entry No. 162, reflecting the following litigation: 

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49. Moreover, there is no proposed resolution of third party claims of a common type to be released that has been negotiated by the holders of similar claims against third parties. Instead, the proposed opt out release, which will extinguish third party claims against non-debtor third parties, was proposed not by parties similarly situated to proposed releasing parties, but made primarily at the behest of the parties who would be the beneficiaries of the releases. II. The proposed exculpation violates Fifth Circuit authority. 50. The exculpation provision included in the Plan should be modified to clarify that it complies with 11 U.S.C. § 524(e), which was never intended to protect nondebtor parties from “any negligent conduct that occurred during the course of the bankruptcy.” Pacific Lumber, 584 F.3d at 252. In Pacific Lumber, the Fifth Circuit disallowed the release of the debtors’ officers, directors, and professionals because there was no evidence that they “were jointly liable for any…pre-petition debt. They are not guarantors or sureties, nor are they insurers.” Id. 51. The Fifth Circuit struck down all nondebtor releases except those releasing the unsecured creditors’ committee and its members because “its members are the only disinterested volunteers” seeking release. Id. at 253. See also United Artists Theatre Co. v. Walton (In re United Artists Theatre Co.), 315 F.3d 217, 227 (3d Cir. 2003)(holding that plan release provisions did not render moot United States Trustee’s appeal of indemnity provisions of financial advisor’s employment agreement). See also, In re Thru, Inc., 2018 WL 5113124, *23. 52. Bankruptcy Courts within the Northern District of Texas have resolved objections to exculpation provisions by replacing such provisions with channeling injunctions. See Memorandum Opinion and Order, Docket Entry No. 4614, In re Pilgrim’s Pride Corporation, et al., Case No. 08-45664-DML-11 (January 14, 2010); Fourth Amended Joint Chapter 11 Plan of CHC Group Ltd. and its Affiliated Debtors (Section 10.8), Docket Entry No. 1701, In re CHC

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Group, Ltd., Case No. 16-31854-BJH-11, United States Bankruptcy Court for the Northern District of Texas, Dallas Division (February 16, 2017). III. The Debtors should clarify that claims of governmental agencies are not released. 53. The Debtors should modify the Disclosure Statement and the Plan to clarify that no party shall be released from any causes of action or proceedings brought by any governmental agencies in accordance with their regulatory functions, including but not limited to criminal and environmental matters. The United States Trustee requests that the Debtors include the following language in the Disclosure Statement and Plan: Nothing in the Confirmation Order or the Plan shall effect a release of any claim by the United States Government or any of its agencies or any state and local authority whatsoever, including without limitation any claim arising under the Internal Revenue Code, the environmental laws or any criminal laws of the United States or any state and local authority against any party or person, nor shall anything in the Confirmation Order or the Plan enjoin the United States or any state or local authority from bringing any claim, suit, action, or other proceedings against any party or person for any liability of such persons whatever, including without limitation any claim, suit or action arising under the Internal Revenue Code, the environmental laws or any criminal laws of the United States or any state and local authority against such persons, nor shall anything in the Confirmation Order or the Plan exculpate any party or person from any liability to the United States Government or any of its agencies or any state and local authority whatsoever, including any liabilities arising under the Internal Revenue Code, the environmental laws or any criminal laws of the United States or any state and local authority against any party or person. IV. The Court should enter a separate order converting the cases listed on the Schedule of Converted Cases and a separate order dismissing the cases on the Schedule of Abandoned Debtors, rather than embedding such conversions and dismissals within the confirmation order. 54. The Plan Supplement lists cases that shall be converted upon confirmation and cases that shall be dismissed upon confirmation. Any order converting or dismissing any of the jointly administered cases should be separately entered by the Court so that parties in interest may

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easily identify the conversion orders and dismissal orders. A separate order will also aid the Bankruptcy Clerk’s office by providing a separate order by which a case is converted or dismissed. Neither parties in interest nor the Clerk of Court should be required to search within other documents such as the Plan Supplement or any confirmation order that may be entered to ascertain which cases are converted or dismissed. Wherefore, the United States Trustee requests that the Court deny confirmation of the Plan and grant to the United States Trustee such other and further relief as is just and proper. DATED: March 10, 2021 Respectfully submitted, WILLIAM T. NEARY UNITED STATES TRUSTEE /s/ Meredyth A. Kippes Meredyth A. Kippes Trial Attorney Texas State Bar No. 24007882 Office of the United States Trustee 1100 Commerce Street, Room 976 Dallas, Texas 75242 (214) 767-1079 meredyth.a.kippes@usdoj.gov Certificate of Service There undersigned hereby certifies that on March 10, 2021, a copy of the foregoing pleading was served via ECF to parties requesting notice via ECF. /s Meredyth A. Kippes Meredyth A. Kippes