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November 2, 2020 – The acting United States Trustee for the Eastern District of Missouri (“the U.S. Trustee”) objected to the Debtors' Disclosure Statement, arguing that it does not provide creditors with the information necessary to make an informed decision as to the Plan and that it otherwise describes a Plan which is not confirmable. Central to both arguments are the Disclosure Statement's presentation of the Plan's non-consensual third-party releases and exculpation provisions that unjustifiably "shield a very broad collection of individuals and entities" with an "opt out" (as opposed to opt in) mechanism and do so in a manner which creditors are not likely to fully comprehend [Docket No. 1195].
The U.S. Trustee does not like the opt out requirement and is not satisfied that it is presented in a manner which makes creditors aware that "the failure of a creditor or equity holder to return a ballot or Opt-Out Form manifested their intent to provide a release," ie that it "apprise[s creditors of]…the risks and financial consequences of the proposed plan."
The U.S. Trustee’s objection states, “The Disclosure Statement and Plan, in their current form, do not provide adequate information and proposes a plan that is not confirmable. The U.S. Trustee objects to the Disclosure Statement and solicitation of the Plan on various grounds, including, among others:
- The Plan improperly proposes non-consensual third-party releases in favor of numerous non-debtors through an opt out election.
- The Plan inappropriately extends exculpation coverage beyond estate fiduciaries. The U.S. Trustee objects to the Exculpation Clause of the Plan because it exculpates persons and entities that are not fiduciaries of the estate. The exculpation also is not limited to actions or inactions taking place during the bankruptcy cases, as required by applicable law."
Specifically, according to the objection, "the Plan shields a very broad collection of individuals and entities included in the Plan’s definition of Exculpated Parties, Related Parties and through the Plan’s exculpation provisions. Specifically, the Plan and Disclosure state: Exculpated Parties means collectively: (a) the Debtors, (b) the Wind-Down Estates, (c) the Plan Administrator, (d) the Creditors’ Committee and each of its members in their capacity as such and (e) with respect to each of the foregoing Persons or Entities in clauses of their Related Parties who acted on their behalf in connection with the matters as to which exculpation is provided herein."
The objection continues, "The present Objection contests whether the Disclosure Statement contains sufficient information to enable creditors and other parties in interest to arrive at an informed decision concerning acceptance or rejection of the Plan. The U.S. Trustee asserts the above objections to the Release provision at the Disclosure stage so that revisions can be made before solicitation is made. It is also appropriate to evaluate and revise the Exculpation provisions and related definitions contained in the Disclosure prior to solicitation to allow creditors an opportunity to adequately evaluate the plan. Absent additional evidence or amendments sufficient to satisfy this objection, the Court should deny approval of the proposed Disclosure Statement and the Forms of Ballot…
The U.S. Trustee objects to the release and exculpation provisions in the Disclosure and Plan in that they (a) require holders of claims and interests to opt out of them rather than opt into them, while also deeming those holders of claims and interests that are not entitled to vote on the Plan or that are entitled to vote on the Plan but do not vote, to have accepted the release and exculpation provisions (b) are overly broad, both in terms of the parties covered, and for the time periods actions are exculpated, among other things.”
The objection further provides, "The Debtors have failed to explain why it is appropriate to extend the exculpation provisions to [non-estate fiduciaries]."
About the Debtors
According to the Debtors: “Briggs & Stratton Corporation (NYSE: BGG), headquartered in Milwaukee, Wisconsin, is focused on providing power to get work done and make people’s lives better. Briggs & Stratton is the world’s largest producer of gasoline engines for outdoor power equipment, and is a leading designer, manufacturer and marketer of power generation, pressure washer, lawn and garden, turf care and job site products through its Briggs & Stratton®, Simplicity®, Snapper®, Ferris®, Vanguard®, Allmand®, Billy Goat®, Murray®, Branco® and Victa® brands. Briggs & Stratton products are designed, manufactured, marketed and serviced in over 100 countries on six continents.”
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