487 B.R. 713
Bankr. E.D. La.2013Background
- Debtor Gulf States Long Term Acute Care of Covington, L.L.C. (and its reorganized debtor) sought relief from a plan release and clarification of claims from Adler, its disbursing agent.
- Plan 6.05 released Debtor’s claims against MPT, Maurin, Gemino, and Capital One in exchange for specified consideration and releases.
- The release encompassed known and potential claims against Maurin, including those from the Derivative Action and related postpetition matters; several entities were not explicitly released.
- Mediation produced a Cooperation Agreement and an Immaterial Modification to the Plan; the Plan was confirmed on February 22, 2010.
- Adler sought to withdraw the release against Maurin for fraud under §1144 and to identify reserved claims, including fraudulent transfers and related actions.
- District Court dismissal of Adler’s claims against various defendants was binding; Adler’s remaining focus was on Maurin and reserved claims against others.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness and viability of §1144 relief to revoke release against Maurin | Adler argues fraud invalidates the release and seeks revocation. | §1144 is untimely; Rule 60 does not apply to revocation of a confirmation order. | Motion untimely; §1144 not applicable; Rule 60 not applicable. |
| Whether Plan release of claims against Maurin was broad enough to cover unknown or post‑petition claims | Release did not clearly include unknown post‑petition claims. | Plan language released all claims against Maurin on the Effective Date, including those could have been asserted in the Derivative Action. | General release covered all claims, including unknown ones, and thus barred Adler’s claims against Maurin. |
| Whether Adler may pursue veil‑piercing/alter ego collection against Maurin‑controlled entities | Veil piercing is available to collect on fraudulent transfer claims. | Veil piercing is an equitable remedy tied to underlying claims, not an independent action; released by plan. | Veil piercing is a collection mechanism, not a standalone claim; may pursue as collection if underlying claims survive. |
| Effect of Immaterial Modifications on Jamestown and related releases | Jamestown releases were not clearly carved out; Adler may pursue. | Immaterial Modifications released Maurin and Jamestown Healthcare Properties, thus limiting Adler. | Jamestown Healthcare Properties released; Adler cannot pursue those claims. |
| Reservation of avoidance actions and scope relative to third parties | Reservation language may encompass avoidance actions affecting third parties. | Reservation should address creditor/vote impact; third-party noncreditors have limited notice and standing. | Reservation sufficiently covers certain avoidance actions against noncreditor third parties; Adler may pursue against Gulf States Holdings, B&G, Jamestown Dallas, and Gregory Walker, and pursue retention actions. |
Key Cases Cited
- MPF Holdings U.S. LLC v. Anderson, 701 F.3d 449 (5th Cir. 2012) (contract interpretation of plan reservations; carveouts and exclusions)
- In re United Operating, L.L.C., 540 F.3d 351 (5th Cir. 2008) (avoidance actions; reservation language)
- In re National Benevolent Association of the Christian Church (Disciples of Christ), 333 Fed. Appx. 822 (5th Cir. 2009) (ambiguity in reservations not always benefit to defendant)
- In re Compton v. Anderson (MPF Holdings U.S. LLC), 701 F.3d 449 (5th Cir. 2012) (reservation of claims; exclusions and chapter 5 actions)