543 B.R. 703
Bankr. D. Del.2016Background
- Debtors Millennium Lab Holdings II, LLC, Millennium Health, LLC, and RxAnte, LLC filed a Prepackaged Joint Chapter 11 Plan.
- Plan includes third party releases for MLH, TA, and certain related parties as part of the reorganization.
- Settlements with USA Settling Parties and lenders provide for equity infusions, a new term loan, and a 100% recovery for most creditors.
- Ad hoc group of prepetition lenders agreed to terms; opt-out lenders object to the third party releases.
- Court confirmed the Plan and then addressed certification for direct appeal under 28 U.S.C. § 158(d)(2)(A).
- Only Issue 2 (authority to release a non-debtor’s direct claims without consent) satisfied certification criteria; others were not certified.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Jurisdiction for non-debtor releases | Opt-Out Lenders rely on lack of pure jurisdiction to grant releases | Court had related-to jurisdiction via indemnification provisions | Issue not certified |
| Authority to release non-debtor direct claims without consent | Issue satisfies criteria for direct appeal | Contends no such authority or requires further standardization | Certifies issue; direct appeal allowed for this question |
| Standard of law for releases without consideration | Question of law governing releases without consideration | No discrete legal standard identified apart from issue 2 | Not certified |
| Debtors’ directors' services as financial contributions | Services could be viewed as contribution to estate | Not a standalone legal question; tied to issue 2 | Not certified |
| Contributions by non-debtors on behalf of others | Financial contributions on behalf of non-contributing parties | Not a separate legal question | Not certified |
Key Cases Cited
- Pacor, Inc. v. Higgins, 743 F.2d 984 (3d Cir. 1984) (establishes 'related to' jurisdiction framework)
- Gillman v. Continental Airlines, 203 F.3d 203 (3d Cir. 2000) (hallmarks and limits of permissible nonconsensual releases)
- United Artists Theatre Co. v. Walton, 315 F.3d 217 (3d Cir. 2003) (adopted Continental hallmarks in later context)
- Global Industrial Technologies, Inc., 645 F.3d 201 (3d Cir. 2011) (recognizes Continental hallmarks; discusses silica trust context)