Vanderbilt Minerals, LLC
Signed this 27 day of April, 2026.
Wendy A. Kinsella
United States Bankruptcy Judge
MEMORANDUM DECISION ON MOTION TO APPROVE GLOBAL SETTLEMENT
Before the Court is the Settlement Motion1 filеd by Vanderbilt Minerals, LLC (the “Debtor“) at the sole direction of its Independent Manager and the Sole Member of the
The Motion seeks approval of a global settlement (the “Global Settlement“) between the Debtor and its affiliates, R.T. Vanderbilt Holding Company, Inc. (“Holdings“), Vanderbilt Chemicals, LLC (“Chemicals“), Vanderbilt Global Services, LLC (“Global Services“), Vanderbilt Worldwide, LLC (“Worldwide“), and Advanced Milling Technologies, LLC (“AMT,” and collectively with Holdings, Chemicals, Global Services, and Worldwide, “RTV“). The Global Settlement resolves intercompany claims due to the Debtor in exchange for the transfer of certain Settlement Assets4 to the Debtor to be included in a pending section 363 sale of the Debtor‘s business as a going concern. The primary disputes are: (a) whether the Global Settlеment, as an insider transaction, meets the heightened standard for approval under Rule 9019 and the Iridium factors; and (b) whether the Debtor‘s broad release of claims against RTV is permissible and appropriate.
A hearing (the “Hearing“)5 was held on April 16-17, 2026.6 After testimony and argument
I. Jurisdiction
The Court has jurisdiction to hear and decide this case pursuant to
II. Background
The Court assumes the parties’ familiarity with the general background of the bankruptcy case and will only set out the facts necessary for a resolution of the Motion and the Objections.
In 2012-2013, the Debtor‘s predecessor, R.T. Vanderbilt Company Inc., engaged in restructuring transactions wherein it separated the chemicals and mining businesses and created, inter alia, the Debtor (the “2013 Restructuring“). Holdings was established as the parent company, the Debtor and Chemicals became the operating entities, and the other affiliates werе formed to provide certain administrative and support services pursuant to several intercompany service
In the years after the 2013 Restructuring, the Debtor continued to face rising costs from talc litigation and settlements, including large adverse verdicts in 2024 and 2025. It began to explore its options for a strategic restructuring and hired Dean Vomero of Applied Business Strategies (“ABS“) as Chief Restruсturing Officer. Based on Mr. Vomero‘s review of the Debtor‘s financial condition, including the pending talc litigation, he concluded that restructuring was necessary because the Debtor would not be able to grow and improve its business with the talc litigation and associated defense costs mounting. Mr. Vomero concluded that a section 363 sale through bankruptcy would maximize the value of the Debtor‘s assets. Declaration of Dean Vomero in Support of the Bidding Procedures and DIP Financing Motions, Doc. 19, at ¶¶ 8–9. As a result, in August 2025, the Debtor hired Greenhill & Co., LLC to investigate debtor in possession financing opportunities and to market its assets for sale, but “it became clear that in order to achieve a value-maximizing sale the Debtor would need to include the Settlement Assets among those being marketed as part of the Debtor‘s business.” See Motion, at ¶ 14; see also, April 16 Transcript, at 25:2–20.
Around that same time frame, in September, 2025, the Debtor, through its board оf managers, appointed Ben Pickering as an independent manager, and assigned him the task of
Upon commencing this case on February 16, 2026, the Debtor, through Mr. Pickering, immediately filed this Motion along with the DIP Financing Motion7 and the Sale Motion.8 Those motions, with the Settlement Motion, comprise the infamous “three legged stool” that the Debtor has argued is crucial to successfully navigate its chapter 11 case. Approval of this Motion allows
a. The Hearing
At the Hearing, the Court first heard testimony from Eric Mendelsohn, a Managing Director and Co-Head of Nоrth American Financing Advisory and Restructuring at Greenhill & Co., LLC, investment banker for the Debtor. Mr. Mendelsohn testified about the process employed to obtain debtor in possession financing and the marketing of the Debtor‘s assets. He testified potential purchasers expressed an interest in buying the assets and but he heard from those parties the “non-debtor assets, are really critical to the operation of the VEEGUM® family of products.” April 16 Transcript, 24:11–25 and 25:1–12. He stated Greenhill “receive[d] feedback from potential buyers and lenders that they would like to have those non-debtor assets to be part of the sale of part of the assets on which they would lend money.” Id. at 25:17–20. “Every single [indication of interest] was either verbally or in their letters told us that they wanted those assets.” Id. at 26:2–3. Mr. Mendelsohn stated the non-debtor Settlement Assets provide value to the estate and are important to bidders to maximize value. Id. at 26:4–17.
Mr. Pickering was then called to the stand. He discussed his extensive qualifications as a CPA(CA), Chartered Insolvency and Restructuring Professional and a Licensed Insolvency Trustee (Canada). His experience included senior roles at Ernst & Young LLP, Mesirow Financial
Mr. Pickering testified that he undertook an investigation of insider causes of action, explaining in detail the research and steps he took to understand and explore intercompany matters, including the cash management system. He stated that an error in the cash management system led to a discrepancy wherein the Global Netting10 was completed in order to correct the system flaw and accurately reflect the true amount due from Holdings to the Debtor. He explained in detail his assumptions and calculations in arriving at the present value due to the Debtor on the Outstanding RTV Obligations after consultation with Greenhill and Mr. Vomero. See generally, id. at 85:1–92:6.
Mr. Pickering discussed recoveries through litigation, what debts were owing, and potential claims relating to intercompany transactions. He stated he analyzed alter ego, veil piercing, and successor liability claims (collectively, the “Alter Ego Claims“). He repeatedly consulted with Katten and testified regarding his reliance on three presentations Katten prepared for him that detailed the investigation and contained a legal analysis of intercompany claims and defenses that may be raised.11 See December 15, 2025 Presentatiоn, January 27, 2026 Presentation and
During cross examination, Mr. Pickering conceded that he did not spend much time analyzing the 2013 Restructuring that led to the creation of the Debtor, Holdings, and other non-debtor affiliates. He also did not analyze or estimate the amount of potential talc liabilities that may come due. The UCC asked him about perceived deficiencies in his investigation that: (i) unlike his other interviews of various company personnel, Mr. Pickering did not take notes during his several meetings with Mr. Vomero; and (ii) he did not directly speak to Randall Johnson, President of Holdings and a former Board Member of the Debtor. The UCC focused on language contained in emails from Mr. Johnson where he stated Holdings “pulls all of the strings” and that the Debtor‘s board provided a “rubber stamp” for Holdings’ decisions, to highlight that Holdings may have exercised domination and control over the Debtor that could lend credence to the Alter Ego Claims.12
Michael Atkinson, a partner with Province LLC, testified as the UCC‘s financial expert with experience in estimating mass tort claim liability. After his detailed analysis, he concluded the liability for future talc litigation claims in the next 30 years was approximately $525M, and therefore the potential 1% payment to claimants under the Global Settlement was not reasonable. See id. at 210:6–11. On cross-examination, Mr. Atkinson conceded that he did not have access to much of the data that Mr. Pickering had which could have provided additional information on the value of future talc litigation claims, calling into question his estimated value of $525M. See id. 232:12–235:5.
III. Legal Analysis
a. Purdue End Around
Before the Court reaches the Rule 9019 and Iridium factor analysis, it must decide if the proposed settlement releases sought run afoul of Purdue Pharma, which prohibits non-consensual releases of claims against non-debtor third parties. Harrington v. Purdue Pharma L.P., 603 U.S. 204, 226 (2024). The UCC and UST allege the Debtor is seeking to release the talc claimants’ Alter Ego Claims against the non-debtor affiliates without their consent. The UCC argues that the Motion “should be rejected to the extent that it seeks to settle and release the tort claimants’ state
Recently, the Second Circuit considеred the authority of a chapter 11 trustee to recover assets from the debtor‘s affiliate using alter ego and veil piercing theories. HK Int‘l Funds Invs. (USA) Ltd., LLC v. Despins (In re Kwok), No. 24-2504, 2026 WL 922975 (2d Cir. Apr. 6, 2026). The Second Circuit noted: “section 544(a) permits the trustee to assert any generalized claims that would belong to a hypothetical high-priority lien creditor,” and the determination of whether such a claim belongs to the estate is determined through state law. Id. at *4. The Court then reiterated the test to determine whether a claim belongs to an estate is to distinguish between “personal” and “general” claims. Id. at *5 (citing In re Nordlicht, 115 F.4th 90, 105 (2d Cir. 2024)). “If a claim is a general one, with no particularized injury arising from it, and if that claim could be brought by any creditor of the debtor, the trustee is the proper person to assert the claim.” Id. (quoting St. Paul Fire & Marine Ins. Co. v. PepsiCo, Inc., 884 F.2d 688, 701 (2d Cir. 1989)). And, “[b]y contrast, creditors – not the trustee – ‘are exclusively entitled to pursue personal claims,’ which belong only to specific sets of creditors harmed in particular ways.” Id. (citation omittеd) (also holding that “trustees may assert generalized alter-ego claims either under section 544 or – if those claims also belong to the estate itself – under section 541“).
The Kwok court, citing In re Nordlicht, found that “reverse veil-piercing claim[s] [are] . . . general.” In re Kwok, 2026 WL 922975 at *5. These reverse veil piercing claims “increas[e] the basket of assets that could be used to satisfy any and all liabilities owed by the debtor[,]” and “[a]s
Here, the record is clear that any direct claims by talc claimants against the parties to the Global Settlement are not being released. See, e.g., Holdings Reply, at ¶ 3 (“direct claims held by third party individual plaintiffs аre not impacted or released by the Global Settlement“); id. at ¶ 18 (“The Global Settlement does not contain any Purdue-type nonconsensual third-party releases. Nor does it contain any releases of direct liability claims against either the Debtor or R.T. Vanderbilt. No party is stripped of any direct claims without its consent.“). In addition, the record demonstrates that direct claims against officers and directors are not being released. See Debtor Reply, at ¶ 7 (“[t]he Settlement does not release any claims— direct or derivative—against the Debtor‘s directors or officers“); id. at ¶ 63 (“[t]he Settlement does not release the Debtor‘s officers and directors from estate causes of action. To the extent any such individual qualifies as a “Representative” of a released party, any release would run only in that capacity, not in his or her capacity as an officer or director of the Debtor.“). Therefore, in the event that talc claimants intend to assert direct claims against Holdings, non-debtor affiliates or directors and officers of the Debtor, those rights are preserved. Thus, the UST and UCC‘s position that the approval of the settlement would violate Purdue Pharma is in error as talc claimant‘s direct claims are not being released without their consent.
b. Heightened Standard for Review
Having determined the proposed releases do not violate Purdue Pharma, the Court turns to the settlement. Settling estate claims naturally implicates section 363, which states that “the
The standard for determining whether to grant relief under section 363 is whether the debtor exercised sound business judgment. See In re Giftcraft Ltd., 672 B.R. 173, 180 (Bankr. S.D.N.Y. 2025). However, courts have held that transactions that benefit insiders must withstand heightened scrutiny. See In re Enron Corp., 335 B.R. 22, 28 (S.D.N.Y. 2005).
Given the insider transactions at issue, the parties agreed at the Hearing that the standard to be employed is that of heightened scrutiny. Therefore, “some skepticism” must be applied when analyzing whether the Motion should be granted. See In re Chassix Holdings, Inc., 533 B.R. 64, 70 (Bankr. S.D.N.Y. 2015).
In applying heightened scrutiny, courts analyze the integrity of the transaction and examine “whether the process and price of a proposed transaction not only appear fair but are fair and whether fiduciary duties were properly taken into consideration.” In re Innkeepers USA Tr., 442 B.R. 227, 231 (Bankr. S.D.N.Y. 2010). In addition, courts assess “the bona fides of a transaction among a debtor and an insider of the debtor,” looking at the “entire fairness” of the transaction at issue. In re LATAM Airlines Grp. S.A., 620 B.R. 722, 769 (Bankr. S.D.N.Y. 2020).
c. The Settlement
Turning to the merits of the Motion,
“Settlements and compromises are favored in bankruptcy as they minimize costly litigation and further parties’ interests in expediting the administration of the bankruptcy estate.” In re Dewey & LeBoeuf LLP, 478 B.R. 627, 640 (S.D.N.Y. 2012). As a general rule, “[i]t is not the court‘s task to determine whether the settlement proposed by the parties is the best possible, or fairest, or most appropriate resolution of the dispute.” O‘Connell v. Packles (In re Hilsen), 404 B.R. 58, 70 (Bankr. E.D.N.Y. 2009). Instead, it must be fair and equitable. See In re Comair Ltd., 2025 Bankr. LEXIS 2811, at *12–13 (Bankr. S.D.N.Y. 2025).
d. Iridium Factors
In the Second Circuit, the analysis to determine whether a settlement is fair and equitable is dictated by the Iridium factors. See Motorola, Inc. v. Official Comm. of Unsecured Creditors (In re Iridium Operating LLC), 478 F.3d 452, 462 (2d Cir. 2007). The Iridium factors consider:
- (1) a comparison between the possibility of success and the benefits offered by the settlement;
- (2) the likelihood of complex and protracted litigation in the absence of a settlement;
- (3) the interests of creditors, including “the degree to which creditors either do not object to or affirmatively support the proposed settlement;”
- (4) whether other parties in interest support the settlement;
- (5) the competency and experience of counsel supporting the settlement and the experience of the bankruptcy judge in reviewing the settlement;
- (6) the nature and breadth of the releases to be obtained by officers and directors; and
- (7) the extent to which the settlement is the result of arm‘s-length bargaining.
See id. at 462.
The Debtor argues that all Iridium factors are met here. See Motion, at ¶¶ 58–73. By contrast, the UST and UCC argue none of the Iridium factors are met. See UST Objection, at ¶¶ 11–19 and UCC Objection, at ¶¶ 236–67. The Court shall analyze each factor in turn.
i. Balancing Litigation Success and Settlement
In balancing the litigation success and settlement factor, the Debtor contends the settlement provides a mechanism to continue operations, consummate a sale and maximize the recovery to creditors such that the benefits from the settlement outweigh the potential for recovery if the claims were litigated. Motion, at ¶ 60. The time, cost and uncertainty in prosecuting the claims balanced against the terms of the settlement weigh in favor of the settlement. Id. at ¶ 61. The UST argues that the “record does not provide a sufficient basis for the Court to determine whether the consideration being provided exceeds the potential value of the claims being released.” UST Objection, at ¶ 11. The UCC agrees, noting that “at this stage, due to the significant intertwining of the Debtor and the non-debtor affiliates, the Committee has been unable to perform proper due diligence into these intercompany claims, or determine if there are other, additional intercompany or shareholder transactions that should be investigated that may have similarly high chances of success.” UCC Objection, at ¶ 238.
The first factor is one of the most important factors to consider. See In re LATAM Airlines Grp. S.A., No. 20-11254, 2022 WL 272167 at *21 (Bankr. S.D.N.Y. Jan. 28, 2022). The Court need not “hold a mini trial” on the merits of the potential claims. In re Enron Corp., No. 02 CIV. 8489 (AKH), 2003 WL 230838, at *2 (S.D.N.Y. Jan. 31, 2003). In fact, courts have held that “[w]hen claims at issue in a settlement raise complex questions of fact and law that are not easily decided, courts find that the first Iridium Factor weighs towards approving a settlement.” In re LATAM Airlines Grp. S.A., 2022 WL 272167 at *21; see In re NII Holdings, Inc., 536 B.R. 61, 122 (Bankr. S.D.N.Y. 2015). Nevertheless, a court “should form an educated estimate of the complexity, expense, and likely duration of such litigation, the possible difficulties of collecting on any judgment which might be obtained, and all other factors relevant to a full and fair
As the Debtor is a Delaware limited liability company, Delaware state law governs the analysis of the Alter Ego Claims. Delaware law contemplates a veil piercing scenario in “exceptional cases.” Vichi v. Koninklijke Philips Elecs. N.V., 62 A.3d 26, 49 (Del. Ch. 2012). The standard is high. “Delaware public policy disfavors disregarding the separate legal existence of business entities.” Paul Elton, LLC v. Rommel Del., LLC, 2020 WL 2203708, at *14 (Del. Ch. May 7, 2020); see Wallace ex rel. Cencom Cable Income P‘rs II, L.P. v. Wood, 752 A.2d 1175, 1183 (Del. Ch. 1999) (“Persuading a Delaware court to disregard the corporate entity is a difficult task.“). Delaware courts consider a number of factors in determining to pierce the corporate veil: “(1) whether the company was adequately capitalized for the undertaking; (2) whether the company was solvent; (3) whether corporate formalities were observed; (4) whether the dominant shareholder siphoned company funds; and (5) whether, in general, the company simply functioned as a facade for the dominant shareholder.” Manichaean Cap., LLC v. Exela Techs., Inc., 251 A.3d 694, 706 (Del. Ch. 2021).
Here, the Pickering Declaration and Mr. Pickering‘s testimony detailed the underlying investigation, assumptions and analysis that he used to assess the potential success of litigation on the Alter Ego Claims under Delaware law and on all intercompany claims. The January 27, 2026 Presentation indicated Katten reviewed 1,782 pages of the Debtor‘s documents relating to the Intercompany Matters from 2013 to present and reviewed 4,743 pages plus 340 excel spreadsheets from Holdings and its subsidiaries in response to various due diligence requests. January 27, 2026 Presentation, pp. 7–8. After that extensive review, Mr. Piсkering identified six related party
After concluding the Outstanding RTV Obligations remained as the only viable claims, Mr. Pickering provided an in depth assessment of the possibility of success along with the risks of litigation, and the time and expenses involved. He discussed his rationale for settling those claims. He testified that the Intercompany Note was not in default and did not mature until 2037, so the Debtor lacked legal grounds to bring a cause of action to recover on that debt. April 16 Transcript, 62:18–63:13. He detailed his assumptions and methodology for discounting the accounts receivable because of the risk of litigation and accumulating attorneys’ fees. Id. at 79:6–85:19. He also reviewed the financial statements of the potential insider defendants to properly consider the collectability of any judgment. Id. at 107:6–113:18. He reviewed the value of the Settlement Assets and support services being provided to the Debtor in satisfaction of the RTV Obligations, and concluded the consideration being paid was at the high end of his expected recovery. Id. at 85:1–92:6. As a result, he concluded the Global Settlement‘s benefits outweighed any possibility of success in litigation.
The UCC repeatedly questioned why Mr. Pickering did not even attempt to make a specific settlement demand on the Alter Ego Claims. He testified that since they were not valid and viable,
In light of Mr. Pickering‘s thorough analysis and credible testimony, this factor weighs in favor of approval of the settlement.
ii. Likelihood of Protracted Litigation
As to the second factor, the Debtor contends that “avoiding costly litigation that would unnecessarily waste resources is in the best interests of the estate.” Motion, at ¶ 63. Further, the benefits and certainty derived from the Global Settlement outweighs the potential limited recovery in the event litigation is successful. Id. at 65.
The UST repeаts the argument that the Debtor is relying on speculative and generalized assertions. See UST Objection, at ¶ 12. The UCC also argues the record is too devoid for the Court to make a ruling as to this factor. See UCC Objection, at ¶ 242.
Courts have found that if a settlement addresses “not only current litigation but also anticipated litigation as well,” that this factor would weigh in support of said settlement as it mitigates “legal uncertainty and legal expenses” that would likely “contribute to greater creditor recovery.” In re Wythe Berry Fee Owner LLC, 660 B.R. 534, 565 (Bankr. S.D.N.Y. 2024).
The record reflects that protracted litigation is highly likely if the Global Settlement is not approved. In Holdings’ Reply in support of the Motion, they not surprisingly raised several of the defenses that Mr. Pickering considered and stated they would vigorously defend against any actions brought by the Debtor. See, e.g., Holdings Reply, at ¶ 23. While the litigation may not be complex, there are sufficient unsettled issues to drag it out, and the likelihood of significant
iii. Interests of Creditors
As to the interests of creditors factor, the Debtor asserts it has liquidity constraints that could be amplified if the Motion is not granted. This in turn could reduce any recovery by creditors. Motion, at ¶ 68.
The UST argues that the Global Settlement “extinguishes claims against affiliates and restructures intercompany obligations without a clear showing that creditors are receiving commensurate values,” and that “the primary stakeholders in this case, the tort claimants, through the UCC, oppose the Settlement Agreement and seek dismissal of this case.” UST Objection, at ¶¶ 13–14. Similarly, the UCC strenuously objects to the Motion, arguing the de minimis compensation to claimants, if approved, and the foreclosure of potential rights that claimants possess violates the Debtor‘s fiduciary duty to maximize value for the benefit of creditors. See UCC Objection, at ¶¶ 247–49. In light of the talc creditors’ vehement оbjection to the proposed settlement through the UCC, as well as statements made at the Hearing by talc claimants’ counsel, this factor strongly weighs in favor of denying the Motion.
iv. Support of Parties in Interest
As to the fourth factor, the Debtor relies on the RTV parties’ contributions as support for the settlement. Motion, at ¶ 69. The Court notes the support of the DIP Lender as well, but it discounts that support since both DIP Lender and the RTV parties are direct beneficiaries of the settlement.
While the talc claimants are the largest and arguably the most important parties in interest, the Court cannot overlook the Debtor‘s employees and their communities. Even if a sale is not approved, the Global Settlement allows the Debtor to acquire assets that are critical to its viability
v. The Competency and Experience of Counsel
The Debtor argues the competency and experience of counsel involved weigh in favor of approval as each of the settlement parties had independent counsel who extensively negotiated in good faith.
The UST questions the disinterestedness of the independent counsel and whether the Settlement Agreement was indeed negotiated in good faith.” UST Objection, at ¶ 15. The UCC makes the same argument, but also asserts that “the Debtor‘s board limited the scope of the investigation that Mr. Pickering and Katten undertook to intercompany matters.” See UCC Objection, at ¶¶ 256–58.
At this juncture, Jones Day is no longer involved.13 The testimony showed Mr. Pickering had no prior relationship with the Debtor or its affiliates. Moreover, although the UCC alleged otherwise, Mr. Pickering stated his investigation was not limited in any manner, and Katten, an international full-service law firm, was thе sole provider of legal advice in reaching the agreement. Holdings and the other parties to the Global Settlement were likewise represented by experienced, competent counsel at Vinson & Elkins LLP.
As a result, the competency and experience of counsel involved weigh in favor of granting the Motion.
As to the sixth factor, the Debtor asserts “[t]he releases are being given in exchange for substantial value and provide finality to all disputes between and among the Settlement Parties.” Motion, at ¶ 71.
The UST argues that the “the nature and breadth of the releases being offered by the Debtor are in violation of the Bankruptcy Code and applicable law.” UST Objection, at ¶ 16. The UCC notes that the officers and directors have contributed nothing in return for the releases they are receiving. UCC Objection, at ¶¶ 260–63.
This factor weighs in favor of denying approval of the settlement. While the Court concluded the Debtor‘s рroposed releases did not violate Purdue Pharma because the Alter Ego Claims are generalized claims that belong to the estate, the broad release of those claims forecloses any future investigation and potential recovery from Holdings and the affiliates on the insider transactions and any other matters that may not yet be known. As the UCC correctly pointed out, it had only six weeks to investigate insider claims that Mr. Pickering reviewed for five months, effectively tying one arm behind the UCC‘s back in this fight. In addition, while the disclosure of information to the UCC was ongoing and generally uncontested, the UCC did not receive the three unredacted Presentations that Katten prepared for Mr. Pickering until the UCC brought a motion to compel, and only days before the Hearing. Without sufficient time for a thorough investigation by the UCC, there is a persuasive argument that the broad releases should not be approved.
This factor is troubling. Releasing known and potential unknown causes of action against Holdings and the affiliates under such a tight time frame is problematic. However, the UCC had two large teams of very experienced and capable counsel who spent a tremendous amount of time and resources to review the transactions at issue. Although the UCC and UST made strenuous
vii. Extent of Arms’ Length Bargaining
As to the final Iridium factor, the Debtor relies on the active involvement of each settling parties’ independent counsel as support for the claim the Settlement Agreement was negotiated at arms’ length and in good faith. Motion, at ¶ 72.
The UST argues that “the record calls into question whether the settlement reflects a truly independent negotiation.” UST Objection, at ¶ 17. The UCC agrees. See UCC Objection, at ¶¶ 264–67. As noted above, the UCC also highlighted the deficiencies that allegedly imply Mr. Pickering lacks independence, inсluding the failure to follow up on the emails wherein Mr. Johnson states that “Holding pulls all of the strings,” and that “[Debtor‘s] board essentially provided a ‘rubber stamp” and his failure to take notes during his meetings with Mr. Vomero. These shortcomings, the UCC argue, are further evidence of Mr. Pickering‘s investigation being a “sham.”
In spite of the UST and UCC‘s inferences, the record demonstrates the Global Settlement was the result of arms’ length bargaining by Mr. Pickering and his counsel on one side, and Holdings, the affiliates and their counsel on the other. Mr. Pickering testified he or his counsel made settlement demands and attended a full day settlement conference at the Katten offices in February. See Pickering Declaration at ¶ 13. The Timeline of events showed seven term sheets and multiple offers exchanged before an ultimate deal was reached, reflecting robust negotiations took place. See Special Committee Exhibit 8. This evidence persuades the Court to find the bаrgaining was done in good faith at arms’ length.
This factor weighs in support of approval of the Motion as “the proposed settlement was the result of a vigorously negotiated process.” In re Adelphia Communs. Corp., 368 B.R. 140, 246 (Bankr. S.D.N.Y. 2007). Courts have also found this factor to weigh in favor when “multiple parties gave concessions, and agreement ultimately was reached by parties with distinct fiduciary obligations.” In re NII Holdings, Inc., 536 B.R. 61, 120 (Bankr. S.D.N.Y. 2015). Such is the case with Mr. Pickering here.
viii. Other Factors
The UCC notes that another factor Courts consider is whether the proposed settlement falls above the “lowest point in the range of reasonableness.” See In re DiStefano, 654 B.R. 49, 54 (Bankr. N.D.N.Y. 2023) (quoting In re W.T. Grant Co., 699 F.2d 599, 613 (2d Cir. 1983)). The UCC points to the fact that (a) the claims being resolved may exceed the amount being paid under the Global Settlement; and (b) there is a failure by the Debtor to include sufficient information for the Court to value such claims and assess whether non-debtor affiliates can be held liable for such claims. See UCC Objection, at ¶¶ 268–89. The UST similarly argued at the Hearing that the Court has no ability to assess the value оf the claims being released based on the record before it.
The Court disagrees. The Court found Mr. Pickering to be a qualified, experienced, credible witness. He assessed the intercompany claims, used commercially reasonable assumptions, analyzed the potential for recovery under multiple legal theories, and quantified the viable and valuable claims. He believed the consideration the Debtor was receiving was at the high end of the range of potential recovery at over $27M. His investigation and consultations with Katten, detailed in the Presentations, were thorough and appropriate. Mr. Pickering did not have any ties or loyalties to the Debtor‘s board and management, nor to its affiliates or their professionals. He stated unequivocally he was a fiduciary for the Debtor and built in a “fiduciary out” in the Settlement Agreement if additional information came to light that would cause him to reconsider it. In pеrson and through counsel, he negotiated a settlement that he believed was in the best interests of the estate.
e. Sub Rosa Allegations
The UST finally argues that the Global Settlement is a sub rosa plan that is an attempt to circumvent the Bankruptcy Code. See UST Objection, at ¶ 22.
The UST cites to In re Genesis Glob. Holdco, LLC and its factors in arguing that (a) the Global Settlement dictates the Debtor‘s reorganization; (b) the Global Settlement bypasses voting rights of creditor; (c) the proposed sale process disposes large assets belonging to the Debtor; and (d) approval of the Global Settlement would effectively force the creditors to waive claims against the Debtor and its affiliates. See UST Objection, at ¶ 24 (citing In re Genesis Glob. Holdco, LLC, 660 B.R. 439).
At the Hearing, the Debtor14 disputed that the Global Settlement is a sub rosa plan, as even if the Motion and subsequent Sale Motion are granted, there are still a large number of insurance
The Global Settlement does not dictate the Debtor‘s reorganization or liquidation, and it appears there are other material assets such as insurance policies that may further enhance the estate. The transaction brings assets into the estate that allow the Debtor to operate as a standalone business or be sold as a going concern. The creditors have not waived any claims against the Debtor, and the Alter Ego Claims against its affiliates do not belong to them. Finally, the creditors will have the right to vote when a plan is ultimately proposed.
f. Other Considerations
The Court is very sympathetic to the 1,400 talc claimants in this case and their families, many of whom have been suffering and seeking their day in court for justice for years. The loss of the ability to sue the Debtor as a result of this bankruptcy and to pursue the Alter Ego Claims against the affiliates is an extremely difficult situation. This reality is not lost on the Court and the creditor‘s opposition weighed heavily against approving the Global Settlement. However, the Bankruptcy Code, Rules and Second Circuit precedent dictate the process and analysis for the settlement of claims, and the Court must adhere to them. While the claimants did not ask to be here, the bankruptcy forum is designed to orderly liquidate and monetize the Debtor‘s assets, prevent a race to the courthouse, and provide a fair and equitable process for distribution on those claims. As noted by the Debtor, there are a significant number of insurance policies which may be additional sources of recovery. While there is no amount of money that can ever compensate the talc claimants for their injuries and loss of life - much less make the claimants whole - the
IV. Conclusion
As a result of the foregoing, after applying heightened scrutiny to the Global Settlement and balancing the Iridium factors, the Court finds the factors weigh in favor of granting the Motion. Counsel for Mr. Pickering is directed to submit an order specifying the Debtor Released Claims (as defined in the Settlement Agreement) shall not include any claims against the Debtor‘s directors and/or officers in their capacity as such, notwithstanding that such directors and/or officers may be Vanderbilt Entities Released Parties (as defined in the Settlement Agreement) in any other capacity; or any direct claims held by any creditor, as directed in the Court‘s oral ruling.
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