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<br />policy and section 1125(e) ofthe Bankruptcy Code, under whichthere is no liability for good faith
<br />actions in connection with plan solicitation or issuance of securities under the Plan. See 11 U.S.C.
<br />§ 1125(e). Because such provisions do not "affect the liability of [the exculpated] parties, but
<br />rather [state] the standard of liability under the [Bankmptcy] Code," they do not "come within the
<br />meaning of § 524(e)." Id. at 245. "As a policy matter, exculpation are necessary to ensure that
<br />capable, skilled individuals are willing to assist in the reorganization efforts in chapter 11 cases."
<br />Alpha Natural Res., Inc., 556 B.R. at 261. 38.
<br />Article 11.03 of the Plan contains an exculpation provision, which is consistent with other
<br />chapter 11 cases regarding the identity of exculpated parties and the scope of the exculpation. The
<br />Plan defines the "Exculpated Parties" as (i) the Debtors, (a) each of the Debtors' current officers
<br />and directors that served in such capacities between the Petition Date and the Effective Date, (in)
<br />the Committee and each of the Committee's members acting in their capacities as members
<br />thereof, (tv) the Professionals for the Debtors and the Committee, and (v) the Released Parties.
<br />However, the exculpation does not extend to any holder of an Equity Interest or any other current
<br />or former officer, director, manager, or employee of the Debtors for conduct occurring prior to the
<br />Petition Date. Further, the acts for which parties may be exculpated in the Plan are limited to post -
<br />petition acts. Finally, the exculpation provision contains an exception for any exculpated party if
<br />such party is "determined in a Final Order to have constituted willful misconduct or gross
<br />negligence." Plan § 11.03.
<br />The United States Trustee (the "UST") objected to the proposed exculpation provision in
<br />the Plan on the basis that such provision is "overly broad" in that it extends to the Released Parties,
<br />which are not estate fiduciaries (Docket No. 569) (the "UST Obi ectio"). While the UST submits
<br />that there is no basis for the extension of exculpation provisions beyond estate fiduciaries, such
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<br />by the UST in approving the inclusion of non -estate fiduciaries in exculpation provisions. See In
<br />re Murray Metallurgical Coal Holdings, LLC et al, Case No. 20-10390 (JEH) (Docket No. 798)
<br />(Banta. S.D. Ohio Nov. 25, 2020) (approving an exculpation provisions of non -estate fiduciaries
<br />including pre -petition Lender and DIP Lender in its entirety and holding " ... [t]he Exculpation
<br />appropriately affords protection to those parties who actively and constructively participated in
<br />and contributed to the Debtors' chapter 11 process consistent with this Court's orders, and it is
<br />appropriately tailored to protect the Exculpated Parties from inappropriate litigation."); In re
<br />Murray Energy Holdings Co., Case No. 19-56885 (JEH) (Docket No. 2135) (Banta. S.D. Ohio
<br />Aug. 31, 2020) (same); In re Murray Metallurgical Coal Holdings, LLC et al, Case No. 20-10390
<br />(JEH) (Docket No. 860) (Banta. S.D. Ohio Jan. 11, 2021) (opinion of the Bankruptcy Court
<br />approving exculpation provisions noted above).
<br />Accordingly, exculpation of the kind requested under the Plan are standard in complex
<br />cases such as the Debtors. The exculpations are appropriately Limited in scope, applying only to
<br />acts and omissions occurring in connection with the commencement of the Chapter 11 Cases, the
<br />sale of the Debtors' assets, administration of the Debtors' estates, and the Plan process. The
<br />Exculpation also confer only a qualified immunity by excluding acts or omissions which are the
<br />result of gross negligence or willful misconduct.
<br />Moreover, approving the exculpation of the Released Parties would be beneficial to the
<br />estates. If this Court does not approve the exculpation of the Released Parties, the Debtors' estates
<br />will Lose the additional $100,000 that the Lenders are required to pay to the estates under the
<br />Released Party Order. See Released Party Order, Ex. A (Settlement Agreement), at IN 1, 5. Losing
<br />access to these funds would harm the Debtors' unsecured creditors.
<br />The Proponents also note that the beneficiaries of the exculpations have made significant
<br />contribution to the Debtors' Liquidation; these contributions have allowed for the formulation of
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<br />argument is contrary to the holdings of several courts — including those in the Southern District of
<br />Ohio— and the facts of this case.
<br />Indeed, chapter 11 plans extending properly tailored exculpation to non -estate fiduciaries
<br />— such as the Released Parties — are regularly confirmed in this and other jurisdictions. See, e.g.,
<br />In re Firstenergy Solutions Corp., No. 18-50757 (AMK) (Banta. N.D. Ohio Oct 16, 2019)
<br />(Docket No. 3283) (confirming a plan providing exculpation to non -estate fiduciaries); In re
<br />Wornick Co., No. 08-10654 (JVA) (Banta. S.D. Ohio June 27, 2008) (Docket No. 262) (same); In
<br />re Alpha Natural Resources, Inc., 556 B.R. 249, 260 (Banta. E.D. Va. 2016) (approving of the
<br />plan's exculpation for non -estate fiduciaries, including tenders, and explaining that such provisions
<br />"are not unusual and are generally permissible" (internal quotations omitted)); In re Airadigm
<br />Communications, Inc., 519 E3d 640, 655-57 (7" Cir. 2008); In re Mission Coal Company, LLC,
<br />No. 18-04177 (TOM) (Banta. N.D. Ala. Apr. 15, 2019) (Docket No. 1324) (same); In re
<br />Westmoreland Coal Company, No. 18-35672 (DRJ) (Banta. S.D. Tex. Mar. 2, 2019) (Docket No.
<br />1561) (same); In re Westinghouse Flee. Co. LLC, No. 17-10751 (MEW) (Bankr. S.D.N.Y. Mar.
<br />28, 2018) (Docket No. 2988) (same); In re Caesars Entertainment Operating Co., No. 15-01145
<br />(ABO) (Bankr. N.D. ILL Jan. 17, 2017) (Docket No. 6334) (same).
<br />As such, it is not uncommon for courts to confirm plans that grant exculpation to key third
<br />parties, including a debtor's tenders. (See, e.g., reorganization plans and confirmation orders in In
<br />re FiberMark, Inc., Case No. 04-10463 (Banta. D. Vt. Dec. 5, 2005); In re RCN Corp., Case No.
<br />04-13638 (RDD) (Bankr. S.D.N.Y. Dec 8., 2004); In re Kmart Corp., Case No. 02-02474 (Bankr.
<br />N.D. ILL. Apr. 23, 2003); In re Sterling Chem. Holdings, Inc., Case No. 01-37805-114-11 (Banta.
<br />S.D. Tex. Nov. 29 2002)).
<br />In addition to the Litany of cases cited above where courts granted exculpation to third
<br />parties (including tenders), the Southern District of Ohio has rejected nearly identical objections
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<br />the Plan that resolves many complicated issues among the Debtors and other interested parties and
<br />which, in the Debtors' view, positioned the Debtors to seek confirmation of the Plan providing for
<br />the best possible recoveries for Claims against the Debtors. Furthermore, the Released Parties
<br />received a broad release pursuant to the Court's approval of the Released Party Settlement. The
<br />Debtors are also unaware of any valid causes of action against any of the beneficiaries of the
<br />exculpation. Other than the argument that exculpation of non -estate fiduciaries is impermissible
<br />(which is not correct) the UST provides no reasoning as to why the exculpation in this matter is
<br />inappropriate. In view of the foregoing, the exculpation are appropriate and in the best interests
<br />of the Debtors' estates, and the UST Objection should be overruled.
<br />(ff) The Third -Party Release of the Released Parties
<br />Is Appropriate
<br />Third party releases are commonly included in chapter 11 plans under section 1123(b)(6)
<br />of the Bankruptcy Code. Here, the Third -Party Release is limited in scope that is, it only applies
<br />to the Released Parties, which means the DIP Secured Parties, the Prepetition Secured Parties,
<br />their affiliates which purchased the Debtors' assets as part of their credit bid, parties related to the
<br />lenders, and each of their respective directors, employees, and professionals. The Third -Party
<br />Release releases claims held by non -debtor parties againstthe Released Parties, but creditors grant
<br />the release only to the extent that they affirmatively elected to vote in favor of the Plan.
<br />It is well established that "a consensual third -party release is no different from any other
<br />contract or settlement" and that bankruptcy courts therefore "generally approve [such] provisions
<br />in a plan." 8 COLLIER ON BANKRUPTCY ¶ 1141.02[b] (16th ed. 2020). A third -party release
<br />implemented through a debtor's chapter 11 plan is entirely appropriate where, as here, the third
<br />parties consent to such release. Flake v. Schrader -Bridgeport International, Inc., 538 Fed. Appx.
<br />604, 613 (6th Cir. 2013) (upholding a consensual third party release); Food Lion, Inc. v. S.L.
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