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Case 1 20-bk-12043 Doc 573 Filed O1/13/21 Entered 011131211103 53 Desc Main <br />Document Page 21 of 44 <br />Case 1 20-bk-12043 Doc 573 Filed 01/13/21 Entered 01113/21 11:03 53 Desc Main <br />Document Page 22 of 44 <br />debtor is a corporation of a provision prohibiting the issuance of <br />nonvoting equity securities, and providing, as to the several classes of <br />securities possessing voting power, an appropriate distribution of such <br />power among such classes. " 11 U S C § I123(a)(6). Here, section <br />1123(a)(6) is not applicable to these Chapter 11 Cases because the Debtors <br />are being liquidated pursuant to the Plan <br />• Section 1123(a)(7). Section 1 l23(a)(7) of the Bankruptcy Code requires <br />that a plan "contain only provisions that are consistent with the interests <br />of creditors and equity security holders and with public policy with <br />respect to the manner of selection of any officer, director, or trustee under <br />the plan and any successor to such officer, director, or trustee" 11 U S C. <br />§ 1123(a)(7) No directors and officers are being appointed following the <br />Effective Date in these Chapter I 1 Cases In addition, on December 15, <br />2020, the Committee disclosed in the Notice of Filing of Selection of <br />Liquidating Trustee and Liquidating Trust Board Representatives and <br />Filing of Form of Liquidaung Trust Agreement (Docket No 563) (the <br />" Llpuidatine Trustee Notice") the selection of GlassRamer Advisory & <br />Capital Group, LLC d/b/a B Riley Advisory Services as the Liquidating <br />Trustee and Whayne Supply Company, Phillips Machine Service, Inc, <br />Genco Mine Service, Joy Global Underground Mining, LLC, and Austin <br />Sales LLC as Liquidating Trust Board Representatives The Plan, <br />therefore, satisfies section 1123(a)(7) of the Bankruptcy Code <br />3. Discretionary Contents of the Plan (I123(b)) <br />(a) Generally <br />Section 1123(b) of the Bankruptcy Code identifies various discretionary provisions that <br />may be included in a chapter 11 plan but are not required. For example, a plan may impair or leave <br />unimpaired any class of claims or interests and provide for the assumption or rej action of executory <br />contracts and unexpired leases I I U S C § 1123(b)(1), (2) A plan also may provide for (i) "the <br />settlement or adjustment of any claim or interest belonging to the debtor or to the estate," (it) "the <br />retention and enforcement by the debtor, by the trustee, or by a representative of the estate <br />appointed for such purpose, of any such claim or interest," or (m) "the sale of all or substantially <br />all of the property of the estate, and the distribution of the proceeds of such sale among holders of <br />claims or interests " Id §§ 1123(b)(3)(A)-(B), (b)(4) Finally, a plan may "modify the rights of <br />holders of secured claims or unsecured claims, or leave unaffected the rights of holders of <br />21 <br />Case 1,20-bk-12043 Doc 573 Filed Ol/13/21 Entered 01/13/2111 03 53 Desc Main <br />Document Page 23 of 44 <br />plan, provided that the confirmed plan contain a third parry release and other provisions consistent <br />with the Released Parry Settlement, and (m) the release of all claims against the Debtors' estates, <br />subject to recoupment by the Released Parties of the settlement amounts paid to the Debtors' <br />estates See Released Party Settlement, r 1-3, 4(a) <br />Most relevant for the issue of plan confirmation, the Released Party Settlement provided <br />that (i) the Proponents shall pursue confirmation of a chapter 11 plan of liquidation, (11) all creditors <br />voting in favor of the plan release the Released Parties under terms consistent with provisions of <br />the Released Party Settlement (i a the Thud Party Release), (m) the Released Panics shall be <br />exculpated from all post -petition actions under the Plan under the standard exculpation provision <br />applicable to estate professions (i a the inclusion of the Released Parties in the definition of <br />Exculpated Parties), and (iv) the Plan would be consistent with the terms of the Released Party <br />Settlement (i e the Debtor Release") See Released Party Settlement, 1? 5-6 The provisions of the <br />Article XI of the Plan do nothing more than codify or effectuate the terms of the Released Party <br />Order <br />(1) The Plan's Release and Exculpation Provisions are <br />Appropriate <br />Article XI of the Plan contains provisions that provide form exculpation provision m favor <br />of the Exculpated Parties (Section 1103), a release by the Releasing Panics of certain Claims <br />against the Released Parties (Section 11 04) (the "Third -Party Release'), and the release of <br />claims by the Debtors and their Estates against the Released Parties (Section 11 05) (the "Debtor <br />Release") The term "Released Parties" means (i) the DIP Secured Parties, (u) the Prepctition <br />Secured Panics, (in) Pledge Servicing Partners, LLC, (iv) ARC Financial Partners, LLC, (v) <br />Appalachian Resource Company, LLC and (vi) with respect to each of the foregoing parties in <br />clauses (i) through (v), such party's respective current and former affiliates, and such party's and <br />any class of claims" and may "include any other appropriate provision not inconsistent with the <br />applicable provisions of [Title I I] "Id §§ 1123(b)(5)-(6) <br />As described above, the Plan provides for (i) the impairment of certain classes of Claims <br />and Interests, while leaving others Unimpaired, thereby modifying the rights of the holders of <br />certain Claims and Equity Interests and leaving the rights of others unaffected,4 and (it) the <br />assumption or rejection of executory contracts and unexpired leases in which the Debtors are <br />parties (Article VII of the Plan) <br />(b) Specific Provisions <br />Section 1123(b)(6) of the Bankruptcy Code provides that a chapter 11 plan may "include <br />any other appropriate provision not inconsistent with the applicable provisions of [the Bankruptcy <br />Code] " 1 I U S C § 1123(b)(6). Here, the Plan contains vantrus provisions in accordance with the <br />discretionary authority granted under section 1123(b) of the Bankruptcy Code <br />The majority of the relief requested related to exculpation and releases has been previously <br />approved by this Court On November 2, 2020, the Court entered the Order Approving Settlement <br />Agi eenrent utth Prepennon Scented Parties and DIP Secured Parties, Pursuant to Bankruptcv <br />Rule 9019 (Doc No 483) (Docket No 504) (the "Released Party Order') which approved a <br />settlement agreement between the Debtors, Committee and Released Parties (the "Released Party <br />Settlement') In part, the Released Parry Order approved the Released Parry Settlement, which <br />contained a release of claims against the Released Parties In exchange for such release, the <br />Released Panics agreed to, among other things, (i) the immediate payment of $400,000 to the <br />Debtors' estates, (u) the payment of $100,000 to the Debtors estates upon the Effective Date of a <br />4 The follouvig Classes are Imparted I, 2, 4, 5, end 6 The following Class is Ummpaued 2 <br />22 <br />Case 1 20-bk-12043 Doc 573 Filed 01/13/21 Entered 01/13/211103 53 Desc Main <br />Document Page 24 of 44 <br />their current and former affiliates' current and former officers, managers, directors, equity holders <br />(regardless of whether such interests are held directly or indirectly), predecessors, successors, and <br />assigns, subsidiaries, principals, members, employees, agents, managed accounts or funds, <br />management companies, fund advisors, advisory board members, financial advisors, partners, <br />attorneys, accountants, investment bankers, consultants, representatives, and other professionals <br />Notably, the Plan does not provide for a discharge of the Debtors (Section 11 01) and does <br />not release any Causes of Action or Avoidance Actions unless previously released by the Debtors <br />under the DIP Order, the Sale Order, the Settlement Agreement or the Released Party Order <br />(Section 11 02) As discussed below, each ofthese provisions is permissible under section 1123(b) <br />of the Bankruptcy Code and appropriate in these Chapter 11 Cases <br />(1) The Exculpation and Limitation of Liability is <br />Appropriate <br />Among the permissive provisions customarily included in chapter 11 plans in this Circuit <br />(and elsewhere) under section 1123(b)(6) are exculpation provisions See, eg, In re Murrav <br />Energy Holdings Ca, Case No 19-56885 OEH) (Docket No 2135) (Bankr S D Ohio Aug 31, <br />2020) (approving an exculpation provision in a plan in its entirety) In re Alpha Natural Res , Inc, <br />556 B R 249, 260 (Baal¢ E D Va. 2016) ("Exculpation provisions m the one in the Debtors' <br />Plan [i e , exculpation provision with respect to the Debtors' retained professional] are not unusual <br />and generally are permissible, so long as they are properly limited and not overly broad") (internal <br />quotations removed), see also In re Nat'l Heritage Found, Inc, 478 B R 216, 234 (Banks. E D <br />Va 2012), In to PWSHoldmg Corp, 228 F 3d 224, 245-47 (3d Cir 2000) (exculpation provisions <br />are "commonplace in Chapter 11 plans ", Bluseth v Credit Suisse, 961 F 3d 1074 (9th Cir <br />2020) As the PWS Holding court noted, such clauses are not true releases, but instead "sets forth <br />the appropriate standard for liability " Al at 246 Such provisions also are consistent with public <br />23 24 <br />