Clare Oaks U.S. Trustee says statement lacks details on plan releases

By Caroline Salls

Pittsburgh, Aug. 18 – The U.S. Trustee overseeing Clare Oaks’ Chapter 11 case objected to the disclosure statement for the company’s proposed Chapter 11 plan, according to a Monday filing with the U.S. Bankruptcy Court for the Northern District of Illinois.

U.S. trustee Patrick Layng said in his objection that he intends to object to the release and exculpation provisions in the company’s first amended plan of reorganization.

Specifically, Layng said the proposed releases “are somewhat narrow in who they bind (creditors voting in favor of the plan), but quite broad in who and what they cover.”

Although the legal permissibility of the release provisions is a confirmation issue, Layng said the disclosure statement should provide some indication as to how the plan sponsors will meet their burden of showing the releases are necessary.

The U.S. Trustee said Clare Oaks’ disclosure statement does not make clear what consideration supports the releases for each releasee or indicate why a release is necessary to the plan as a whole.

The disclosure statement hearing is scheduled for Aug. 19.

Clare Oaks is a Bartlett, Ill.-based senior living facility. It filed bankruptcy on June 11, 2019 under Chapter 11 case number 19-16708.

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