Roust U.S. Trustee opposes attempt to get ‘rubber stamp’ plan approval

By Caroline Salls

Pittsburgh, Jan. 5 – The U.S. Trustee overseeing Roust Corp.’s Chapter 11 bankruptcy case objected to confirmation of the company’s pre-packaged plan of reorganization in a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

“A little over three years after emerging from their last expedited pre-packaged bankruptcy case filed in the District of Delaware, the debtors, in unprecedented fashion, request that this court, in essence, rubber stamp what can more properly be characterized as a pre-petition bankruptcy case,” Region 2 U.S. trustee William K. Harrington said in his objection.

Specifically, Harrington said Roust is attempting to avoid scrutiny and the procedural protections of the bankruptcy process.

The U.S. Trustee said the Roust debtors expect the court to approve confirmation of their plan and disclosure statement less than a week after they filed their bankruptcy cases on the Friday of a holiday weekend, and parties in interest were directed to file any objections to the plan and disclosure statement before the cases were filed.

Harrington said the supporting documents for the plan “spanned thousands of pages.”

“In addition to the unprecedented speed at which these cases are proceeding, the proposed plan is unconfirmable because it contains numerous provisions which do not appear to comply with applicable provisions of the Bankruptcy Code,” the objection said.

The U.S. Trustee said those provisions include overbroad and impermissible release, injunction and exculpation provisions, an improper designation of some classes as unimpaired, inadequate evidence of plan feasibility, inadequate information regarding the release of claims for loans and accrued interest and impermissible requests for approval of management incentive plan provisions and assumption or rejection of contracts.

Roust, a White Plains, N.Y.-based producer of alcoholic beverages, filed bankruptcy on Dec. 30. Its Chapter 11 case number is 16-23786.

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