Trump U.S. trustee eyes plan denial claiming releases are ‘overbroad’

By Kali Hays

New York, March 9 – Trump Entertainment Resorts, Inc.’s U.S. Trustee, Andrew R. Vara, filed an objection to the company’s third amended joint plan of reorganization with the U.S. Bankruptcy Court for the District of Delaware on Monday.

Vara claims that the plan is not confirmable “because it contains third party releases and exculpation provisions” that are illegal.

Specifically, the plan contains language that gives a liability release to all voting holders of allowed general unsecured claims unless they choose to opt-out of the release, but those that fail to return a ballot will be automatically included among the released parties.

“The vast majority of parties sought to be released have not provided a critical financial contribution necessary to render the plan feasible. To the extent holders of general unsecured claims do not affirmatively indicate their consent to the non-debtor releases, they should not be approved,” the objection stated.

Vara went on to say that Trump’s proposed exculpations are “overbroad” and “impermissible” and that “the list of parties receiving exculpation should be limited to those parties who served in the capacity of estate fiduciaries, i.e., the creditors’ committee, its members, estate professionals and the debtors’ directors and officers.”

The confirmation hearing is set to begin March 12.

Trump Entertainment Resorts, an Atlantic City-based owner and operator of casino resort properties, filed for bankruptcy on Sept. 9. The Chapter 11 case number is 14-12103.

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