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Ultimate Escapes liquidation plan draws objection from U.S. Trustee
By Jim Witters
Wilmington, Del., Dec. 1 - Ultimate Escapes Holdings LLP's second amended plan of liquidation drew an objection from the U.S. Trustee, who says the plan is not confirmable, according to documents filed Thursday with the U.S. Bankruptcy Court for the District of Delaware.
"The plan is not confirmable because the debtors are not current with their administrative obligations, including the filing of monthly operating reports and the payment of quarterly fees. Also, the plan contains an exculpation provision that is contrary to applicable law in this district," trustee Roberta A. DeAngelis wrote in the objection.
The debtors have not filed a monthly operating report since February and have not paid any quarterly fees this calendar year, the objection states.
The trustee asks that confirmation of the plan be denied until all fees are paid and all reports are filed.
A typical exculpation clause is meant to insulate liability for postpetition conduct of estate fiduciaries, except for gross negligence and willful misconduct. It should be narrowly defined to include only postpetition actions, the trustee wrote.
"While the exculpation clause in the plan contains a qualifier for postpetition conduct in a particular subset of the provision, the entire exculpation clause should include a qualifier that only postpetition conduct is protected," the objection states.
The exculpation clause in this plan also includes CapitalSource, which is the debtors' prepetition and postpetition lender, and not an estate fiduciary, the objection states.
Ultimate Escapes, a Kissimmee, Fla.-based destination club operator, filed for bankruptcy on Sept. 20, 2010. The Chapter 11 case number is 10-12915.
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