Aerosoles U.S. Trustee objects to Chapter 11 plan release provisions

By Caroline Salls

Pittsburgh, Jan. 2 – The U.S. Trustee overseeing the Chapter 11 case of AGI HoldCo, Inc., which does business as Aerosoles, objected to third-party release provisions contained in the company’s proposed plan of reorganization, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

“The plan is not confirmable to the extent it provides for a third-party release by non-voting classes, including general unsecured creditors, without having provided affected parties in interest an opportunity to opt out of the proposed third-party releases,” acting Region 3 U.S. Trustee Andrew R. Vara said in his objection.

Vara said the plan calls for mutual releases between the Aerosoles debtors and other released parties, including current and former officers and directors, pre-bankruptcy secured parties, the company’s debtor-in-possession financing agent, the official committee of unsecured creditors, all purchasers and all holders of general unsecured claims.

In addition, Vara said “it is also not clear that the released parties have made any substantial contribution to the plan,” and the company has not proven that the releases are necessary to its reorganization.

A hearing is scheduled for Jan. 9.

Aerosoles is an Edison, N.J.-based global footwear company. The company filed bankruptcy on Sept. 15 under Chapter 11 case number 17-11962.

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