FedNat’s Chapter 11 plan draws objection from U.S. trustee

By Sarah Lizee

Olympia, Wash., Sept. 27 – FedNat Holding Co.’s Chapter 11 plan of liquidation drew an objection from Region 21 U.S. trustee Mary Ida Townson, according to documents filed Wednesday with the U.S. Bankruptcy Court for the Southern District of Florida.

The U.S. trustee said the court should deny confirmation of the plan on the basis that it provides for non-consensual third-party releases that are contrary to and more expansive than the limited release under the bankruptcy code.

The plan also seeks to release liens on undisclosed estate assets and provides for specific discharge provisions “buried in no less than 10 provisions” in the plan, she said.

“Due to these issues, the plan proponents should be instructed by this court to present an amended plan of liquidation that redresses and resolves these issues before this court rule on confirmation,” the U.S. trustee said in her objection.

“Absent those amendments, confirmation of this instant plan of liquidation should be denied and the case converted so that an independent estate fiduciary may be appointed to administer and liquidate the remaining estate assets for the benefit of the estate and its creditors.”

The final hearing on the plan is scheduled for Oct. 10.

The insurance holding company, which is based in Sunrise, Fla., filed bankruptcy on Dec. 12, 2022. The Chapter 11 case number is 22-19451.

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