Nautical Solutions’ Chapter 11 plan draws objection from U.S. trustee

By Sarah Lizee

Olympia, Wash., Feb. 10 – Nautical Solutions, LLC’s pre-packaged Chapter 11 plan of reorganization drew a limited objection Thursday from Region 7 U.S. trustee Kevin M. Epstein, according to documents filed with the U.S. Bankruptcy Court for the Southern District of Texas.

Epstein said the plan improperly provides overly broad exculpation coverage to the independent manager and member of the debtors’ special committee.

“Only debtors, an official committee and its members, and any independent directors may receive exculpation coverage,” the U.S. trustee said in his objection.

“While a debtor may choose to release its claims against third parties consistent with its business judgment, the Bankruptcy Code and controlling precedent prohibit non-consensual third-party limitations of liability against non-debtors.”

Epstein said that unless the debtors conform the plan’s exculpation provision, the court should deny confirmation.

A combined hearing on confirmation of the plan and approval of the disclosure statement is scheduled for Feb. 15.

Nautical Solutions is a deepwater drilling servicer based in Dallas. The company filed bankruptcy on Jan. 9 under Chapter 11 case number 23-90002.

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