Continental Airlines’ approved bankruptcy plan of reorganization improperly barred shareholder securities fraud claims against the company’s non-debtor directors and officers because there was no evidence that the release of those claims was either integral to the plan’s feasibility or fair to the shareholders, the 3rd U.S. Circuit Court of Appeals concluded Feb. 1 (In re Continental Airlines, 3d Cir., No. 98-5509, 2/1/00).

In reaching that conclusion, the appeals court noted that “[t]he hallmarks of permissible non-consensual releases — fairness, necessity to the organization, and specific factual findings to support these conclusions — are all absent here.”

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