Chapter 11 of the U.S. Bankruptcy Code offers distressed companies the opportunity for a fresh start through a court-approved plan of reorganization. Companies can also efficiently administer their own liquidation under Chapter 11 through a court-approved plan of liquidation. Yet finalizing such plans is no picnic. The process is often contentious, and the plan can be a heavily-negotiated global settlement among many parties with divergent interests. Certain of those parties, such as pre- or post-petition lenders, may have had a long history of involvement with the debtor and may be supporting it financially during and following emergence from bankruptcy.

It comes as no surprise, then, that non-debtor parties involved in the plan process will want the plan to bar other non-debtor parties from bringing claims against them. These release and exculpation provisions have in most cases required the consent of the potential claimants. But debtors have been increasingly requesting non-consensual releases, meaning the releases would be imposed on potential claimants without their consent.

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