Instant Brands plan’s exculpation provision too broad, trustee says

By Sarah Lizee

Olympia, Wash., Feb. 8 – Instant Brands Holdings Inc.’s Chapter 11 plan of reorganization drew a limited objection from Region 7 U.S. trustee Kevin M. Epstein, according to documents filed Thursday with the U.S. Bankruptcy Court for the Southern District of Texas.

The U.S. trustee said the plan improperly provides overly broad exculpation coverage to “each independent director of the debtors” in violation of Fifth Circuit case law.

“Only debtors, an official committee and its members, and any independent directors, appointed post-petition by court order, may receive exculpation coverage,” Epstein said in the 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.”

The U.S. trustee said that unless the debtors amend the plan’s exculpation provision, the court should deny confirmation.

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

Instant Brands is a Downers Grove, Ill.-based manufacturer of kitchen and houseware brands, such as Instant Pot, Pyrex, Corelle, CorningWare, SnapWare, Chicago Cutlery and Visions. The company filed bankruptcy on June 12, 2023 under Chapter 11 case number 23-90716.

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