SiO2 Medical’s plan ‘patently unconfirmable,’ U.S. trustee says

By Sarah Lizee

Olympia, Wash., May 11 – SiO2 Medical Products, Inc.’s disclosure statement for its Chapter 11 plan drew an objection from the U.S. trustee overseeing the case, according to documents filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

Regions 3 and 9 U.S. trustee Andrew R. Vara said the disclosure statement shouldn’t be approved because the plan is “patently unconfirmable.”

“The debtors are unable to meet these statutory requirements because they themselves do not know at this early juncture in these cases what will occur with respect to the estates’ assets,” the U.S. trustee said in his objection.

Vara noted that bids are not due until after the disclosure statement hearing and after the proposed plan vote deadline, and investigations into possible causes of action and possible challenges to at least portions of secured lender claims are still in their infancy.

“These events may have a significant impact on creditor recoveries, and they are not adequately explained in the disclosure statement,” he said.

Vara said the plan is also patently unconfirmable due to the scope of the third-party releases, the debtor releases and the parties receiving exculpation.

The plan imposes non-consensual third-party releases on numerous non-debtor parties, and a related-parties clause expands the universe of those who will be stripped of their claims against non-debtors “by way of a labyrinth of terms and definitions,” the U.S. trustee said.

The disclosure statement hearing is scheduled for May 16.

The Auburn, Ala.-based company creates and manufactures engineered primary packaging container components for the pharmaceutical and biotechnology industry. The company filed bankruptcy on March 29 under Chapter 11 case number 23-10366.

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