Sequential Brands: U.S. trustee objects to plan’s third-party releases

By Sarah Lizee

Olympia, Wash., Feb. 16 – Sequential Brands Group, Inc.’s Chapter 11 plan of liquidation drew an objection Tuesday from Regions 3 and 9 U.S. trustee Andrew R. Vara, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

Vara said the plan should not be confirmed because it imposes third-party releases on various non-debtor parties without their consent, merely because those parties are related in some fashion to one the debtors’ secured lenders, or to the debtors themselves.

“Not only will no affirmative consent be sought from such related parties, but they also will not be provided any ability to opt out of such releases, and in most cases will not even receive notice that such releases will be forced on them, because they are not themselves creditors of the debtor,” the U.S. trustee said in his objection.

Vara said they include all current and former employees of the debtors’ lenders, all current and former employees of the affiliates of the debtors’ lenders, and all current and former employees of the debtors’ affiliates.

“There is no basis or justification in these cases for the approval such non-consensual third-party releases under the bankruptcy code,” Vara said.

The plan confirmation hearing is scheduled for Feb. 22.

New York-based Sequential Brands owns, manages and licenses consumer brands across multiple industries. The company filed bankruptcy on Aug. 31 under Chapter 11 case number 21-11194.

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