Quorum Health U.S. Trustee opposes plan release, exculpation details

By Caroline Salls

Pittsburgh, May 14 – Quorum Health Corp.’s pre-packaged Chapter 11 plan drew an objection on Thursday from Region 3 U.S. trustee Andrew R. Vara, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

“Confirmation should be denied because the plan has overly broad exculpation and non-consensual third-party releases,” Vara said in his objection.

Specifically, Vara said the plan’s exculpation is objectionable because it is not limited to estate fiduciaries, and although unimpaired classes are poised to be reinstated or paid in full for their claims, it is not evident that those creditors are receiving consideration for the release of remaining claims they have against third parties.

In addition, the U.S. Trustee said the confirmation order should make clear that the plan’s third-party releases do not release any claims patients or other general unsecured creditors may have against third parties.

A hearing is scheduled for May 22.

Quorum Health is a Brentwood, Tenn.-based operator and manager of general acute care hospitals and outpatient services. The company filed bankruptcy on April 7 under Chapter 11 case number 20-10766.

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