MatlinPatterson fund’s disclosure statement draws trustee objection

By Sarah Lizee

Olympia, Wash., April 26 – MatlinPatterson Global Opportunities Partners II LP’s disclosure statement for its amended Chapter 11 plan of liquidation drew an objection from Region 2 U.S. trustee William K. Harrington, according to documents filed Tuesday with the U.S. Bankruptcy Court for the Southern District of New York.

Harrington said the disclosure statement should be denied because it would impose third-party releases on the debtors’ creditors and interest holders by deeming the releases to be consensual unless those creditors and interest holders actively opt out.

In addition, approval should be denied because the plan would impose third-party releases on persons and entities who are not party to the bankruptcy cases, not entitled to any distributions under the plan, will not receive notice of the plan or third-party releases, and will not have any opportunity to opt-out, the U.S. trustee said.

Harrington also said that approval should be denied because the plan’s proposed exculpation provision is overly broad.

MatlinPatterson is a New York-based distressed debt and credit opportunities fund. The company filed bankruptcy on July 6, 2021 under Chapter 11 case number 21-11255.

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