GT Real Estate disclosure statement draws objection from U.S. trustee

By Sarah Lizee

Olympia, Wash., Sept. 12 – GT Real Estate Holdings, LLC’s disclosure statement for its Chapter 11 plan of reorganization drew an objection on Monday from Regions 3 and 9 U.S. trustee Andrew R. Vara, according to documents filed with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the parent of GT Real Estate is non-debtor DT Sports Holding, LLC, which is owned by Carolina Panthers owner David Tepper.

The proposed plan implements the terms of a plan support and sponsorship agreement with DT Sports.

Under the plan, priority contractor claims and secured contractor claims will be channeled to a $60 million settlement trust funded by DT Sports, while general unsecured claims, including unsecured contractor claims, are also channeled to the settlement trust and will receive payment from a $500,000 cash pool, as well as remaining funds from the settlement trust.

The channeling is supported by non-debtor releases and an injunction that will channel the debtor’s liability to holders of contractor claims and general unsecured claims, along with the liability of the plan sponsor and many other non-debtors, to the settlement trust. Under the plan, the settlement trust will become the sole source of recovery for these claimholders.

Releases of non-debtor third parties will be imposed on all holders of claims and interests, whether or not they have voted to accept the plan.

“The proposed channeling injunction resembles the injunctions that have historically been featured in Chapter 11 cases involving product liability claims for which injuries and claims are expected to arise indefinitely into the future,” Vara said in his objection.

“However, this case does not involve tort claims, making the proposed channeling injunction unusual.”

The U.S. trustee said the legality and enforceability of the channeling injunction is ultimately a question for confirmation.

Vara also said the disclosure statement doesn’t provide enough information to creditors about the releases.

The U.S. trustee added that the scope of the third-party releases is too broad, and the exculpation and settlement provisions make the plan unconfirmable.

The disclosure statement is scheduled for Sept. 19.

The Charlotte, N.C.-based real estate company filed Chapter 11 bankruptcy on June 1 under case number 22-10505.

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