HyLife unit Tritek’s Chapter 11 plan draws U.S. trustee objection

By Sarah Lizee

Olympia, Wash., Sept. 29 – HyLife Foods subsidiary Tritek International Inc.’s Chapter 11 plan drew an objection from Regions 3 and 9 U.S. trustee Andrew R. Vara, according to documents filed Thursday with the U.S. Bankruptcy Court for the District of Delaware.

Vara said the plan is not confirmable because it strips numerous non-debtor parties of their direct claims against other non-debtors without their affirmative consent.

“The parties that are deemed by their silence to consent to give such releases include creditors in voting classes who do not return a ballot, including those creditors who never received the solicitation package, or did not receive it timely, and unimpaired claimants, including holders of administrative claims and priority tax claims, who were not even provided the ability to opt-out of giving releases that are far broader than their unimpaired claims,” the U.S. trustee said in his objection.

He said the plan also shouldn’t be confirmed due to the scope of the claims the debtors will be releasing.

Counsel for the official committee of unsecured creditors indicated in a recent letter to the court that, based upon the investigation it had undertaken, the debtors’ estates may have valuable claims against the debtors’ directors and officers, Vara noted.

But the plan provides that the debtors shall release all claims against their current and former directors, officers, employees, professionals, non-debtor affiliates, and many other released parties.

“Such releases are especially concerning because they make no exception for known or unknown claims of fraud, willful misconduct, gross negligence or criminal acts,” Vara said.

“It is unclear what consideration, if any, will be provided to the debtors’ estates in exchange for such broad releases.”

The U.S. trustee said the plan also includes an impermissibly broad exculpation clause that protects many non-fiduciaries and fails to include the necessary temporal scope.

The plan confirmation hearing is scheduled for Oct. 5.

HyLife Foods is a pork processor based in La Broquerie, Man. U.S.-based subsidiary Tritek filed Chapter 11 bankruptcy on April 27 under case number 23-10520.

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