Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

The Bankruptcy StrategistFeaturesBankruptcyLitigation

Fifth Circuit Weighs In on Scope of Releases and Exculpation

By Francis J. Lawall and Nathaniel T. DeLoatch
October 01, 2022

The scope of releases obtainable within a Chapter 11 plan remains a hot issue, as evidenced by high-profile cases such as the Boy Scouts and Mallinckrodt. A standard and noncontroversial form of release often found in a plan involves exculpation provisions that typically hold debtor personnel, committee members and their professionals harmless for actions taking in connection with the prosecution of the bankruptcy case itself. In an important recent U.S. Court of Appeals for the Fifth Circuit decision, the court explored whether exculpation provisions protecting more than just the debtor and committee are appropriate. In the same decision, the scope of equitable mootness was considered, and limited to allow the appeal of an order confirming a substantially consummated liquidating plan that was argued (and found) to contain overly broad exculpation relief. See, Highland Capital Management v. NexPoint Advisors, No. 21-10449 (5th Cir. Aug. 19, 2022).

In October 2019, Highland Capital Management (Highland Capital) filed Chapter 11 in Delaware. The case was later transferred, at the request of the Unsecured Creditors' Committee, to the U.S. Bankruptcy Court for the Northern District of Texas.

The bankruptcy case was remarkably litigious, due in no small part to the committee's successful attempt to remove Highland Capital's co-founder, James Dondero, from his positions as both an officer and director of Highland Capital. Subsequently, Dondero, acting individually and through various entities in which he held a controlling interest, objected throughout the case to almost every action taken by the committee, Highland Capital, and the independent directors approved by the court to control Highland Capital during the bankruptcy case.

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Major Differences In UK, U.S. Copyright Laws Image

This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.

The Article 8 Opt In Image

The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.

Strategy vs. Tactics: Two Sides of a Difficult Coin Image

With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.

Removing Restrictive Covenants In New York Image

In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?

"Holy Fair Use, Batman": Copyright, Fair Use and the Dark Knight Image

The copyright for the original versions of Winnie the Pooh and Mickey Mouse have expired. Now, members of the public can create — and are busy creating — their own works based on these beloved characters. Suppose, though, we want to tell stories using Batman for which the copyright does not expire until 2035. We'll review five hypothetical works inspired by the original Batman comic and analyze them under fair use.