Cutera Bankruptcy Liability Shields Prompt Government Opposition

Cutera Inc.'s plan to reorganize in bankruptcy contains impermissible features that would broadly release related third parties from potential lawsuits without proper consent from affected creditors, a Justice Department unit said.

The dermatology and aesthetics device company’s Chapter 11 plan should be rejected and pared down insofar as it proposes to discharge potential legal claims against a host of company insiders, advisers and top creditors, the US Trustee’s office said in a filing Wednesday with the US Bankruptcy Court for the Southern District of Texas.

Creditors or other stakeholders who may not know about the release provisions would be beholden ...