Gulf Coast Health Bankruptcy Plan Rejected Because of Releases

Bankrupt former nursing home operator Gulf Coast Health Care LLC lost its bid for approval of a liquidation plan that would have guaranteed unsecured creditors at least $10 million.

The plan improperly provides that third parties would be releasing non-debtors from liquidation claims without those claimants’ consent, Judge Karen B. Owens of the U.S. Bankruptcy Court for the District of Delaware said at a hearing Wednesday.

Owens said she would have otherwise approved the plan.

The plan would have allowed creditors to recover more than they would from a Chapter 7 liquidation, passing a key test for court confirmation, she ...