Mercon Coffee Loses Bankruptcy Liability Releases for Insiders

Mercon Coffee Corp. failed to get court approval of liability releases for insiders via its bankruptcy plan after a judge determined the releases didn’t abide by the wording of the US Bankruptcy Code.

The Netherlands-based coffee supplier told Judge Michael E. Wiles of the US Bankruptcy Court for the Southern District of New York that it provided releases protecting leaders against litigation to incentivize them stay with the company. But Mercon itself conceded that its theory in support of the releases didn’t meet the requirements of section 503(c) of the bankruptcy code, which governs transfers to insiders, Wiles wrote.

“I ...