Z Gallerie Creditors Pan Bankruptcy Plan to Release Shareholders

Some unsecured creditors of furniture retailer Z Gallerie LLC are pushing back on the company’s decision to release some shareholders and other insiders from liability in its Chapter 11 bankruptcy case.

The court still needs to determine if the proposed releases—including Brentwood ZG LLC and Z Gallerie Founder Holdings LLC, a company that represents the three sibling founders, Joe, Carole, and Mike Zeiden—meet the standard for non-debtor releases, the creditors’ committee said in an April 30 court filing.

Releasing non-debtor third parties from their liabilities isn’t unusual in a Chapter 11 plan, which must be approved by the bankruptcy ...