Reliance Upon J. Alix Protocol May Preclude Exculpation in the Fifth Circuit

January 31 2023| News| | By Okin Adams

Okin Adams’s Partner and Bankruptcy and Restructuring Attorney David Curry and Bankruptcy and Restructuring Attorney Edward Clarkson recently collaborated on an article for the American Bankruptcy Institute’s Business Reorganization Committee, discussing how the reliance on the J. Alix Protocols could preclude exculpation for certain estate professionals in the Fifth Circuit.

Chapter 11 plans providing for nonconsensual releases of claims against parties other than a debtor are strictly prohibited in the Fifth Circuit. While this prohibition has generally been interpreted broadly to preclude exculpation for most estate professionals, the Fifth Circuit recently recognized an exception for estate fiduciaries whose employment has been approved by the bankruptcy court. 

Read the full article on American Bankruptcy Institute’s website for an analysis of how adherence to the J. Alix protocol, however, may preclude estate fiduciaries from benefiting from this new exception. (subscription is required).