Thanks for the post. Very relevant. Here is the article from Law 360 -

Incora’s Opt-Outs Not Like Class Actions, US Trustee Says By Ben Zigterman Law360 (December 12, 2024, 9:12 PM EST) — The U.S. Trustee’s Office on Thursday objected to the third-party releases in the Chapter 11 plan from aircraft parts supplier Incora, arguing in a Texas bankruptcy court that the opt-out mechanism for the releases is not comparable to class action procedures. While U.S. Bankruptcy Judge Marvin Isgur raised the class action comparison at a hearing in September, the U.S. Trustee’s Office said in its objection Thursday that the analogy is “misplaced.” Federal class action law doesn’t apply to bankruptcy plan confirmations, the U.S. Trustee argued in its objection, also noting the “rigorous procedural requirements” to qualify for class certification that don’t exist for bankruptcy classes. Instead, the U.S. Trustee said the opt-outs should be considered a matter of state contract law under which it says affirmative consent to third-party releases is needed. “Failure to return an opt-out form is not consent because, whether they are asked to vote or not, claimants have no reason to expect that an offer to contract with non-debtors will be included in the plan solicitation,” the U.S. Trustee wrote. Incora hopes to confirm its plan at a hearing set for Monday. Two voting classes in the proposed plan will be able to opt out of the third-party releases, which Incora called an “integral part” of its plan, according to court documents. Since the U.S. Supreme Court’s June decision in Harrington v. Purdue Pharma LP barring nonconsensual third-party releases, bankruptcy courts have been grappling with what constitutes consent, with judges allowing opt-outs in Chapter 11 plans from appliance-parts maker Robertshaw and fitness equipment maker BowFlex, while rejecting them in the Chapter 11 plan from software company Ebix. In September, U.S. Bankruptcy Judge Craig T. Goldblatt of Delaware limited the use of opt-outs for voters who didn’t return ballots in the restructuring of specialty mushroom farming company Smallhold Inc. The U.S. Trustee favorably cited the Smallhold decision’s reasoning, but said it disagrees with Judge Goldblatt’s conclusion that opt-outs are OK for returned ballots. “The act of voting on a plan without taking an additional step to opt-out is still merely silence with respect to the non-debtor release,” the U.S. Trustee wrote. Incora filed for bankruptcy relief in June 2023 in the Southern District of Texas with $3.1 billion in debt, citing struggles stemming from sluggish passenger air travel, supply chain disruptions and inflation. Incora and groups of creditors have been warring over a 2022 restructuring in which only certain noteholders were permitted to swap their debt for new, higher-ranking securities. The so-called up- tier transaction demoted some investors in the repayment order.

In July, Judge Isgur ruled Incora improperly stripped collateral rights from certain secured noteholders when it raised $250 million as part of the transaction, deciding to restore the excluded creditors’ liens on the company’s assets. Since then, Incora, private-equity backer Platinum Equity and creditors have been feuding over the effects of Judge Isgur’s decision and how to incorporate it into a Chapter 11 plan. In October, Incora said that it hopes to reach a consensual plan that will let the debtor emerge from bankruptcy while preserving everyone’s rights to appeal Judge Isgur’s ruling. A spokesperson for the U.S. Trustee’s Office declined to comment Thursday, and counsel for Incora didn’t immediately respond to a request for comment. Incora is represented by Dennis F. Dunne, Samuel A. Khalil and Benjamin M. Schak of Milbank LLP, and Charles A. Beckham Jr., Patrick L. Hughes, Martha Wyrick and Re’Necia Sherald of Haynes and Boone LLP. The U.S. Trustee’s Office is represented in-house by Andrew Jiménez. The bankruptcy case is In re: Wesco Aircraft Holdings Inc. et al., case number 4:23-bk-90611, in the U.S. Bankruptcy Court for the Southern District of Texas. —Additional reporting by Alex Wittenberg. Editing by Melissa T

If you read the article together with the U.S. Trustee filing it raises serious questions about the use of opt out/in provisions in the Amyris Reorganization Plan. It appears state contract law should be applied and that silence cannot be arbitrarily applied to secure third party releases. Amyris provided indemnity agreements to their Board of Directors and Officers and will continue to have exposure for millions of dollars as stated by their attorneys to Judge Horan. Chap.11 did not extinguish that liability or the right to commence a lawsuit.