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42. The Court’s conclusion of law is incorrect. It is unclear whether Baron will be free of
litigation where, as here, the Plan is nothing but a pretext to seize non-debtor assets and provide
protection under § 363 to the Receiver, Trustee and others. Baron is at risk that such releases
will not be enforced and will be forced to defend such claims with “residual cash” from an
improper sale of assets that should have been valued for at least $60,000,000. Indeed, Baron
will still have to respond to attempts by dissatisfied litigants who seek to sue Baron and
challenge the § 363 protection the Court proposes to grant Baron. The fees from simply
asserting a § 363 defense will likely be substantial. The Receiver’s and Trustee’s primary goal is
to avoid potential litigation or claim by Mr. Baron for misconduct alleged in the district court,
the Fifth Circuit and the district court proceedings. The Court finds that Mr. Baron will “receive
residual cash of a few million dollars,” Baron notes that, by operation of the Global Settlement
Agreement in late 2010, Mr. Sherman was given $1.8 million to satisfy all claims of the
receivership. Even though the debts of the estate did not exceed $767,000, Mr. Sherman
nevertheless found reasons to continue the bankruptcy and bill the estate millions. There is no
evidence that Sherman will not continue to waste the assets entrusted to him. The Court should
not, as a matter of law or equity, provide protection to the Receiver, or approve this kind of plan
under the facts and circumstances of this case.
43. The Court’s conclusions of law on the releases are incorrect. “Pacific Lumber does not
restrict the availability of settlements of claim under § 1123(b)(3)(A) thus provid[ing] an avenue
for a Chapter 11 plan to provide for releases of liability for non-debtors. But, such releases must
satisfy the requirements of a valid settlement of claims under the Code. It would require, inter
alia, consent and consideration by each participant in the agreement to be valid.” In re Bigler LP,
442 BR 537, 545-6 (Bankr. Court, SD Texas 2010)(holding exculpation clause not a valid
Case 09-34784-sgj11 Doc 1000 Filed 12/06/12 Entered 12/06/12 00:02:46 Desc