Law360 reports that the Chapter 11 reorganization plan for health insurance technology company Benefytt Technologies has been approved by U.S. Bankruptcy Judge Christopher M. Lopez, who rejected claims that the plan improperly releases the company‘s owner Madison Dearborn Partners from liability. Lowenstein Sandler’s Bankruptcy & Reorganization Department represented the Official Committee of Unsecured Creditors.
Pursuant to the plan, Benefytt will be split into two companies: a “cash flow” company that owns Benefytt's existing contracts and related revenue streams which will be owned by the Debtors’ prepetition term lenders, and an operating company that was purchased by private equity firm, Madison Dearborn and certain co-investors through a credit bid of the debtor-in-possession loan provided to fund the Debtors’ bankruptcy cases. The plan provides for preferred equity in cash flow company, approximately $5 million in cash, and the preservation of certain causes of action for the benefit of general unsecured creditors.
According to Law360, “Judge Lopez allowed the plan to proceed, saying the third-party releases were not objectionable because they are optional and don't preclude the claimants from going after Benefytt in the future, as long as they themselves don't sign the releases.”
The Lowenstein team included Jeffrey Cohen, Eric Chafetz, Keara Waldron, Phillip Khezri, and Brittany Clark as co-counsel with McDermott Will & Emery LLP for the Official Committee of Unsecured Creditors.
