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Purchasing
a §524(g) Injunction
–
When Does the Purchase Price
Become Property of the Plan
Trust?
Section 524(g) of the Bankruptcy
Code permits a debtor, through
a confirmed plan of reorganization,
to obtain a "channeling
injunction" applicable
to mass tort asbestos claims.
Consistent with the broad
liability net cast by the
typical asbestos litigant,
a channeling injunction imposed
under §524(g) may be
extended to "a third
party who is identifiable
from the terms of such injunction
… and is alleged to
be directly or indirectly
liable for the conduct of
claims against, or demands
on the debtor …".
11 U.S.C. §524(g)(4).
Section 524(g) is not without
its hurdles. Among the many
protections built into the
statute by Congress is the
requirement that the proposed
plan not be crammed down over
the dissent of the class or
classes subject to the channeling
injunction. Specifically,
the debtor is required to
segregate the asbestos claimants
contemplated to be subject
to the injunction into one
or more classes, and obtain
the acceptance of at least
75 percent of the ballots
cast by the members of each
such class.
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