Behrmann, et al. v. Nat'l Heritage Foundation, et al., No. 10-2015 (4th Cir. 2011)Annotate this Case
Following a state court judgment of over six million dollars entered against NHF in Texas, NHF filed a voluntary petition in the U.S. Bankruptcy Court, seeking to reorganize under Chapter 11 of the Bankruptcy Code. At issue was were the circumstances under which a bankruptcy court could approve nondebtor release, injunction, and exculpation provisions as part of a final plan of reorganization under Chapter 11. The court held that equitable relief provisions of the type approved in this case were permissible in certain circumstances. A bankruptcy court must, however, find facts sufficient to support its legal conclusion that a particular debtor's circumstances entitled it to such relief. Because the bankruptcy court in this case failed to make such findings, the district court erred in affirming the bankruptcy court's confirmation order. Accordingly, the court vacated the judgment of the district court and remanded for further proceedings.