Murray Kentucky Energy, Inc. v. Ceralvo Holdings, LLC, No. 19-6038 (8th Cir. 2020)
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The Bankruptcy Appellate Panel affirmed the bankruptcy court's order denying Murray's motion to enforce the order confirming debtors' third amended plan of reorganization and to enjoin parties from asserting claims barred by the third amended plan. Murray claimed that their purchase of debtors' assets "free and clear" under section 363, together with the release provision in the confirmed plan, precluded their liability for indemnification payments for litigation expenses accruing after the effective date of the plan. The bankruptcy court held that neither 11 U.S.C. 1141(d), Kentucky law, nor the language of the confirmed plan released Murray from its contractual or contingent indemnity obligations.
The panel held that the bankruptcy court did not abuse its discretion in determining the confirmed plan requires Murray to comply with the contractual indemnity obligations. The court held that the bankruptcy court followed principles of contract assignment and interpretation in reaching its conclusions about which obligations Murray assumed and which were released, upholding the agreements and the confirmed plan as written, rather than as Murray wants to rewrite them.
Court Description: [Saladino, Author, with Nail, Chief Judge, and Sandberg, Bankruptcy Judge] Bankruptcy Appellate Panel. The bankruptcy court did not err in determining that Murray's purchase of debtors' assets "free and clear" under section 363, together with the release provisions in the confirmed plan, did not preclude Murray's liability for indemnification payments for litigation expenses accrued after the effective date of the plan. [ April 22, 2020 ]
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