Testing Post-Purdue ‘Altered Legal Landscape,’ UST, SEC Take Aim at CalAmp Plan’s Shareholder Releases

Relevant Documents: U.S. Trustee Objection SEC Objection Voting Tabulation Ahead of the confirmation hearing on CalAmp’s prepackaged plan set for Thursday, July 11, at 9:30 a.m. ET, the U.S. Trustee and the U.S. Securities and Exchange Commission have objected to the plan, each focusing largely on the plan’s proposed releases by public shareholders. The UST and SEC argue that shareholders’ releases are nonconsensual, as they are not receiving distributions or consideration in exchange for the releases, and the plan requires the shareholders to affirmatively opt out of the releases. The SEC points directly to the Supreme Court’s recent ruling in Purdue Pharma, saying it “has altered the legal landscape in the area of third-party releases” and that “[p]ast precedent must be reexamined through the lens of that decision.” According to the SEC, a “shareholder’s failure to return an unsolicited form to opt-out of a release is insufficient evidence of consent to the release,” which is required under Purdue. The SEC adds that nonconsensual third-party releases are no longer permissible and that the “only basis for approving a nondebtor release that might remain post-Purdue is an adequate showing by the plan proponent that the release is consensual,” which it argues the[...]