U.S. Trustee Tracy Hope Davis is opposing the effort by Dynegy Inc and its Dynegy Holdings LLC unit to emerge from chapter 11 bankruptcy, saying that their reorganization plan may improperly limit the ability of third parties to bring liability claims, Reuters reported yesterday. Davis filed an objection to the plan on Monday in bankruptcy court, just nine days before a Sept. 5 hearing in which Dynegy hopes to win court approval of its reorganization. Dynegy this week said its plan had won overwhelming support from creditors holding about $3.5 billion of claims. But Davis, whose office oversees bankruptcy cases in the New York area, said that the power producer has not shown that its proposed "broad, non-consensual third party releases of liability" comply with bankruptcy law, and that such releases are proper only in rare circumstances.
