firm news | media mention
The U.S. Court of Appeals for the Third Circuit has affirmed Alecto Healthcare Services LLC’s eligibility for Subchapter V relief and confirmation of its Chapter 11 plan, resolving challenges raised by a group of judgment creditors.
In a precedential opinion, the Third Circuit agreed that a disputed obligation did not count toward the statutory debt limit governing Subchapter V eligibility. The court found that the debt was contingent and unliquidated when Alecto filed for bankruptcy because the creditor had not provided the written demand required under the governing agreement.
The Third Circuit also upheld the bankruptcy court’s approval of a settlement resolving potential claims against Alecto’s officers and directors. The court concluded that the bankruptcy court acted within its discretion in approving the settlement and confirming the plan over the creditors’ objections.
“The reorganized debtor is pleased with the court’s opinion,” said Jeff Waxman, counsel to Alecto and a partner in the bankruptcy and restructuring practice at Morris James.
The decision leaves Alecto’s confirmed plan intact and provides precedential guidance on how contingent and unliquidated obligations should be evaluated when determining eligibility for Subchapter V.
Morris James Partner Jeff Waxman represented Alecto Healthcare Services in the bankruptcy proceedings and appeals before the Delaware District Court and Third Circuit Court of Appeals. Chuck Kunz and Doug Candeub joined him in the appellate proceedings.
The case is The Reed Action Judgment Creditors v. Alecto Healthcare Services LLC, No. 25-1853, in the U.S. Court of Appeals for the Third Circuit. The underlying proceeding is In re Alecto Healthcare Services LLC, No. 23-10787, in the U.S. Bankruptcy Court for the District of Delaware.
“The reorganized debtor is pleased with the court’s opinion,” said Jeff Waxman, counsel to Alecto.
