Saying that the plan contains many releases from creditors that cannot be assumed and are overly broad because they release the debtor from liability of claims not related to the bankruptcy, the U.S. Trustee asked the DE bankruptcy court to reject Pacific Sunwear’s plan of reorganization. A particular bone of contention appears to be the relative treatment given to unsecured trade creditors, who will be paid 100% of their claims over time, and the other unsecured creditors, whom the objection estimates will get only 2%.

PacSun, in a declaration from CEO Gary Schoenfeld, contends that this favorable treatment for trade creditors ... Log in to view full article.