In a recent ruling, a Florida bankruptcy judge has determined that California plaintiffs with tort claims against Bird Global Inc. cannot prevent the confirmation of the company’s Chapter 11 plan while they pursue an appeal. This decision is influenced by the plan’s third-party releases.
Judge Denies Stay of Confirmation
During a Zoom hearing, U.S. Bankruptcy Judge Corali Lopez-Castro denied the plaintiffs’ request for a stay on the confirmation of the plan. The judge found that the plaintiffs had not demonstrated a strong likelihood of success on appeal or shown that they would suffer irreparable harm without the stay.
Judge Lopez-Castro referenced evidence from the confirmation hearing, which indicated that tort claimants, including the California plaintiffs, would receive full compensation. She noted that granting a stay would delay payments to numerous creditors and other claimants who did not request the stay.
Plan Confirmed Despite Objections
On August 1, Judge Lopez-Castro confirmed the Chapter 11 plan despite objections from the California plaintiffs. These plaintiffs, who sustained significant injuries from Bird scooters, argue that the $19.2 million allocated in the plan is insufficient to cover their claims. They are seeking over $384 million from municipalities for alleged negligence in road maintenance and design.
The plaintiffs contend that their claims against nondebtor parties will be nullified in the plan in exchange for a “minimal contribution” from the municipalities.
Plaintiffs’ Attorney Challenges Bar Order
During the hearing, attorney Bradley Shraiberg for the plaintiffs argued that the bar order in the plan does not align with the U.S. Supreme Court’s recent ruling in Harrington v. Purdue Pharma LP. In that case, the Supreme Court invalidated nonconsensual third-party releases in Purdue Pharma’s bankruptcy plan.
Shraiberg claimed, “The clear language of Purdue suggests a ‘control F’ analysis. There is no provision in the bankruptcy code that allows a court to grant a third-party release.”
Judge Lopez-Castro’s Ruling on Purdue Decision
However, Judge Lopez-Castro disagreed with this interpretation. She believes that the Purdue decision does not override the Eleventh Circuit’s 1996 ruling in Matter of Munford Inc., which supports the use of bar orders under Section 105(a) of the Bankruptcy Code to facilitate settlements.
Judge Lopez-Castro remarked, “If we can’t approve bar orders as part of a settlement, we’re not only altering plan confirmations but also the daily operations of the court.”
She also noted that the Bird Global case differs significantly from Purdue, which involved thousands of claims compared to the 204 claims in Bird Global’s case. Additionally, the U.S. Trustee did not oppose the Bird Global plan, unlike the opposition in the Purdue case.
Bird Global’s Chapter 11 Filing and Reorganization
Bird Global filed for Chapter 11 in December due to a “liquidity crisis” and difficulties managing over $112 million in debt amid falling revenues. The company secured a restructuring support agreement with its lenders and received $25.1 million in new debtor-in-possession financing from Apollo Global Management and its second-lien lenders to continue operations.
Bird Global was sold to its debt holders for $145 million and will be restructured into a new entity, Third Lane Mobility Inc. The confirmed reorganization plan includes an insurance settlement where the debtors’ insurance policies will be sold, and the proceeds placed in a trust for tort claimants.
Representation in the Case
Bird Global is represented by Paul S. Singerman, Jordi Guso, Robin J. Rubens, and Clay B. Roberts from Berger Singerman LLP. The California plaintiffs are represented by D. Edward Hays and Bradford N. Barnhardt of Marshack Hays Wood LLP, and Bradley S. Shraiberg and Samuel W. Hess of Shraiberg Page PA. The official committee of unsecured creditors is represented by Gordon E. Gouveia, Robert F. Elgidely, and Michael A. Sweet of Fox Rothschild LLP. Third Lane Mobility is represented by Paul Battista and Eric Jacobs of Venable LLP.
Case Information
The case is In re: Bird Global Inc. et al., case number 1:23-bk-20514, in the U.S. Bankruptcy Court for the Southern District of Florida.
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