A channeling injunction issued under Section 524(g) bars claimants from pursuing the reorganized company and channels all claims to the trust. It binds future claimants who have not yet manifested disease.
Approval requires supermajority creditor approval and a future claimants' representative.
Alternative Names:
Channeling Injunction, Section 524(g) Injunction
Why it Matters?
The injunction is what makes reorganization viable for a company facing indeterminate future liability, since a discharge alone would not bind claimants whose injuries have not yet manifested. Extending the protection to affiliated entities and insurers is frequently negotiated and heavily contested, because those parties obtain permanent protection without themselves filing. The future claimants' representative exists to protect people who cannot yet know they have a claim.
Frequently Confused with
Related terms
Frequently asked questions
Why is a channeling injunction necessary?
Can it protect non-debtor parties?
