Plan Administrator argued that he was protected by an exculpation clause in the debtor’s plan of reorganization. The clause exculpated him from liability in discharging his duties. But the motion brought by the preferred shareholders didn’t seek to hold him liable for anything. The movants sought to remove and replace him based on an alleged conflict of interest. Therefore, the court ruled, this argument failed.Next, the Plan Administrator argued that the motion to have him replaced should be denied based on res judicata. Objections to his appointment at confirmation had been denied, and now his appointment was being challenged again. But, the bankruptcy judge said, res judicata did not apply to the removal motion because the relief being sought was different from the relief sought in the confirmation objections. Thus, this argument failed too.The movants argued that the Plan Administrator wasn’t disinterested and his appointment had run afoul of Bankruptcy Code sections 324, 327, and 328. But, the court noted, post-confirmation plan administrators are not appointed pursuant to those sections. Instead, such appointments are based on Bankruptcy Code 1123, and a plan administrator serves as “representative of the estate.”The movants also asserted that when the Plan Administrator was appointed, he had failed to disclose his holdings of common shares, also in violation of Code sections 327 and 328. At that time, however, equity was not expected to receive a recovery. And even when equity got a distribution, the Plan Administrator was not doing anything contrary to the interests of preferred shareholders. His pursuit of the lawsuit was to benefit creditors and shareholders alike. Thus, at most, the court observed, he held a “potential conflict.” But that was “not enough” to disqualify him from serving as Plan Administrator. 2023 Bankr. LEXIS 1557, at *11.Next, the movants argued that the Plan Administrator had breached his fiduciary duty of loyalty. They said he could have

." Id. at 374.The Third Circuit ruled that "the FCR standard requires more than disinterestedness." According to Judge Krause, "[a]n FCR must be able to act in accordance with a duty of independence from the debtor and other parties in interest in the bankruptcy, a duty of undivided loyalty to the future claimants, and an ability to be an effective advocate for the best interests of the future claimants." Id. (footnote omitted).The Third Circuit reached this conclusion after considering the text of the Bankruptcy Code and its legislative history, the standards traditionally applied to creditors' committees—which, the court explained, serve an analogous role in bankruptcy cases—and "the administrability of the fiduciary standard … in the bankruptcy context." Id.First, the Third Circuit reasoned, Congress specifically chose to use the "disinterested person" standard in 11 other provisions of the Bankruptcy Code, yet omitted it from section 524(g). Id. at 375 (citing 11 U.S.C. §§ 327(a), 328(c), 332(a), 333(a)(2)(A), 701(a)(1), 703(c), 1104(b)(1), 1104(d), 1163, 1183(a), 1202(a) and 1302(a)). This is not surprising, Judge Krause wrote, because the provisions containing the "disinterested person" standard "relate to professionals whose duties run to the entire estate or to the court, requiring that they remain impartial" and do not represent any adverse interest, whereas the FCR is the "'legal representative' for just such an adverse interest, having been appointed specifically 'for the purpose of protecting the rights of' future asbestos claimants." Id. (quoting 11 U.S.C. § 524(g)(4)(B)(i)). The Third Circuit accordingly concluded that this statutory omission "counsels against" adopting the disinterested person standard for the purpose of FCR appointments.Next, the Third Circuit reasoned that lawmakers' usage of the term "legal representative"—a term of art referring to someone owing fiduciary duties to absent constituents—in section 524(g) indicates they anticipated an FCR

at 2165-66. 11 U.S.C. § 328(a), in contrast, provides that a debtor, “with the court’s approval, may employ or authorize the employment of a professional person on any reasonable terms and conditions of employment… .” (emphasis added).