MEMORANDUM OPINION

KEVIN R. HUENNEKENS, Bankruptcy Judge.

Before the Court in this contested matter is True Health Diagnostics, LLC's ("True Health") Motion to Enforce Release, Covenant Not to Sue and Sale Injunction ("Motion to Enforce"). The Motion to Enforce seeks entry of an order (a) enforcing a release and covenant not to sue contained in Sections 3.1 and 3.2 respectively of the Asset Purchase Agreement (the "APA") dated as of September 29, 2015; (b) enforcing an injunction in Paragraph 35 of the Court's Sale Order approving the sale of substantially all of the assets of Health Diagnostic Laboratory, Inc. ("HDL"), Integrated Health Leaders, LLC, and Central Medical Laboratory, LLC (collectively the "Debtors"), to True Health pursuant to the APA; and (c) dismissing with prejudice all claims asserted by Richard Arrowsmith in his capacity as the Liquidating Trustee (the "Liquidating Trustee") of the HDL Liquidating Trust against True Health's current and former employees in an adversary proceeding pending before the Court (the "Adversary Proceeding"):1 At the conclusion of a hearing conducted on September 28, 2017 (the "Hearing"), the Court ruled that it would deny the Motion to Enforce. This Memorandum Opinion sets forth the Court's findings of fact and conclusions of law in support of that ruling in accordance with Bankruptcy Rule 7052.2

Background and Procedural History

HDL operated an accredited, full service clinical laboratory that provided testing of biomarkers for the indication of risk for cardiovascular disease, diabetes, and other illnesses. BlueWave Healthcare Consultants, Inc. ("BlueWave") sold HDL's testing services to physicians as an outside sales and marketing company. HDL processed lab tests it received from physicians all around the country, and frequently billed the patient's private insurance carrier or a Federal Health Care Program such as Medicare or Medicaid. Afterwards, HDL would reimburse the referring physicians for the costs associated with collecting, processing, and handling the blood samples that they had sent to HDL for testing.

In 2013, the United States Department of Justice ("DOJ") and United States Department of Health and Human Services' Office of Inspector General ("HHS OIG") began investigating the Debtors and BlueWave in connection with HDL's business practices including its payment of process and handling fees to the referring physicians. HHS OIG issued a special fraud alert on June 25, 2014, advising that the payment of processing and handling fees to referring physicians could violate certain federal anti-kickback laws. A number of lawsuits and a string of bad publicity ensued that put considerable liquidity pressure on the Debtors. On April 10, 2015, Aetna filed a complaint against several defendants including HDL and BlueWave in the United States District Court for the Eastern District of Pennsylvania (the "Aetna Action").3

In April 2015, HDL agreed to a multi-million dollar settlement for alleged violations of the federal False Claims Act along with a corresponding corporate integrity agreement with HHS OIG. By that time, HDL's relationship with its pre-petition secured lender, Branch Banking and Trust Company ("BB&T"), had become severely strained.4 Following a series of defaults under its BB&T loan facilities, BB&T discontinued HDL's borrowing ability and cut off HDL's access to its existing accounts. With no ability to access its cash and with no alternative sources of financing immediately available, HDL was forced to file for protection under chapter 11 of the Bankruptcy Code.

On September 17, 2015, the Court entered an Order (I) Approving Asset Purchase Agreement and Authorizing the Sale of Assets of the Debtors Outside the Ordinary Course of Business, (II) Authorizing the Sale of Assets Free and Clear of All Liens, Claims, Encumbrances and Interests, (III) Authorizing the Assumption and Sale and Assignment of Certain Executory Contracts and Unexpired Leases and (IV) Granting Related Relief (the "Sale Order"). See Sale Order, In re Health Diagnostic Laboratory, Inc., No. 15-32919 (Bankr. E.D. Va. Sept. 17, 2015), ECF No. 512. The Sale Order authorized the sale of substantially all of the Debtors' assets to True Health under the terms of the APA. See id The transaction under the APA closed on September 29, 2015, and True Health acquired substantially all of the Debtors' operating assets (the "Purchased Assets").

The APA contains provisions wherein the Debtors granted True Health and its employees a release (the "Release")5 and a corresponding covenant not to sue (the "Covenant Not to Sue").6 Paragraph 35 of the Sale Order provides for an injunction ("Sale Order Injunction") against the assertion of certain claims against True Health, its employees, and the Purchased Assets.7

The Court confirmed the Debtors' Modified Second Amended Plan of Liquidation (the "Plan")8 by an order entered on May 12, 2016 (the "Confirmation Order").9 The HDL Liquidating Trust was formed in accordance with the terms of the Plan on the Effective Date.10 Pursuant to the Plan, 11 U.S.C. § 1123, and the trust agreement executed to implement the Plan, the HDL Liquidating Trust is the successor of the Debtors and the Committee.11 In addition, a number of creditors (the "Assigning Creditors") transferred their own creditor causes of action12 to the HDL Liquidating Trust in accordance with section 6.16 of the Plan (the "Assigned Creditor Claims"). Among the many Assigned Creditor Claims is the Aetna Action. Pursuant to section 6.5(c)(23) of the Plan, the HDL Liquidating Trust is the successor of the Assigning Creditors with respect to the Assigned Creditor Claims.13

On September 16, 2016, the Liquidating Trustee commenced the Adversary Proceeding by filing a complaint (the "Complaint") against over 100 different defendants. The Complaint asserts eight claims against 24 defendants who were former employees of independent contractors engaged by BlueWave and who are now employees of True Health (the "True Health Defendants").14 See Complaint, Arrowsmith, Liquidating Trustee v. Warnick, et al., No. 16-03271 (Bankr. E.D. Va. Sept. 16, 2016), ECF No. 1. The Liquidating Trustee brought claims for assumpsit and unjust enrichment in Counts 65 and 66 of the Complaint against all the defendants named in the Complaint, including the True Health Defendants, in his capacity as successor to the Debtors and also in his capacity as assignee of the Assigning Creditors.15 The Liquidating Trustee brought claims against the True Health Defendants for fraud in Counts 67 and 68, for tortious interference with contracts in Counts 69 and 70, and for conspiracy in Counts 72 and 73 only in his capacity as assignee of the Assigning Creditors.

On December 16, 2016, the True Health Defendants, acting separately, filed several motions to dismiss the Complaint (the "Motions to Dismiss") wherein they raised as affirmative defenses many of the same arguments contained in the Motion to Enforce. On August 9, 2017, the True Health Defendants were ordered to participate in a settlement conference before United States Magistrate Judge David. J. Novak, but were unable to agree to a settlement. On that very same day, this Court entered an order that denied in part and granted in part the Motions to Dismiss that had been filed by the True Health Defendants. See Corrected Order Denying the Motions to Dismiss in Part; Granting the Motions to Dismiss in Part, In re Health Diagnostic Laboratory, Inc., No. 16-03271 (Bankr. E.D. Va. Aug. 9, 2017), ECF No. 366. In a Memorandum Opinion that accompanied the order resolving the Motions to Dismiss, the Court noted that the Release in the APA and the injunction in the Sale Order applied only to successors-in-interest of HDL. They did not restrict claims belonging to creditors against third parties. See Memorandum Opinion at 23 n.45, In re Health Diagnostic Laboratory, Inc., No. 16-03271 (Bankr. E.D. Va. Aug. 9, 2017), ECF No. 363. Nevertheless, the Court did not rule on those affirmative defenses in the context of the Motions to Dismiss.16

Following the failed settlement and issuance of the Memorandum Opinion, Judge Novak instructed True Health to inform him whether it planned to file a motion with this Court to enforce the Release in the APA and, if so, to inform him before September 15, 2017. On August 30, 2017, True Health confirmed that it would file such a motion. In compliance with Judge Novak's instructions, True Health filed its Motion to Enforce on September 7, 2017.

Jurisdiction and Venue

The Court has subject matter jurisdiction over this contested matter pursuant to 28 U.S.C. §§ 157 and 1334, and the General Order of Reference from the United States District Court for the Eastern District of Virginia dated August 15, 1984. The Court has core jurisdiction to interpret and enforce its prior Sale Order. See Travelers Indem. Co. v. Bailey, 557 U.S. 137, 151 (2009) (holding that a bankruptcy court has jurisdiction to interpret and enforce its own prior orders and injunctions); In re Motors Liquidation Co., 829 F.3d 135, 154 (2d Cir. 2016); In re Circuit City Stores, Inc., 557 B.R. 443, 448 (Bankr. E.D. Va. 2016); In re LandAmerica Fin. Grp., Inc., No. 08-35994, 2013 WL 3731757, at *4 (Bankr. E.D. Va. 2013). Venue is appropriate in this Court pursuant to 28 U.S.C. § 1408.

Discussion

Release and Covenant Not to Sue

True Health acquired substantially all of the Debtors' operating assets under the terms of the APA. The sale prevented the imminent liquidation of the Debtors. It saved over 400 jobs in the Richmond area and brought more than $37 million into the Debtors' bankruptcy estate. True Health was only willing to proceed with the transaction if the Sale Order afforded it the protection of a sale free and clear of all interests under § 363(f) of the Bankruptcy Code.

In re Kent Manor Inn, LLC, No. 16-18048-TJC, 2017 WL 2267241, at *5 (Bankr. D. Md. May 23, 2017) (citing In re USA United Fleet Inc., 496 B.R. 79, 83 (Bankr. E.D.N.Y. 2013)); see also In re WBQ P'Ship, 189 B.R. 97, 108 (Bankr. E.D. Va. 1995); In re Med. Software Sols., 286 B.R. 431, 446-47 (Bankr. D. Utah 2002). Releases, covenants not to sue, and injunctions are all customary protections provided to purchasers in sales free and clear of interests approved under § 363(f) of the Bankruptcy Code.

True Health seeks entry of an order enforcing the Release17 and the Covenant Not to Sue18 for which it negotiated in sections 3.1 and 3.2 of the APA. Assuming arguendo that the True Health Defendants are "Buyer Released Parties" as defined in the APA,19 the Release and Covenant Not to Sue contained in the APA would prevent the Liquidating Trustee from asserting claims against the True Health Defendants as successor in interest to the Debtors' bankruptcy estate. However, the Liquidating Trustee is advancing the claims brought against the True Health Defendants in an entirely different capacity—as assignee of the Assigning Creditors.

True Health argues that the Assigned Creditor Claims constitute property that the estate acquired after commencement of the case and as such became property of the bankruptcy estate by virtue of § 541(a)(7) of the Bankruptcy Code. See 11 U.S.C. § 541(a)(7); In re Bogdan, 414 F.3d 507, 512 (4th Cir. 2005). True Health asserts that the Assigned Creditor Claims were stripped of any separate identity or status they might have enjoyed when they became property of the estate and that they are now undistinguishable from any other claims brought on behalf of the Debtors' estate. This contention is not well founded. The Assigned Creditor Claims never entered the bankruptcy estate. They were transferred directly to the HDL Liquidating Trust. Section 6.16(a) of the Plan states that "the Creditor Causes of Action owned by Assigning Creditors shall be assigned to or otherwise transferred to the Liquidating Trust for . . . the benefit of the Liquidating Trust Beneficiaries."20 See Confirmation Order at 90 ¶ 6.16(a), In re Health Diagnostic Laboratory, Inc., No. 15-32919 (Bankr. E.D. Va. May 12, 2016), ECF No. 1095. Separate assignment agreements effectuated the transfers.21 Under the plain language of the Plan, the Assigned Creditor Claims are property of the HDL Liquidating Trust and were never property of the bankruptcy estate.

The terms of a confirmed plan govern the permissible duties of a trustee following bankruptcy. See Grede v. Bank of N.Y. Mellon, 598 F.3d 899, 902 (7th Cir. 2010) ("Although the terms of the Bankruptcy Code govern the permissible duties of a trustee in bankruptcy, the terms of the plan of reorganization (and of the trust instrument) govern the permissible duties of a trustee after bankruptcy.") (emphasis in original); see also In re Lyondell Chem. Co., 541 B.R. 172, 201 (Bankr. S.D.N.Y. 2015), rev'd and remanded on other grounds, 554 B.R. 635 (S.D.N.Y. 2016) (distinguishing between suits brought on behalf of the estate and those brought on behalf of assigning creditors); Zazzali v. Hirschler Fleischer, P. C., 482 B.R. 495, 509 (D. Del. 2012) ("[A] post-bankruptcy trustee who is not asserting claims on behalf of the estate is entitled, like any assignee, to bring claims on behalf of assigning creditors."). In this case, the Plan specifically entitled the Liquidating Trustee to step into the shoes of the Assigning Creditors and pursue claims on their behalf separate and apart from his duties to pursue claims on behalf of the estate.

In the Lyondell case, a Luxembourg entity acquired Lyondell Chemical Corp. ("Lyondell") in a leveraged buyout ("LBO") financed entirely by debt secured by the target company. See In re Lyondell Chem. Co., 541 B.R. at 174-75. The LBO left Lyondell insolvent and overleveraged. Lyondell filed a petition under chapter 11 of the Bankruptcy Code a little over a year later. Id at 175. Lyondell's plan of reorganization created a single trustee to pursue claims from a litigation trust and a creditor trust. See id The trustee pursued fraudulent transfer claims on behalf of both trusts. See id. The bankruptcy court in Lyondell emphasized that the "carefully crafted terms of the [p]lan" established that the claims pursued by the trustee were "separate and distinct" with respect to the claims pursued on behalf of the estate and those pursued on behalf of assigning creditors. Id at 201.

The focus should not be centered on who is enforcing the claim or on the multiple roles that entity may have; but rather, the focus should be directed on the source of the rights that are being enforced. In the case at bar, as in Lyondell, the trustee is pursuing the Assigned Creditor Claims "on behalf of the creditors." Id (emphasis in original). This case also involves a carefully crafted Plan that differentiates between claims pursued by a trustee as successor in interest to the estate and claims pursued by a trustee as assignee of the Assigning Creditors. See id Paragraph 6.5(c), Subparagraph 23 of the Plan governs the role of the Liquidating Trustee in this case and describes him as:

Confirmation Order at 83 ¶ 6.5(c)(23), In re Health Diagnostic Laboratory, Inc., No. 15-32919 (Bankr. E.D. Va. May 12, 2016), ECF No. 1095. Section 6.16 titled "Assignment of Creditor Causes of Action" further emphasizes that the "Creditor Causes of Action owned by Assigning Creditors shall be assigned to or otherwise transferred to the Liquidating Trust for the purpose of commencing, prosecuting, settling, releasing, and/or liquidating the Creditor Causes of Action for the benefit of Liquidating Trust Beneficiaries" Id at 90 ¶ 6.16(a).

The Plan clearly treats the Assigned Creditor Claims as separate and distinct from estate claims. The Liquidating Trustee serves in two separate capacities: as the "successor of the Debtors" and as the "successor of the Assigning Creditors." See id at 83 ¶ 6.5(c)(23).22 The Release and Covenant Not to Sue contained in the APA apply only to claims that the Debtors held and had the capacity to release. See Sale Order at 48 ¶¶ 3.1-3.2, In re Health Diagnostic Laboratory, Inc., No. 15-32919 (Bankr. E.D. Va. Sept. 17, 2015), ECF No. 512. The APA could not release claims held by third party creditors. The Assigned Creditor Claims are not governed by the Release and the complementing Covenant Not to Sue set forth in the APA.

Sale Order Injunction

The injunction included at Paragraph 35 of the Sale Order does not enjoin creditors from enforcing their own separate claims against third parties. It only enjoined creditors holding claims against the Debtors from asserting those claims against True Health and the Purchased Assets. Accordingly, the injunction does not prohibit the Liquidating Trustee from pursuing the Assigned Creditor Claims as assignee of the Assigning Creditors.

Strict limitations are placed on a court's power to grant nondebtors a release and to enjoin third-parties from asserting such released claims against nondebtors. See Nat'l Heritage Found v. Highbourne Found, 760 F.3d 344, 347 (4th Cir. 2014); see also Behrmann v. Nat'l Heritage Found, 663 F.3d 704, 712 (4th Cir. 2011) ("approval of nondebtor releases in this context should be granted cautiously and infrequently."). A court can release nondebtors from such third-party claims in the context of a confirmation order that complies with the National Heritage framework.23 The case at bar concerns the Sale Order, not the Confirmation Order.24

True Health argues that the Sale Order Injunction bars all creditor claims relating to the operation of the Debtors' business. The Court was careful in entering the Sale Order to ensure that the scope of the injunction was not so overbroad. See In re Merry-Go-Round Enters, Inc., 400 F.3d 219, 227 (4th Cir. 2005) ("a court's interpretation of its own order must be given substantial deference.") (citing Colonial Auto Ctr. v. Tomlin (In re Tomlin), 105 F.3d 933, 941 (4th Cir. 1996)). The Sale Order Injunction provides that

Sale Order at 29-30 ¶ 35, In re Health Diagnostic Laboratory, Inc., No. 15-32919 (Bankr. E.D. Va. Sept. 17, 2015), ECF No. 512 (emphasis added). The plain language of the injunction included in the Sale Order is entirely consistent with the holding in Sunland. The Sale Order Injunction does not apply to the Assigned Creditor Claims.

The Liquidating Trustee is not asserting the Assigned Creditor Claims "against, in or with respect to any of the Debtors or the Purchased Assets." Those claims are being asserted on behalf of third-party creditors against the True Health Defendants. Aetna, Cigna, and the other Assigning Creditors held those claims against the True Health Defendants individually. The Assigning Creditors did not need to proceed against the Debtors or the Purchased Assets in order to pursue their claims against the True Health Defendants. The transfer of the Assigned Creditor Claims to the HDL Liquidating Trust did not change the underlying nature of those claims. The Assigned Creditor Claims were, and continue to be, claims that the Assigning Creditors had against the True Health Defendants in their personal capacities.25 The Sales Order Injunction did not enjoin the very broad range of third-party claims for which True Health now advocates.

Equitable Considerations

True Health argues finally that equity weighs in its favor and that this Court should enforce the APA provisions and Sale Order Injunction under general principles of equity. While the Court recognizes the critical importance True Health played in the bankruptcy case, equity fails to trump the plain language of the Sale Order approved by this Court.

Conclusion

The Court finds that the Release, Covenant Not to Sue, and Sale Order Injunction do not bar the Liquidating Trustee from asserting the Assigned Creditor Claims against the True Health Defendants. Accordingly, the Court will deny True Health's Motion to Enforce.

A separate order shall issue.