                           ON REHEARING

                             PUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT


                            No. 13-1608


NATIONAL HERITAGE FOUNDATION, INCORPORATED,

                Plaintiff – Appellant,

           v.

HIGHBOURNE FOUNDATION; JOHN R. BEHRMANN; NANCY BEHRMANN,

                Defendants – Appellees.



Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria.       Anthony J. Trenga,
District Judge. (1:12-cv-01329-AJT-JFA; 09-10525-BFK; 09-01342-
SSM)


Argued:   May 14, 2014                    Decided:   July 25, 2014



Before WILKINSON, AGEE, and DIAZ, Circuit Judges.


Affirmed by published opinion. Judge Diaz wrote the opinion, in
which Judge Wilkinson and Judge Agee joined.


ARGUED: David B. Goroff, FOLEY & LARDNER LLP, Chicago, Illinois,
for Appellant.    Glenn W. Merrick, G.W. MERRICK & ASSOCIATES,
LLC, Centennial, Colorado, for Appellees.     ON BRIEF: Erika L.
Morabito, Rory E. Adams, FOLEY & LARDNER LLP, Washington, D.C.,
for Appellant. Daniel J. Schendzielos, COLORADO TRIAL LAWYERS &
LEGAL SERVICES, LLC, Greenwood Village, Colorado, for Appellees.
DIAZ, Circuit Judge:

     On    remand    following      an   earlier    appeal       in    this   case,    a

bankruptcy court ruled that the non-debtor release provision in

National   Heritage     Foundation’s      Chapter        11    reorganization     plan

was unenforceable.           The district court affirmed.                On appeal to

this court, NHF argues that the courts below erred, claiming

that the facts and circumstances surrounding its bankruptcy are

sufficiently        unique     to    justify       the        release.        Finding

insufficient evidence to support NHF’s contentions, we affirm.



                                         I.

     A detailed recitation of the facts underlying this case is

contained in our previous opinion, Behrmann v. National Heritage

Foundation, Inc., 663 F.3d 704 (4th Cir. 2011) (NHF I).                                We

recite only those facts relevant to this appeal.

     NHF is a non-profit public charity 1 that administers and

maintains Donor-Advised Funds.            These are funds in which donors

relinquish all right and interest in the assets they donate.

The sponsoring charitable organization--in this case, NHF--owns

and controls all of the donated assets, although donors retain




     1
       In November 2011, the              IRS   revoked        NHF’s     status   as   a
section 501(c) public charity.



                                         2
the right to make non-binding recommendations regarding the use

of the assets.

      In 2009, NHF filed a voluntary petition for reorganization

under Chapter 11 of the Bankruptcy Code after a state court

entered      a    multimillion      dollar       judgment   against    it.      After

multiple revisions, the bankruptcy court approved NHF’s Fourth

Amended and Restated Plan of Reorganization (the “Plan”).                         The

Plan contained a Non-Debtor Release Provision covering NHF; the

Official Committee of Unsecured Creditors (the “Committee”) and

its members; any designated representatives of the Committee;

and any officers, directors, or employees of NHF, the Committee,

or   their       successors   and   assigns       (collectively,      the    “Released

Parties”).         The Release Provision provided that the Released

Parties

      shall not have or incur, and are hereby released from,
      any claim, obligation, cause of action, or liability
      to any party in interest who has filed a claim or who
      was given notice of the Debtor’s Bankruptcy Case (the
      “Releasing Parties”) for any act or omission before or
      after the Petition Date through and including the
      Effective Date in connection with, relating to, or
      arising out of the operation of the Debtor’s business,
      except to the extent relating to the Debtor’s failure
      to comply with its obligations under the Plan.

J.A. 1059. 2


      2
       The Plan also contained an Exculpation Provision, barring
suits against the Released Parties for any acts or omissions in
connection with the bankruptcy, and an Injunction Provision,
enjoining   suits  in  violation  of   either  the   Release  or
(Continued)
                                             3
     Certain NHF donors--the appellees in this case--challenged

the Plan’s confirmation on the ground that the Release Provision

was invalid.         The district court affirmed the bankruptcy court’s

confirmation of the Plan.

     On      the     first      appeal,    we     vacated      that     portion         of   the

district      court’s        judgment      affirming      the     Release          Provision,

holding    that      the     bankruptcy     court       failed    to    make       sufficient

factual      findings      to    support    its    conclusion          that    the      Release

Provision      was    essential.           See    NHF    I,    663     F.3d        at   712-13.

Although     we    reiterated       this    circuit’s         longstanding          rule     that

non-debtor         releases         may      be      enforced           in     appropriate

circumstances, we cautioned that they should only be approved

“cautiously        and     infrequently.”          Id.    at     712.         To    determine

whether    such      circumstances        exist,    we    directed       the       bankruptcy

court   to    consider        the   six    substantive         factors       enumerated       in

Class Five Nevada Claimants v. Dow Corning Corp. (In re Dow

Corning Corp.), 280 F.3d 648 (6th Cir. 2002).                                These include

whether:



Exculpation Provision.      The bankruptcy court upheld the
Exculpation Provision, see In re Nat’l Heritage Found., Inc.,
478 B.R. 216, 234 (Bankr. E.D. Va. 2012), a decision that
neither party challenged.     It also approved the Injunction
Provision, but only to the extent that it enforced the
Exculpation Provision and not the Release Provision.    See id.
Based   on   our   holding  that   the   Release  Provision  is
unenforceable, we find no error in that judgment.



                                             4
     (1) There is an identity of interests between the
     debtor and the third party . . . ; (2) The non-debtor
     has    contributed    substantial   assets   to    the
     reorganization; (3) The injunction is essential to
     reorganization . . . ; (4) The impacted class, or
     classes, has overwhelmingly voted to accept the plan;
     (5) The plan provides a mechanism to pay for all, or
     substantially all, of the class or classes affected by
     the injunction; [and] (6) The plan provides an
     opportunity for those claimants who choose not to
     settle to recover in full.

Id. at 658.        On remand, we instructed the bankruptcy court--“if

the record permits it--to set forth specific factual findings

supporting its conclusions” that the Release Provision in NHF’s

Plan was valid.       NHF I, 663 F.3d at 713.

     A different bankruptcy court judge considered the case on

remand.    That court gave the parties the option of reopening the

record to present more evidence, but they declined to do so.

Reviewing the then-existing record, the bankruptcy court made

factual    findings     with     respect       to    each   of    the   Dow    Corning

factors.     It     concluded    that   only        one   factor--an    identity    of

interests between NHF and the Released Parties--clearly weighed

in   favor    of    NHF,   and     it   declared          the    Release      Provision

unenforceable.       See In re Nat’l Heritage Found., Inc., 478 B.R.

216, 232 (Bankr. E.D. Va. 2012).                    The district court affirmed

the bankruptcy court’s ruling.                 See Nat’l Heritage Found., Inc.

v. Behrmann, No. 1:12-cv-1329, 2013 WL 1390822, at *9 (E.D. Va.

Apr. 3, 2013).       NHF timely appealed.



                                           5
                                       II.

     We review the legal conclusions of the bankruptcy court and

district court de novo.        Gold v. First Tenn. Bank Nat’l Ass’n

(In re Taneja), 743 F.3d 423, 429 (4th Cir. 2014).                   Like the

district court below, we review the bankruptcy court’s factual

findings for clear error.      Id. 3

                                       A.

     Based on the record before us, we conclude that NHF has

failed   to   carry   its   burden     of    proving   that   the   facts    and

circumstances of this case justify the Release Provision.                   Like

the courts below, we consider the evidence with respect to each

Dow Corning factor in turn.




     3
       Relying on Henry A. Knott, Co. v. Chesapeake & Potomac
Telephone Co. of West Virginia, 772 F.2d 78 (4th Cir. 1985), NHF
argues that the district court should have reviewed the
bankruptcy court’s factual findings on remand de novo. In Henry
A. Knott, we held that a de novo hearing may be required before
a successor judge “if the case requires the trier of fact to
make credibility determinations concerning the testimony of
witnesses.”   Id. at 85.     Here, however, there was only one
witness, Janet Ridgely, and her credibility was not in dispute.
Rather, both courts simply found her testimony insufficient to
support the Release Provision even if fully credited.      Given
this, we see no reason why the district court was required to
depart from the general rule that the bankruptcy court’s
“[f]indings of fact, whether based on oral or documentary
evidence, shall not be set aside unless clearly erroneous.”
Fed. R. Bankr. P. 8013.



                                        6
                                             1.

      Under the first Dow Corning factor, a court must consider

whether there is an identity of interests--usually an indemnity

obligation--between the debtor and the released parties.                                A non-

debtor release may be appropriate in such circumstances because

a suit against the non-debtor may, “in essence, [be] a suit

against the debtor” that risks “deplet[ing] the assets of the

estate.”        NHF I, 663 F.3d at 711 (quoting In re Dow Corning, 280

F.3d at 658).

      We     conclude     that    NHF       has    demonstrated          an    identity     of

interests between itself and the Released Parties.                                Under the

terms      of   its    bylaws,    NHF       must    advance          legal     expenses    and

indemnify its officers and directors for “any action . . . in

which such person may be involved by reason of his being or

having     been    a   director   or    officer          of”    NHF.      J.A.    868.      No

security is required to ensure the covered parties repay NHF for

any advanced expenses.            See also In re Nat’l Heritage Found.,

478     B.R.      at    227-28      (describing                the     scope      of      NHF’s

indemnification         provisions).              Such     an        expansive        indemnity

obligation        is   sufficient      to    satisfy           the    first     Dow    Corning

factor.

                                             2.

      The second Dow Corning factor required NHF to demonstrate

that the Released Parties made a substantial contribution of

                                              7
assets to its reorganization.                     NHF I, 663 F.3d at 711.                 In

effect, this factor ensures that in order for a Released Party

to achieve that status, it must have provided a cognizable and

valid       contribution        to   the    debtor     as     part    of   the    debtor’s

reorganization.

       None       of     the    Released     Parties     in    this     case     made     any

financial contribution to the reorganization.                           NHF nonetheless

argues          that     its     officers     and      directors        satisfied        this

requirement by promising to continue serving NHF.

       As an initial matter, there is no evidence in the record to

support NHF’s assertion that its officers and directors actually

promised to continue serving NHF. 4                    Even if such a promise had

been made, we find no error in the district court’s conclusion

that       it    would    not    constitute       a   substantial       contribution      of

assets      in    this    case.       As    the   bankruptcy     court     found,       NHF’s

“officers and directors, all of whom are insiders, performed

their duties either because they were paid to do so (in the case

of the officers), or because they had a fiduciary obligation to

do so (in the case of the directors).”                         In re Nat’l Heritage

Found.,         478    B.R.     at   229.     Under     these        circumstances,      the

Released Parties did not provide meaningful consideration for


       4
       The departure of Dr. John T. Houk, NHF’s former CEO, seems
to belie such a claim.



                                              8
their release from liability.                   Cf. In re SL Liquidating, Inc.,

428   B.R.    799,    804        (Bankr.      S.D.    Ohio    2010)    (concluding      that

directors and officers did not make a substantial contribution

when their “described efforts . . . [were] consistent with their

preexisting fiduciary duties and job responsibilities”).                                 The

absence      of    such     consideration            weighs    against    NHF’s   Release

Provision.

                                               3.

      The    third    Dow        Corning      factor    also    counsels     against     the

Release      Provision.           To    satisfy       this    factor,    a   debtor     must

demonstrate that the non-debtor release is “essential” to its

reorganization,           such    that       “the    reorganization      hinges   on     the

debtor being free from indirect suits against parties who would

have indemnity or contribution claims against the debtor.”                               NHF

I, 663 F.3d at 711-12 (quoting In re Dow Corning, 280 F.3d at

658).

      NHF primarily contends that the risk of litigation from its

donors, whose numbers run in the thousands, renders the Release

Provision essential, as NHF would likely have to indemnify its

officers     and    directors          for    their    legal    expenses     should     such

suits arise.

      Although       we    are     sympathetic        to     NHF’s    concern   about    the

possibility of donor suits, the evidence does not suggest that

its reorganization is doomed without the Release Provision.                              NHF

                                                9
has   provided    little     to   no   evidence      regarding   the   number   of

likely    donor    claims,    the      nature   of    such   claims,   or   their

potential merit.       NHF’s vice president, Janet Ridgely, stated

that NHF insiders are concerned about donors bringing suit, but

that is simply too vague to substantiate the risk of litigation.

Cf. In re Dow Corning Corp., 287 B.R. 396, 411 (E.D. Mich. 2002)

(finding a release provision essential when more than 14,000

lawsuits had already been filed against a non-debtor). 5

      Nor does the fact that a prior judgment against NHF was, by

itself, sufficient to trigger bankruptcy establish that donor

litigation,       should     it     materialize,       would     imperil    NHF’s

reorganization.      Based on the dearth of evidence in the record,

we can only speculate as to the potential impact of any donor

suits on NHF’s financial bottom line.

      NHF also argues that the Release Provision is essential

because its current officers and directors may refuse to serve

without such a release.             In support, it points to Ridgely’s


      5
       We recognize that the Behrmanns, the appellees in this
case, filed a fraud action against NHF and its officers and
directors, notwithstanding a stay leaving the Release Provision
in effect. But the mere fact that a single donor suit has been
filed does not establish that NHF will face a flood of
litigation without the Release Provision. We also note that the
district court ordered the dismissal of the Behrmanns’ action
and required them to pay attorney’s fees to NHF.     See In re
Nat’l Heritage Found., Inc., ___ B.R. __, 2014 WL 1783943, at
*9-*10, *18-*19 (E.D. Va. May 5, 2014).



                                         10
testimony      that    the    continued       service         of        NHF’s    officers      and

directors is critical to the reorganization, and that a fear of

third-party      suits      “might     render      [them]          unwilling          to    serve.”

J.A. 949.

       We find no error in the bankruptcy court’s finding that the

risk of officer-and-director flight in this case is minimal.

Although       not     irrelevant,          Ridgely’s             statement           is    hardly

conclusive      evidence      that     NHF’s      officers          and       directors      would

leave without         the    Release       Provision.             And    as     the    bankruptcy

court noted, the risk of NHF’s insiders “abandon[ing] ship” is

particularly        low,    given    that     most      of    them       are     members      of   a

single family.        In re Nat’l Heritage Found., 478 B.R. at 229.

       The bankruptcy court also correctly found that the Release

Provision       itself        provides        little          inducement              for     these

individuals to stay.            NHF’s insiders have already been exposed

to   whatever       liability       they    may    have       for       their     pre-petition

conduct, and the release does not shield them from liability

going forward.             And even if NHF’s officers and directors do

leave,   NHF    has     not    suggested         that    it       would       face     difficulty

recruiting new personnel.             See id. at 230-31.

       If this failure of proof were not enough, the severability

clause contained in NHF’s Reorganization Plan cements our view

that   the    Release       Provision       is    not    essential.               That       clause

provides     that     the    Plan    would    remain         in    effect       “[s]hould      any

                                             11
provision in this Plan be determined to be unenforceable.”                                 J.A.

643    (emphasis      added).          As   we     have     already      concluded,        such

language “suggests that the plan would remain viable absent the

Release Provision[].”              NHF I, 663 F.3d at 714.

       Under     these     circumstances,          we     do    not     believe      NHF   has

carried its burden of demonstrating that the Release Provision

is     essential      to     its    reorganization.              This    failure      weighs

strongly against the validity of the Release Provision.

                                              4.

       To satisfy the fourth Dow Corning factor, NHF was required

to    prove    that    the    class    or     classes       affected     by    the    Release

Provision overwhelmingly voted in favor of the Plan. 6                                Id. at

712.

       In this case, the Release Provision most directly impacted

the class        of   individuals       who    made     donations       to    NHF’s    Donor-

Advised Funds (the “donor class”).                      Under applicable bankruptcy

rules,     the    donor      class’s    support       for      the    Plan    was    presumed

without a formal vote because, under its terms, donor claims

were eligible for full payment with interest.                                NHF maintains

that the donor class’s presumed support for the plan weighs in


       6
       Appellees argue that NHF has waived argument with respect
to the last three Dow Corning factors because it did not address
them below.   As NHF would not prevail on the merits anyway, we
need not resolve this question.



                                              12
favor      of    the    Release      Provision,          and    that,     regardless,          the

class’s support for the Plan is irrelevant because its donors

are not actually creditors.

      We    recognize        that     there       is    some        uncertainty    regarding

whether         an     unimpaired          class’s       presumed        support         for     a

reorganization plan is sufficient to satisfy this Dow Corning

factor.         As a legal matter, the bankruptcy court was entitled to

presume     the      donor    class’s       support      because       their     claims    were

unimpaired.          See 11 U.S.C. § 1126(f) (“[A] class that is not

impaired under a plan, and each holder of a claim or interest of

such class, are conclusively presumed to have accepted the plan,

and solicitation of acceptances with respect to such class . . .

is   not    required.”).             But    the    power       to    authorize    non-debtor

releases is rooted in a bankruptcy court’s equitable authority.

See Menard-Sanford v. Mabey (In re A.H. Robins Co.), 880 F.2d

694, 701 (4th Cir. 1989).                  Here, the equities weigh against NHF,

as the class most affected by the Release Provision was not

given the opportunity to accept or reject the plan.                                Cf. In re

Specialty        Equip.      Cos.,    3     F.3d       1043,    1047     (7th     Cir.    1993)

(finding releases consensual and valid when “each creditor could

choose to grant, or not to grant, the release irrespective of

the vote of the class of creditors or interest holders of which

he or she is a member,” meaning that “a creditor who . . .



                                              13
abstains from voting may still pursue any claims against third-

party nondebtors”).

      In    any    event,   we   need   not    resolve    this   question    today.

Even if NHF is correct, this factor only marginally weighs in

its favor, and it would not alter our ultimate conclusion that

NHF has failed to demonstrate that the circumstances warrant the

Release Provision.          Creditor support does not make up for the

fact that most of the other Dow Corning factors weigh against

enforcing the Release Provision.

                                         5.

      Under the fifth Dow Corning factor, we consider whether the

debtor’s reorganization plan provides a mechanism to consider

and   pay    all    or   substantially        all   of   the   class    or   classes

affected by the non-debtor release.                 See NHF I, 663 F.3d at 712.

As the district court noted, “[t]his consideration has typically

been used to justify release provisions where the reorganization

plan includes a mechanism such as a dedicated settlement fund to

pay   the    claims      . . .   of   those    affected    by    an    injunction.”

Behrmann, 2013 WL 1390822, at *8; see also In re Metromedia

Fiber Network, Inc., 416 F.3d 136, 142 (2d Cir. 2005) (“Courts

have approved nondebtor releases when . . . the enjoined claims

were ‘channeled’ to a settlement fund rather than extinguished

. . . .”).



                                         14
       For   example,         we    have   upheld       a    release     provision              in    a

reorganization plan when the debtor created a separate fund to

settle,      among     other       things,   untimely          claims       or       those      that

otherwise failed to comply with applicable procedures.                                    See A.H.

Robins Co., 880 F.2d at 700-02.                     Although there is no per se

requirement that a debtor “channel” claims, the absence of such

a   mechanism        can    weigh    against      the       validity     of      a   non-debtor

release, especially when the result is that the impacted class’s

claims are extinguished entirely.

       The absence of such a mechanism here weighs against the

Release Provision.            Any donor claims not filed or allowed during

the bankruptcy proceedings have simply been extinguished.                                    Thus,

NHF’s plan lacks an important element of the plan endorsed in

A.H.     Robins--“a         second    chance      for       even     late     claimants              to

recover.”      Id. at 702.

       To be sure, NHF provided notice and opportunity for donors

to file claims against it during the bankruptcy proceedings.

But    NHF     has    provided       no    evidence--in            the   form        of     expert

testimony or otherwise--that this process adequately protected

the donors’ interests.               NHF certainly did not encourage donors

to participate in the bankruptcy process.                           See, e.g., J.A. 503

(informing donors in the disclosure statement that NHF would

object    to    any        donor-filed     claims       and    that      “Donors          are    not

creditors of the Debtor and will have no rights to vote or

                                             15
reject    the    Debtor’s      Plan    or    receive   Distributions        under    the

Plan”).     This hardly strikes us as a bona fide effort to ensure

the consideration of nearly all of the donor class’s claims, and

we agree with the district court’s conclusion that this factor

weighs against the Release Provision.

                                             6.

     The final substantive Dow Corning factor is whether the

plan provides an opportunity for those who chose not to settle

to recover in full.           NHF I, 663 F.3d at 712.

     Our    analysis      of    this    factor     largely       overlaps    with    the

preceding factor.         To that effect, we reiterate the import of

NHF’s    failure    to    provide      any    mechanism     to    pay    donor     claims

outside of the bankruptcy proceedings.                    As the bankruptcy court

found, “the very purpose of the Release Provision[] is to . . .

preclud[e] any recovery from third party sources outside of the

Plan.”     In re Nat’l Heritage Found., 478 B.R. at 232.

                                             B.

     Our     review      of    the    record      shows    that    one    factor--the

possibility that NHF will have to indemnify its officers and

directors for litigation expenses--weighs clearly in favor of

the Release Provision.           But NHF has failed to provide sufficient

evidence that it faces a strong possibility of suits that would

trigger    its    indemnity      obligation,       much    less    that     such    suits

would threaten its reorganization.                 And an indemnity obligation

                                             16
is not, by itself, sufficient to justify a non-debtor release.

If it were, “third party releases would be the norm, not the

exception,   in    Chapter      11    cases.”     Id.     at   232.      Given     the

extraordinary breadth of this particular release, we are also

troubled by NHF’s failure to provide a mechanism outside of the

bankruptcy process to satisfy donor claims.

     In   sum,    we    agree   with    the    district    court      that   NHF   has

failed to demonstrate that it faces exceptional circumstances

justifying   the       enforcement     of   the   Release      Provision      in   its

Reorganization Plan.

     We   emphasize      that   our    decision    is     ultimately     rooted     in

NHF’s failure of proof rather than circumstance alone.                       A debtor

need not demonstrate that every Dow Corning factor weighs in its

favor to obtain approval of a non-debtor release.                       But, as we

noted in NHF I, a debtor must provide adequate factual support

to show that the circumstances warrant such exceptional relief,

and NHF has failed to do so here.



                                        III.

     For these reasons, we affirm the district court’s judgment.



                                                                             AFFIRMED




                                         17
