Jan 24 (Reuters) - A U.S. bankruptcy judge on Friday

approved the Container Store's ( TCSGQ ) bankruptcy restructuring,

allowing the retailer to cut $88 million in debt.

U.S. Bankruptcy Judge Alfredo Perez at a court hearing in

Houston, Texas, overruled the objections of the U.S. Justice

Department's bankruptcy watchdog to the deal's legal protections

for the company's officers, directors, and lenders, finding that

the Container Store ( TCSGQ ) had obtained consent from its creditors.

The Container Store ( TCSGQ ), which filed for bankruptcy in December,

will exit from bankruptcy as a private company owned by lenders

including investment firms Golub Capital and Glendon Capital

Management.

The company, which sells storage solutions, shelving, and

custom closets, said last month that the debt deal will not

impact the retailer's stores or its business operations.

The Container Store ( TCSGQ ) entered bankruptcy with $243 million in

debt. The company's attorney Hugh Murtagh said in court that the

Container Store ( TCSGQ ) hopes to complete its restructuring and exit

from bankruptcy as soon as Monday or Tuesday, with $40 million

in new additional funding provided by its lenders.

Perez said Friday that the Container Store ( TCSGQ ) provided

creditors with sufficient notice that the deal could wipe out

legal claims against company executives and lenders, and it gave

creditors the opportunity to "opt out" and retain their legal

claims if they wished.

"I believe that the process here worked," the judge said.

The Office of the U.S. Trustee, a division of the Justice

Department, had opposed the Container Store's ( TCSGQ ) use of an "opt

out" mechanism, saying that silence does not equal consent under

Texas law.

Debates over what "consent" entails have roiled bankruptcy

courts across the U.S. since last summer's blockbuster Supreme

Court ruling in Purdue Pharma's bankruptcy. In that case, the

Supreme Court ruled that Purdue could not use non-consensual

releases to shield its wealthy Sackler family owners from opioid

lawsuits, but it did not define "consent."

Since then, courts have split on the issue, with some judges

ruling that creditors must affirmatively consent to settlements

that release their legal claims. Other courts, like the one in

Houston, have ruled that consent can be assumed if creditors are

informed about the non-debtor release and given the opportunity

to opt out.

The case is In re The Container Store Group Inc ( TCSGQ ), U.S.

Bankruptcy Court for the Southern District of Texas, No.

24-90627.

For The Container Store ( TCSGQ ): Hugh Murtagh, George Davis, and Ted

Dillman of Latham & Watkins; Tad Davidson and Ashley Harper of

Hunton Andrews Kurth

For the U.S. Trustee: Ha Nguyen of the Office of the U.S.

Trustee

Read more:

DOJ watchdog says silence is not 'consent' in Container

Store ( TCSGQ ) bankruptcy

Home goods retailer The Container Store ( TCSGQ ) files for bankruptcy

protection

US Supreme Court Purdue ruling makes mass litigation tougher

to resolve in bankruptcy