Hooters Injunctions Shouldn’t Apply to Government, DOJ Unit Says

Hooters of America LLC’s bankruptcy exit plan shouldn’t be approved because it fails to clarify that government claims against the restaurant chain won’t be released, the Justice Department’s bankruptcy watchdog said.

Bankruptcy law has a “police and regulatory power” exception that is designed to prevent the impediment of government’s ability to protect the public, the US Trustee said in a Tuesday objection in the US Bankruptcy Court for the Northern District of Texas.

“Preserving governmental entities’ ability to protect public health and safety is particularly important in the context of a food service company,” the US Trustee said.

The government’s ...