Bankruptcy Code

News & Analysis as of

Business Litigation Report - August 2016

Circuit Courts Align to Shield SEC Administrative Proceedings from Collateral Constitutional Attack - In response to the financial crisis of the late 2000s, Congress passed the Dodd-Frank Wall Street Reform and Consumer...more

August 2016: Bankruptcy & Restructuring Litigation Update

Delaware Bankruptcy Court Disagrees with Second Circuit on Implied Preemption of State-Law Fraudulent Transfer Claims Brought by Creditors. In recent years, several bankruptcy and district courts have addressed whether the...more

Confirmation Of A Chapter 11 Plan: Good Faith In The Context Of “Artificial Impairment”

In order to confirm a chapter 11 plan, at least one class of creditors whose claims are “impaired” must accept the plan. The concept of “impairment” is very broad. Under the Bankruptcy Code, a class of claims is impaired...more

Over Four Hundred Years of Law on Fraudulent Transfers, Flushed Down the Drain

In 1571, Parliament enacted a law, sometimes known as the Statute of 13 Elizabeth, creating one of the greatest means of creditor protection – the proscription of fraudulent transfers. As Professors Baird and Jackson stated,...more

Developments in Unitranche Financing (2016)

The increasing use of unitranche financing, both domestically and abroad, has created new opportunities for middle market loan participants. However, lenders must understand the legal issues and potential bankruptcy risks...more

Producers Beware: What happens when your movie distributor files bankruptcy?

The Issue - There has been written a plethora of articles about Bankruptcy Code §365(n) regarding the rights of parties to license agreements when the licensor files a bankruptcy and rejects a license agreement....more

Blog: Rough Waters Could Be Ahead for Those Seeking Protection of Section 546(e) Safe Harbor

A recent decision by the Bankruptcy Court for the District of Delaware in PAH Litigation Trust v. Water Street Healthcare Partners L.P. (In re Physiotherapy Holdings, Inc.), Case No. 13-12965 (KG) (Bankr. D. Del. June 20,...more

The Impact of PROMESA on Creditors

On June 30, 2016, the United States Senate passed the “Puerto Rico Oversight, Management and Economic Stability Act” (“PROMESA”) and it was quickly signed into law by President Obama. PROMESA enables the Commonwealth of...more

Judge Chapman Flips the Script

US Bankruptcy Court for the Southern District of NY Grants Noteholders’ Motion to Dismiss Based on Lehman’s Failure to State Claim With Respect to Flip-Clause Litigation - On June 28, 2016, in what essentially was a...more

Not So Safe After All?

United States Bankruptcy Court for the District of Delaware Holds That Litigation Trustee May Pursue State Law Fraudulent Conveyance Claims, Notwithstanding Bankruptcy Code Safe Harbors - On June 20, 2016, the United...more

You Get a Car! You Get a Car! Bankruptcy Court Gives Debtor a Car. Unsecured Creditors Get Nothing.

So, a ruling came out in June that we in The Bankruptcy Cave have been dying to blog about (and not just so we can use the blog title above). Forgive the delay – heavy workloads and summer vacations often preclude timely...more

Troubled Waters: The Raging Storm Over Safe Harbors

Two United States courts recently issued decisions involving the scope of the Bankruptcy Code’s safe-harbor provision in section 546(e) related to avoidance actions. In one, in the Second Circuit, the court took a broad...more

Court Finds Broad Exemption for IRAs

In In re Elizabeth Bratton Moore, the Bankruptcy Court for the Eastern District of Texas (Sherman Division) ruled that the exemption for IRAs in Section 42.0021 of the Texas Property Code applies not only while the funds are...more

Seventh Circuit: Section 546(e) Safe Harbor Does Not Shield From Avoidance Transfers Made Through Financial Institution Conduits

In FTI Consulting, Inc. v. Merit Management Group, LP, the Seventh Circuit recently held that transfers are not protected under the safe harbor of section 546(e) of the U.S. Bankruptcy Code from fraudulent transfer and other...more

In Conflict With Other Circuits, Seventh Circuit Rules That Certain Transfers Involving Financial Institution Intermediaries Not...

Section 546(e) of the bankruptcy code prohibits a bankruptcy trustee from avoiding “settlement payment[s]”, or payments “made in connection with a securities contract,” that are “made by or to (or for the benefit of)”...more

Second Circuit Raises a Caution Flag for Sales Free-and-Clear of Claims

The power of a bankruptcy court to authorize the sale of assets “free-and-clear” of liens and any other interests is a powerful tool that is used to realize value from distressed businesses. Indeed, purchasers will...more

Environmental Liabilities in Oil & Gas Sales Under Bankruptcy Code Section 363

Since the beginning of 2015, at least 77 companies in the oil and gas industry have sought bankruptcy relief in the United States. The flow of oil and gas company bankruptcies shows no sign of slowing down and, based on the...more

Chapter 13 Plans are Just About Written in Stone

Recently, a bankruptcy judge in the United States Bankruptcy Court for the Eastern District of North Carolina issued a ruling that should help lenders dealing with borrowers in Chapter 13. In a case entitled In re Royal, the...more

Puerto Rico: Congress and Supreme Court Shape a Path Towards Financial Recovery

Puerto Rico’s financial woes have recently been front and center in financial news. Although a recent decision by the U.S. Supreme Court curtailed Puerto Rico’s ability to enact its own legislation to address its debt...more

Are Those Taxes Owing On Your Late-Filed Tax Return Dischargeable? Maybe, But You Better Be In The Right Circuit

Individual debtors with old tax debts relating to late-filed tax returns may be surprised to find that those tax debts may not be dischargeable under section 523(a) of the Bankruptcy Code due to the lateness of the tax...more

Drilling Deeper: The Intersection of Producer Bankruptcies and Gathering Agreements

The issue of whether gathering agreements are subject to rejection in bankruptcy as executory contracts and whether certain provisions of those agreements run with the land and survive rejection will impact ongoing bankruptcy...more

PROMESA Shields Puerto Rico Behind a New Automatic Stay

On June 30, 2016, President Obama signed the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) into law. The most significant portions of PROMESA are found in titles I and II, which establish an...more

Suspicious Minds: Lender's Failure to Investigate and Search For "Possible Dirt" Leads to Fraudulent Transfer Liability, but Not...

In a decision that deserves the close attention of secured lenders, the U.S. Court of Appeals for the Seventh Circuit held that a bank’s awareness of suspicious facts about the collateral pledged to secure its loan required...more

Improper Use of Contract Attorneys, Failure to Disclose Terms – This Case Has It All.

Estate professionals are under continued scrutiny. Unlike other professionals, getting paid is not simply a matter of sending a bill. The bankruptcy court, appropriately so, closely oversees the amount and timing of payment...more

Preparing Yourself and Your Client for Chapter 11: Part I of II – The Petition Package, Filing the Case, Filing Fees, and First...

As a Chapter 11 debtor’s attorney, the prospect of serving as debtor’s counsel is an exciting – and increasingly rare – opportunity. The preparation for filing a Chapter 11 case involves negotiating complex cash collateral...more

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