News & Analysis as of

Breach of Duty Bankruptcy Code

Proskauer Rose LLP

Conflict Between Delaware LLC Act and Bankruptcy Code Affects Creditor Toolbox

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As you know from our prior alerts, creditors of borrowers formed as Delaware LLCs (as opposed to corporations) lack standing under Delaware law to sue directors for breaching fiduciary duties even when, to the surprise of...more

Mintz - Bankruptcy & Restructuring Viewpoints

Delaware Bankruptcy Court Grants Derivative Standing to Creditors’ Committee to Sue Members and Officers of Delaware LLC

In early February, a Delaware bankruptcy judge set new precedent by granting a creditors’ committee derivative standing to pursue breach of fiduciary duty claims against a Delaware LLC’s members and officers. At least three...more

Nelson Mullins Riley & Scarborough LLP

Practice Pointer: Reliance on Bankruptcy Court Appointed Examiner’s Report—Not so Fast

You represent the unsecured creditors committee in a complex Chapter 11 case, where you have reason to believe that the debtor’s officers and directors have, and continue to, engage in self-dealing and are breaching their...more

Proskauer Rose LLP

Del. Bankruptcy Rulings Instruct on Creditors' Rights to Sue

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Creditors of distressed businesses are often frustrated by shareholder- controlled boards when directors pursue strategies that appear to be designed to benefit shareholders at the creditors' expense. In these...more

Proskauer Rose LLP

Suing Directors of a Troubled Business: When Form Trumps Substance

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Creditors of distressed businesses are often frustrated by shareholder-controlled boards when directors pursue strategies that appear to be designed to benefit shareholders at the creditors’ expense. In these circumstances,...more

Freeman Law

Bankruptcy and Non-Dischargeability Causes of Action

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This adversary proceeding in Rennaker v. Davis, Case No. 20-04065 (Bankr. N.D. Tex., Nov. 9, 2021), involves a litany of non-dischargeability allegations – both under 11 U.S.C. §523 and §727. Judge Mark Mullin’s opinion...more

Jones Day

Second Circuit Adopts "Control Test" for Imputation of Fraudulent Intent in Bankruptcy Avoidance Litigation

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In yet another chapter in the tortured saga of the fallout from the failed 2007 leveraged buyout ("LBO") of media giant The Tribune Co. ("Tribune") in a transaction orchestrated by real-estate mogul Sam Zell, the U.S. Court...more

Dorsey & Whitney LLP

2020 Recap: Corporate Restructuring Review

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Amidst a global pandemic, there were plenty of interesting bankruptcy and restructuring events and changes that occurred in 2020. We saw new Bankruptcy Code amendments go into effect (through the Small Business Reorganization...more

Jones Day

Creditors' Committee Denied Standing to Bring Derivative Claims on Behalf of LLC Debtor in Bankruptcy

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The practice of conferring "derivative standing" on official creditors' committees to assert claims on behalf of a bankruptcy estate in cases where the debtor or a bankruptcy trustee is unwilling or unable to do so is a...more

Jones Day

Stay Extended to Bar Litigation Against Chapter 15 Foreign Representatives but No Ruling on Extraterritoriality of Barton Doctrine

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In McKillen v. Wallace (In re Irish Bank Resolution Corp. Ltd.), 2019 WL 4740249 (D. Del. Sept. 27, 2019), the U.S. District Court for the District of Delaware had an opportunity to consider, as an apparent matter of first...more

Mintz - Bankruptcy & Restructuring Viewpoints

The Fifth Circuit Adopts An Expansive Reading Of Section 510(B); Subordinates Claim With 'Equity Characteristics'

In French v. Linn Energy, L.L.C. (In re Linn Energy, L.L.C.), the United States Court of Appeals for the Fifth Circuit addressed the scope of Bankruptcy Code Section 510(b), settling on an expansive reading of the Section,...more

Winstead PC

Court Holds That The Cost To Create A Distributor List Was Sufficient Evidence of Damages for A Breach of Fiduciary Duty Claim

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In In re Amerisciences, a bankruptcy trustee sued a bankrupt company’s former officers for breach of fiduciary duty regarding the theft of trade secrets. No. 18-20394, 2019 U.S. App. LEXIS 20635 (5th Cir. July 11, 2019). ...more

Patterson Belknap Webb & Tyler LLP

Fifth Circuit Considers Nonconsensual Third-Party Releases Outside of Bankruptcy

We’ve focused a lot on third-party releases lately, as bankruptcy courts across the country continue to evaluate whether and under what circumstances they are permissible. But, as a recent opinion of the United States Court...more

Ward and Smith, P.A.

Will My Judgment Get Discharged in Bankruptcy?

Ward and Smith, P.A. on

Bankruptcy is meant to provide a fresh start for the honest but unfortunate debtor. A debtor who files Chapter 7 does so with the presumption that all his or her debts will be forgiven or "discharged." But what about the...more

Baker Donelson

If You're Reading This, You're Too Late: Key Drivers in Rising Health Care Defaults

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Health care bankruptcy filings more than tripled in 2017 as compared to 2016 with no end in sight to the financial struggles facing owners and operators in the sector. According to Bloomberg, health care bankruptcies have...more

Jones Day

Foreign Debtors’ Forum Shopping Warranted Stay of U.S. Avoidance Litigation

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Even if a U.S. court has jurisdiction over a lawsuit involving foreign litigants, the court may conclude that a foreign court is better suited to adjudicate the dispute because either: (i) it would be more convenient, fair,...more

Patterson Belknap Webb & Tyler LLP

Chapter 15: Decision Reviews Jurisdictional Issues and Bankruptcy Code Section 109

In a recent decision, In re B.C.I Fins. Pty Ltd. (In Liquidation), No. 17-11266, 2018 Bankr. LEXIS 1217 (Bankr. S.D.N.Y. Apr. 24, 2018), Judge Sean Lane granted a chapter 15 petition after rejecting a challenge to...more

Goulston & Storrs PC

T&E Litigation Newsletter - February 2017

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Several recent decisions serve as a good reminder that it is not only the Probate and Family Court that addresses important T&E issues in Massachusetts. In the consolidated matters of Hanna et al. v. Williams et al.,...more

Winstead PC

Breach of Fiduciary Duty Judgment May Be Dischargeable In Bankruptcy

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It is not uncommon for a successful plaintiff in a breach of fiduciary duty case to have their collection efforts thwarted by a defendant filing for bankruptcy. The issue is whether the state court judgment is dischargeable...more

Cole Schotz

Affirmed: New York’s Application of the In Pari Delicto Doctrine Bars Faithless Servant Claim and Bankruptcy Insider Exception

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A recent decision of the United States District Court for the Southern District of New York (the “District Court”), affirming a decision of the United States Bankruptcy Court for the Southern District of New York (the...more

Orrick, Herrington & Sutcliffe LLP

Orrick's Financial Industry Week in Review

SEC Provides Additional Analysis Related to Proposed Pay Ratio Disclosure Rules - On June 4, the Securities and Exchange Commission provided additional analysis related to its proposed rules for pay ratio disclosure. The...more

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