Commercial Bankruptcy

News & Analysis as of

Paid Rejection: Bankruptcy Court Allows Professional Fees Despite Trustee’s Flawed Strategy

Can a bankruptcy court deny fees requested by a professional simply because her client chose a poor strategy? The Bankruptcy Court for the District of Idaho recently rejected such a notion, holding that an accounting...more

The Devil's Dictionary of Bankruptcy Terms: Venue

The "Devil's Dictionary" is a quick-reference guide for commercial lenders and other restructuring professionals. In this series, we highlight many of the buzz words found in the Dictionary and used in today's bankruptcy...more

Second Circuit Holds That Minority Bondholders Cannot Avail Themselves of the Trust Indenture Act

While out-of-court restructurings can help companies in need, they can negatively impact minority bondholders. Minority bondholders displeased with out-of-court restructurings looked to a 2015 decision interpreting the Trust...more

Bankruptcy Is Not A Borrower Antidote For Loan “Default Interest”

Defaulting on a loan typically triggers a higher interest rate — “default interest” — as one of many consequences for the borrower. (Other consequences include acceleration of the maturity, late fees and penalties, and...more

Hanjin Shipping Declared Bankrupt

The Seoul Central District Court declared Hanjin Shipping Co Ltd bankrupt on Friday February 17, 2017, after ruling that Hanjin’s liquidation value was greater than its going concern value...more

Your Daily Dose of Financial News

Shareholders have accused Under Armour of “concealing the impact” of Sports Authority’s bankruptcy from investors in order to artificially inflate its stock price. The suit comes on the heels of a disastrous Q4 for UA, in...more

Effectively Defending Adversarial Actions Brought Against Former D&Os in Bankruptcy Court

When private equity investors, hedge funds, distressed asset funds, major shareholders or founders step up and take board positions to help guide or turnaround a troubled company, they often do so for all the right reasons....more

Chris Lazarini Comments on Scope of Bankruptcy Rule 2004 Examination

Bass, Berry & Sims attorney Chris Lazarini commented on a case in which objectors (a law firm, banks and accountants) opposed a bankruptcy trustee's Rule 2004 Motion requesting information related to his investigation of...more

Fifth Circuit Rules for PACA Claimants, and Weakens PACA, All in One Curious Ruling

Most restructuring practitioners are aware, either vaguely or through punishing experience, of the power of PACA creditors. PACA (or the Perishable Agricultural Commodities Act, 7 U.S.C. § 499a et seq. for those who hate...more

Ninth Circuit Holds That Rule Allowing Curing Debtors to Avoid Contractual Post-Default Interest Is No Longer Valid

The Ninth Circuit recently ruled that a Chapter 11 debtor could not avoid the payment of default interest under a promissory note as a condition to curing and reinstating such promissory note under a Chapter 11 plan. In...more

When Construction Contracts Go Sideways in Bankruptcy

The contractor on a project files a bankruptcy case. How should the property owner and subcontractors proceed? When a party to a contract files bankruptcy, the other party’s actions are constrained by the bankruptcy code....more

In re Roust: Seven Steps to Confirming a Plan in Seven Days

On January 6, 2017, Judge Robert D. Drain of the Bankruptcy Court for the Southern District of New York orally approved a prepackaged plan of reorganization (a “Prepack”) in In re Roust Corporation, et al. (Case No....more

Substantive Consolidation: It’s Alive and Well (or Maybe Just Alive)

The doctrine of substantive consolidation (generally- the power of a bankruptcy court to consolidate the assets and liabilities of affiliated entities in bankruptcy) is a recognized remedy exercised by bankruptcy courts – one...more

The Devil's Dictionary of Bankruptcy Terms: Liquidating Chapter 11

The "Devil's Dictionary" is a quick-reference guide for commercial lenders and other restructuring professionals. In this series, we highlight many of the buzz words found in the Dictionary and used in today's bankruptcy...more

“Any and All” Doesn’t Preserve Any and All Estate Claims Post-Confirmation

The Bankruptcy Code permits Chapter 11 plans to provide for the reservation of any claims or interests that that belong to the debtor or the estate, allowing the plans to be confirmed prior to the final resolution of any and...more

Be Sure to Observe Formalities to Protect Business Assets

When entering into a new venture, it is not uncommon for a new legal entity to be formed in order to insulate an existing company from the liabilities associated with the new business. While the law absolutely permits this, a...more

So What Does a Bankruptcy Carve-Out Clause Really Mean? Delaware Bankruptcy Court Concludes It is Not a Cap on Fees After All

In chapter 11 bankruptcy cases, it is not uncommon for secured parties/lenders to provide a “carve-out” for various professional fees. Frequently there may be a “carve-out” for “all chapter 11 professionals” or the...more

Handy List of Basic Issues to Consider for the Transactional Workout

While significant energy here at the Bankruptcy Cave is devoted to substantive bankruptcy matters, not all aspects of a general insolvency practice are always fun and litigation. Oftentimes insolvency lawyers add the most...more

Delaware Bankruptcy Court Amends Local Rules

The Delaware Bankruptcy Court amended its local rules effective February 1, 2017. A copy of the latest version of the rules may be found on the Bankruptcy Court's website. The red-line version to the 2016 version shows...more

Delaware Bankruptcy Judge: A Carve-Out for Fees Is Not a Cap

Judge Christopher Sontchi recently issued an important opinion in the Molycorp chapter 11 case. He held that a standard carve-out in a financing order for the fees of counsel and other professionals for an official...more

Bankruptcy Court Sends Not-So-Gentle Reminder About Observing Corporate Formalities

In a recent decision, the United States Bankruptcy Court for the Eastern District of Massachusetts sent a reminder to practitioners and family business owners that it is critical to maintain corporate formalities in order to...more

CFPB files complaint alleging defendants ran unlawful debt relief operation

The CFPB has filed a complaint in a California federal district court against three law firms and two individual attorneys alleging that they offered debt relief services to consumers in violation of the Telemarketing Sales...more

Roust’s Rapid Road to Confirmation: Confirmation of a Prepackaged Plan in the Southern District of New York in Less Than a...

In less than a week after its bankruptcy filing, a debtor was able to obtain confirmation of its prepackaged plan of reorganization in the Bankruptcy Court for the Southern District of New York. In allowing the case to be...more

"Oil and Gas Industry Seeks Steady Ground Following Year of Restructurings, Restrictive Lending"

Crude oil and natural gas prices reached multiyear lows of approximately $26 per barrel for crude oil (as of January 2016) and $1.50 per million British thermal units (mmbtu) for natural gas (as of March 2016). This...more

Losing Your Marbles: A Sensible Interpretation of Section 316 of the Trust Indenture Act

The U.S. Court of Appeals for the Second Circuit issued its ruling in Marblegate Asset Management, LLC v. Education Management Corp. that provided much needed clarity to creditors and issuers involved in out-of-court...more

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