News & Analysis as of

Limited Liability Company (LLC) Commercial Bankruptcy

Jones Day

Ability of Creditors' Committees to Prosecute Estate Claims Given a Boost in Delaware Bankruptcy Courts

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

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

Holland & Knight LLP

Delaware Bankruptcy Court Grants Creditors' Committee of Debtor LLC Derivative Standing

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In a recent opinion, In re Pack Liquidating, LLC (Pack Liquidating), the U.S. Bankruptcy Court for the District of Delaware held that under Official Committee of Unsecured Creditors of Cybergenics Corp. v. Chinery...more

Kramer Levin Naftalis & Frankel LLP

And Another Lender Blocking Provision Bites the Dust, Texas Bankruptcy Court Rules

One feature commonly seen in commercial lending transactions is a waiver of the borrower’s authority to file for bankruptcy without the consent of the lender. While such “blocking” provisions are generally upheld where the...more

Lerch, Early & Brewer

Revocation of Revocable Trust was Fraudulent Transfer

Lerch, Early & Brewer on

In JPMorgan Chase Bank, N.A. v. Winget, the United States Court of Appeals for the Sixth Circuit addressed whether Larry Winget (Winget) could revoke the Larry J. Winget Living Trust (Trust) to make the assets unreachable to...more

Nelson Mullins Riley & Scarborough LLP

Tenth Circuit BAP Holds that Section 541 of the Bankruptcy Code Doesn’t Invalidate Transfer Restrictions in LLC Operating...

In a recent decision by the Tenth Circuit Bankruptcy Appellate Panel, the court held that a chapter 7 trustee could not sell an LLC membership interest pursuant to section 363 of the Bankruptcy Code because of a transfer...more

Ward and Smith, P.A.

Foreclosure Warning: Property Possessed but Not Owned by a Debtor May Be Subject to the Automatic Stay

Ward and Smith, P.A. on

Creditors know that a bankruptcy petition automatically halts efforts to collect pre-petition debts from the debtor outside of bankruptcy.  The "automatic stay" provides fundamental protection to debtors, mandating a full...more

Winstead PC

Court Held That Those In Control Of A Limited Liability Company May Owe Fiduciary Duties To The Company And Its Members

Winstead PC on

​​​​​​​In In re Mijares, a plaintiff claimed that a defendant defrauded him and breached fiduciary duties owed to him by charging improper, excessive, and unauthorized expenses to their medical practice, causing the...more

Proskauer Rose LLP

NYC Office Tower Ch. 11 Shines Light On Blocking Provisions

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This article analyzes PWM Property Management LLC's bankruptcy filing in the U.S. Bankruptcy Court for the District of Delaware to explain the impact of the use of corporate governance blocking provisions. The filing also...more

Proskauer Rose LLP

Creditors Ask Court to Enforce Bankruptcy Blocking Provision and Approve Creditor Created Plan During Exclusivity Period in PWM...

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I. Introduction - The economic upheaval caused by the outbreak of COVID-19 was unprecedented in the United States and abroad. Employees were furloughed, businesses were mothballed or shut down altogether....more

Nelson Mullins Riley & Scarborough LLP

Recovery from a Member’s Interest in an LLC

In my last post on this Blog, I explored a potential avenue for a debtor to maximize value from the sale of its membership interest in a limited liability company (“LLC”) in bankruptcy, notwithstanding restrictions on sale in...more

Arnall Golden Gregory LLP

Restructuring Roundup - October 2021

Industry News - Washington Prime Group Announces Successful Completion of Financial Restructuring...   J&J is using a bankruptcy maneuver to block lawsuits over baby powder cancer claims...more

Patton Sullivan Brodehl LLP

LLC Operating Agreements Can Reduce Fiduciary Duties

LLC managers owe fiduciary duties both to the LLC and to the LLC’s members, similar to the duties owed by a partner to other partners in a partnership.  (Corp Code §17704.09.)  These include the duty of loyalty, care, and...more

Rivkin Radler LLP

Tax Distributions As Fraudulent Conveyances?

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The Calm Before? I’m confused. For better or worse, I’m pretty sure that I am not alone. Last week, in a letter addressed to the American people, forty-six of the fifty Republicans in the U.S. Senate indicated they...more

Ervin Cohen & Jessup LLP

Can Receivers Reject Leases For The Benefit of Creditors?

Q: I am a receiver in two different cases, both of which have problems. I was appointed in a partnership dispute case, where the only asset is a marijuana dispensary....more

Winstead PC

Bankruptcy Court Discussed The Fiduciary Duties Owed To A Limited Liability Company And Its Creditors By Its Manager

Winstead PC on

In In re Silver State Holdings, in a bankruptcy proceeding a trustee of a limited liability company sued its former manager for breach of fiduciary duty and another entity for conspiracy to breach fiduciary duty arising out...more

Dorsey & Whitney LLP

2020 Recap: Corporate Restructuring Review

Dorsey & Whitney LLP on

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

Delaware Bankruptcy Court Rules that Bankruptcy Blocking Right in Debtor's Corporate Charter Violates Federal Public Policy

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Courts sometimes disagree over whether provisions in a borrower's organizational documents designed to prevent the borrower from filing for bankruptcy are enforceable as a matter of federal public policy or applicable state...more

Spirit Legal

Liability risks for companies in crisis and how to avoid them

Spirit Legal on

Incoming payments pose liability risks for GmbHs on the brink of insolvency - Generally speaking, payments made by customers and debtors are always welcome. Unfortunately though, if a GmbH (German limited liability company)...more

Jones Day

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

Jones Day on

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

Expanding the Scope of the Bankruptcy Safe Harbor for Securities Transactions

Jones Day on

In 2019, the U.S. Court of Appeals for the Second Circuit made headlines when it ruled that creditors' state law fraudulent transfer claims arising from the 2007 leveraged buyout ("LBO") of Tribune Co. ("Tribune") were...more

Kramer Levin Naftalis & Frankel LLP

Bankruptcy Court Holds Committee of Unsecured Creditors Cannot Obtain Derivative Standing When Debtor Is a Delaware Limited...

Recently, in In re Dura Automotive Systems, No. 19-12378 (Bankr. D. Del. June 9, 2020), the Bankruptcy Court for the District of Delaware held that granting the Official Committee of Unsecured Creditors (the Committee)...more

Jones Day

Private Equity Update: 1st Circuit Reverses Imposition of Pension Plan Withdrawal Liability

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The Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA") amended the Employee Retirement Income Security Act of 1974 ("ERISA") and the Internal Revenue Code to make "trade[s] or business[es]" that are under "common...more

Ruder Ware

Did You Know That?

Ruder Ware on

There are many legal rules covering farms – rules that producers might not be aware of. A farm building may not be covered by standard insurance. Farm buildings are exempt from the state building code. And many standard...more

A&O Shearman

First Circuit Finds That Funds Were Not Liable for Portfolio Company’s Pension Fund Withdrawal Liability

A&O Shearman on

On November 22, 2019, the United States Court of Appeals for the First Circuit held that two separate private equity funds managed by the same general partner/management firm were not liable for the pension fund withdrawal...more

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