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One Bankruptcy Court’s Analysis of a Motion to Dismiss Avoidance Claims: The Analytical Framework

A federal judge recently allowed a trustee’s preferential transfer claim against a law firm to proceed but dismissed a constructive fraudulent transfer claim. The decision highlights the pleading standards and analytical...more

Unqualified "Cares" Act Funds Can't Be Used To Pay Creditors

U.S. Bankruptcy Judge Craig A. Gargotta rejected a debtor’s attempt to use “CARES Act” funds, which it did not actually qualify for, to pay creditors in its chapter 11 case. BR Healthcare Solutions (the “Debtor”)...more

Executory Contracts: Third Circuit Does Not Recognize the Doctrine of Implied Assumption

A recent case before bankruptcy judge Karen B. Owens of the United States Bankruptcy Court for the District of Delaware, In re Dura Auto. Sys., LLC, No. 19-12378 (KBO), 2021 WL 2456944 (Bankr. D. Del. June 16, 2021), provides...more

Bankruptcy Court Dismisses NRA’s Ch. 11 Petition

United States Bankruptcy Judge Harlin Hale recently dismissed the National Rifle Association’s Chapter 11 petition as not filed in good faith.  The decision leaves the 150-year-old gun-rights organization susceptible to the...more

The Final Say: Conversion from Chapter 11 to Chapter 7 is Not a Given

It is well-settled that if you are a debtor in chapter 11, you do not have the unfettered right to convert the case to a chapter 7 liquidation.  A recent 10th Circuit decision shows why. Kearney v. Unsecured Creditors...more

Debtor Alleges Thirteenth Amendment Violation; Court Says Debtor Has Standing to Assert the Claim; Decision on the Merits to...

It’s rare for a debtor in bankruptcy to raise allegations of involuntary servitude and a violation of the Thirteenth Amendment. But one debtor did just that after a chapter 11 trustee was appointed to take over the debtor’s...more

Section 1126 of the Bankruptcy Code and the Dangers of Sleeping on Your Rights as a Creditor

A seat at the table: this is what you likely want when your financial interests are drawn into a bankruptcy court proceeding. You’ll seek to be heard and do what you can to maximize your recovery. This is especially true if...more

Delaware Bankruptcy Court Teaches Important Lesson on Timely Lien Perfection

Perfect your liens on time or you may lose them. That’s the painful lesson U.S. Bankruptcy Judge Karen B. Owens taught Halliburton Energy Services, Inc. in her recent decision. Ruling on plaintiff-debtor Southland Royalty...more

The Best Laid Plans: How a Proposed Sale of NYC Real Estate Under Section 363 of the Bankruptcy Code Went Awry

There are several ways in which property owners can advantageously use the Bankruptcy Code to effectuate strategic dispositions of assets. But the bankruptcy process can be fraught with uncertainty that can upend the best...more

Proposed Amendments to the CARES Act Would Expand Access to PPP Loans to Small Businesses in Chapter 11

The paycheck protection program (“PPP”) has been one of the most popular aspects of the CARES Act (i.e., the initial legislation responding to the COVID-19 pandemic). Yet, as has been widely reported, debtors in chapter 11...more

Bankruptcy Considerations in Light of COVID-19 Pandemic

COVID-19 is taking an alarming and unfortunate toll on our country’s population. Each day, we collectively face daunting health risks, and the economic cost to individuals and businesses alike has already been, and will...more

Bankruptcy Court Closes Chapter 11 Cases Even with an Appeal Pending and Over the Objection of the U.S. Trustee.

Debtors in chapter 11 cases are required to make quarterly payments to the United States Trustee’s Office. These fees support the UST Program that serves in all districts but those in two states. Quarterly fees must be paid...more

Third Circuit Addresses the Due Process Rights of Asbestos Claimants

When there are large numbers of substantial individual tort claims against a debtor, potentially involving claimants unknowable to the debtor who themselves may not know they have a claim, the bankruptcy process faces special...more

Bankruptcy Courts Don’t Need to Hold an Evidentiary Hearing in Order to Appoint a Chapter 11 Trustee

The U.S. Bankruptcy Code allows debtors to stay in control of their businesses in chapter 11. But the Code also empowers bankruptcy judges to replace a debtor’s management in certain circumstances with an outside trustee....more

Delaware Court Grants Substantial Contribution Award to Mechanic’s Lien Creditors

Delaware Bankruptcy Judge Brendan Shannon granted mechanic’s lien claimants $1.6 million for making a substantial contribution in a case by “demonstrably and materially facilitating the process of reorganization.” In re M & G...more

Another Ruling on Public Auctions Versus Private Sales Under Section 363

Two weeks ago, we discussed asset sales under Bankruptcy Code section 363. As that post noted, section 363 requires court approval for asset sales outside the ordinary course of business, with courts ensuring that sales...more

Subject Matter Jurisdiction in Bankruptcy: The Eleventh Circuit Addresses Related-To Jurisdiction

The subject matter jurisdiction of bankruptcy courts causes confusion and can be hard to understand. In a recent decision, the United States Court of Appeals for the Eleventh Circuit clarified the meaning of the phrase...more

Asset Sales in Bankruptcy: Public Auctions vs. Private Sales under Bankruptcy Code Section 363

We now address assets sales under Bankruptcy Code section 363. The statute allows debtors to use, sell, or lease their property in the ordinary course of business without court permission. But a debtor’s use, sale, or lease...more

In the News: USA Gymnastics Files Bankruptcy Due to Fallout over Sex-Abuse Scandal

A sex-abuse scandal has landed another organization in bankruptcy court. USA Gymnastics (“USAG”) filed chapter 11 last week in Indiana following a team doctor’s conviction for abusing hundreds of girls. ...more

Creditors’ Contractual Autonomy Does Not Triumph the Value of Bankruptcy Law as a Collective Dispute Resolution Mechanism

In a recent cross-border insolvency case, In re Agrokor d.d., 591 B.R. 163 (Bankr. S.D.N.Y. 2018), Judge Glenn of the United States Bankruptcy Court for the Southern District of New York recognized and enforced a...more

Sears: Another Retail Giant Turning to Bankruptcy Court for Help

Started as a mail-order retailer, evolved to brick-and-mortar stores in urban areas and expanded to a big-box retailer through merger, Sears is now facing the most turbulent time in its history. On October 15, 2018, Sears...more

Bankruptcy Court Finds Arbitration Clause in Consumer Loan Contract to be Sufficient Cause to Grant Relief from Automatic Stay

When a bankruptcy petition is filed, an automatic stay comes into effect staying proceedings against the debtor or the debtor’s property. 11 U.S.C. § 362(a). The stay centralizes litigation regarding the debtor and its...more

Third Circuit Denies Large Break-up Fee in High-Profile EFH Case

The Third Circuit denied a $275 million break-up fee to a bidder that was unsuccessful in its attempt to buy the crown-jewel assets in the high-profile EFH bankruptcy case. In re Energy Future Holdings Corp., No 18-1109, 2018...more

Delaware Court Denies $60 Million Administrative Expense Claim in the EFH Case

The Bankruptcy Court in Delaware recently denied a request for an administrative expense claim to an entity that tried but failed to buy a debtor’s key assets. The decision arises out of the first of three attempts by...more

Delaware District Court Dismisses Appeal by Creditors’ Committee After Case is Converted from Chapter 11 to Chapter 7

The Bankruptcy Code provides for the appointment of a creditors’ committee in chapter 11 bankruptcy cases. See 11 U.S.C. § 1102. There is no parallel provision applicable to chapter 7 cases. When a bankruptcy case is...more

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