A discharge of debt in bankruptcy “operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of...more
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
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
It is well known in the restructuring world that a debtor in bankruptcy can’t get a PPP loan. But what if you’re a debtor and decide a PPP loan could save your business? Will a court dismiss the case so you can seek a loan?...more
3/9/2021
/ Appeals ,
Bankruptcy Code ,
Bankruptcy Court ,
Commercial Bankruptcy ,
Coronavirus/COVID-19 ,
Corporate Counsel ,
Creditors ,
Debtors ,
Motion to Dismiss ,
Paycheck Protection Program (PPP) ,
Relief Measures ,
Small Business
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
We have blogged previously about section 546(e), the Bankruptcy Code’s safe harbor for certain transfers otherwise subject to avoidance as preferences or fraudulent transfers. See 11 U.S.C. § 546(e). Among the transfers...more
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
When a debtor files for bankruptcy, the Bankruptcy Code provides for an automatic stay of almost all proceedings to recover property from the debtor. See 11 U.S.C. § 362(a). A party in interest can seek an order exempting...more
1/27/2020
/ Appeals ,
Automatic Stay ,
Bankruptcy Code ,
Bankruptcy Court ,
Creditors ,
Debtors ,
Federal Rules of Bankruptcy Procedure ,
Motion for Relief from Automatic Stay ,
Reaffirmation ,
Right To Appeal ,
Ritzen Group Inc v Jackson Masonry LLC ,
SCOTUS ,
Time-Barred Claims
Section 303 of the Bankruptcy Code allows creditors to initiate an involuntary bankruptcy case against a debtor. The petition initiating the case must be filed by creditors holding claims aggregating to at least $10,000, and...more
The Bankruptcy Code gives a trustee powers to avoid certain pre-bankruptcy transfers of the debtor’s property to other entities. For example, a trustee can avoid transfers made with the intent to impair the ability of...more
10/30/2019
/ Affirmative Defenses ,
Bankrtupcy Code Section 550 ,
Bankruptcy Code ,
Bankruptcy Court ,
Burden of Proof ,
Commercial Bankruptcy ,
Creditors ,
Debt Collection ,
Debtors ,
Due Process ,
Fraudulent Transfers ,
Google ,
Trustees
Consider these facts. A debtor in bankruptcy sued two parties for breach of contract. The debtor assigned its rights and interests in the cause of action to another entity. The defendants moved to dismiss the lawsuit, arguing...more
9/11/2019
/ Appeals ,
Bankruptcy Court ,
Breach of Contract ,
Debtors ,
Federal Rules of Bankruptcy Procedure ,
Federal Rules of Civil Procedure ,
Filing Requirements ,
Jurisdiction ,
Motion to Dismiss ,
Personal Jurisdiction ,
Remand ,
Subject Matter Jurisdiction ,
Vacated
Chapter 15 of the Bankruptcy Code, added in 2005, provides a route for debtors to obtain US recognition of their insolvency proceedings in other countries. A foreign proceeding can be recognized under chapter 15 as either a...more
Last year, we discussed a decision by Judge Sean Lane of the United States Bankruptcy Court for the Southern District of New York concerning section 109(a) of the Bankruptcy Code. In a recent cross-border case, In re PT...more
5/31/2019
/ Bankruptcy Code ,
Bankruptcy Court ,
Chapter 15 ,
Choice-of-Law ,
Commercial Bankruptcy ,
Creditors ,
Cross-Border ,
Debt Restructuring ,
Debtors ,
Eligibility ,
Filing Requirements ,
Forum Selection ,
Noteholders
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
5/6/2019
/ 363 Sales ,
Appeals ,
Auction ,
Bankruptcy Code ,
Bankruptcy Court ,
Breach of Contract ,
Chapter 11 ,
Chapter 7 ,
Commercial Bankruptcy ,
Creditors ,
Debtors ,
Fiduciary Duty ,
Private Sales ,
Sale of Assets ,
Settlement Agreements ,
Trustees
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
4/17/2019
/ 363 Sales ,
Approval Requirements ,
Auction ,
Bankruptcy Code ,
Bankruptcy Court ,
Chapter 11 ,
Commercial Bankruptcy ,
Commercial Leases ,
Debtors ,
Private Sales ,
Public Bidding ,
Sale of Assets
When a debtor files for bankruptcy, almost all proceedings to recover property from the debtor are automatically stayed by force of law. See 11 U.S.C. § 362(a). This provision, known as the automatic stay, is a central...more
When a party files for bankruptcy, the Bankruptcy Code imposes an automatic stay of litigation against a debtor for claims arising prior to the commencement of the bankruptcy case. See 11 U.S.C. § 362(a). Where there is a...more
If the National Labor Relations Board (“NLRB”) fines an employer for unlawfully firing workers who tried to unionize, can the employer discharge the fine in bankruptcy, or will the exception to discharge found in Bankruptcy...more
2/7/2019
/ Administrative Law Judge (ALJ) ,
Affirmative Defenses ,
Appeals ,
Back Pay ,
Bankruptcy Code ,
Bankruptcy Court ,
Chapter 7 ,
Debtors ,
Dischargeable Debts ,
Employee Rights ,
Employer Liability Issues ,
Hiring & Firing ,
Just Cause ,
NLRA ,
NLRB ,
Personal Liability ,
Section 7 ,
Union Organizers ,
Willful Violations
A court in New York has allowed offshore debtors to take control of an investment account in the U.S. over the objection of a shareholder. At stake was the court’s discretion to permit chapter 15 debtors to access the funds...more
Defendants in a lawsuit didn’t waive their right to arbitrate even after moving to dismiss and answering a complaint, a court held last week. Arbitration wasn’t waived because the defendants hadn’t filed affirmative defenses...more
11/20/2018
/ Affirmative Defenses ,
Arbitration ,
Arbitration Agreements ,
Bankruptcy Court ,
Chapter 13 ,
Counterclaims ,
Debtors ,
Deed of Trust ,
Discovery ,
Mortgage Lenders ,
Motion for Summary Judgment ,
Motion to Dismiss ,
Prejudice
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
10/24/2018
/ Bankruptcy Court ,
Chapter 11 ,
Commercial Bankruptcy ,
Debt Financing ,
Debt Restructuring ,
Debtors ,
Debtors-in-Possession ,
Lenders ,
Liquidity ,
Retailers ,
Sears
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
10/1/2018
/ Automatic Stay ,
Bankruptcy Code ,
Bankruptcy Court ,
Borrowers ,
Chapter 11 ,
Chapter 7 ,
Consumer Lenders ,
Debtors ,
Liquidation ,
Loans ,
Mandatory Arbitration Clauses ,
Motion for Relief
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
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
8/9/2018
/ Administrative Expenses ,
Bankruptcy Code ,
Bankruptcy Court ,
Chapter 11 ,
Commercial Bankruptcy ,
Competitive Bidding ,
Contribution Claims ,
Creditors ,
Debtors ,
Merger Agreements ,
Purchasers
Section 327(a) of the Bankruptcy Code imposes restrictions on the employment of professionals to assist a trustee, requiring that such professionals “not hold or represent an interest adverse to the estate” and be...more