Recently, in In re Moon Group Inc., a bankruptcy court said no, but the district court, which has agreed to review the decision on an interlocutory appeal, seems far less sure.
The bankruptcy court held that a lockbox...more
7/14/2023
/ Advances ,
Appeals ,
Bankruptcy Court ,
Chapter 11 ,
Chapter 7 ,
Credit Agreements ,
Debtors ,
Interlocutory Appeals ,
Lenders ,
Line of Credit ,
Liquidity ,
Notice of Default
The Second Circuit recently held that a non-party to an assumed executory contract is not entitled to a cure payment (although it may be so entitled if is a third-party beneficiary of the contract). The result would have...more
Lenders often attempt to limit what a borrower can do outside the ordinary course of business by negotiating contractual protections. Some of these provisions are designed to make the borrowers bankruptcy remote by, for...more
Section 303(i) of the Bankruptcy Code authorizes the court to award the debtor sanctions on account of an improper filing of an involuntary petition against it. But can a non-debtor third-party obtain such a relief? Yes, says...more
12/16/2022
/ Automatic Stay ,
Bad Faith ,
Bankruptcy Code ,
Bankruptcy Court ,
Chapter 11 ,
Federal Rules of Bankruptcy Procedure ,
Fees ,
Involuntary Bankruptcy ,
Non-Debtors ,
PA Supreme Court ,
Sanctions
In a recent decision, the Court of Appeals for the Fifth Circuit held that an agreement between a debtor, a surety, and third-party beneficiaries was not an executory contract and, thus, was ineligible to pass-through the...more
The Bankruptcy Court for the District of New Jersey denied motions to dismiss the chapter 11 case of the newly created subsidiary of Johnson & Johnson, LTL Management LLC, and granted the debtor’s motion to stay prosecution...more
Highlights Introduction Last week, the House Judiciary Committee voted to send the Nondebtor Release Prohibition Act of 2021 to the floor of the house for vote. If passed, the bill would introduce two major amendments to the...more
Should a claim for appraisal rights brought by a former shareholder of a Chapter 11 debtor be subordinated under Section 510(b) of the Bankruptcy Code? According to the Bankruptcy Court for the District of Delaware, the...more
Recently, in In re Tribune Company, the Third Circuit affirmed that the Bankruptcy Code means exactly what it says and that the enforcement of subordination agreements can be abridged when cramming down confirmation of a...more
9/1/2020
/ Appeals ,
Bankruptcy Code ,
Chapter 11 ,
Commercial Bankruptcy ,
Cramdown ,
Creditors ,
Debtors ,
Discrimination ,
Interest Rate Swaps ,
Parent Corporation ,
Reorganizations ,
Senior Secured Debt ,
Subordination Agreement
Analyzing the inner workings of the elements required for the securities contract “safe harbor” protection under Section 546(e) of the Bankruptcy Code, the Bankruptcy Court for the SDNY dismissed a complaint seeking to...more
No, says the Delaware Bankruptcy Court in In re Maxus Energy Corp. In Maxus, the defendant, Vista Analytical Laboratory, Inc. (“Vista” or the “Defendant”), a designated critical vendor, sought summary judgement dismissing the...more
In a recent bench ruling, the Delaware bankruptcy court denied a motion to dismiss a chapter 11 bankruptcy filing, notwithstanding the fact that the filing contravened an express bankruptcy-filing blocking right, or “golden...more
In a recent decision on motions for summary judgement in the TransCare case, the SDNY bankruptcy court addressed the test for the imposition of liability under the US and New York Worker Adjustment and Retraining Notification...more
5/22/2020
/ Chapter 11 ,
Chapter 7 ,
Commercial Bankruptcy ,
Common Ownership ,
Corporate Restructuring ,
Debtors ,
Economic Realities Test ,
Financial Distress ,
Layoffs ,
Motion for Summary Judgment ,
Private Equity Funds ,
Single Employer Liability Test ,
Unpaid Wages ,
WARN Act
Two courts recently answered “yes,” finding that environmental claims brought against reorganized debtors by government entities were discharged under confirmed Chapter 11 plans of reorganization. In In re Exide Techs., 613...more
5/15/2020
/ Air Pollution ,
Appeals ,
Bankruptcy Code ,
Bankruptcy Discharge Order ,
Batteries ,
Carve Out Provisions ,
Chapter 11 ,
Civil Monetary Penalty ,
Coal Industry ,
Commercial Bankruptcy ,
Common Law Claims ,
Corporate Restructuring ,
Debtors ,
Dischargeable Debts ,
Enforcement Actions ,
Environmental Violations ,
Fines ,
Fraud ,
Global Warming ,
Municipalities ,
Permanent Injunctions ,
Police Power ,
Proof of Claims ,
Public Nuisance ,
Recycling ,
State Regulators ,
Strict Liability
Disagreeing with the much-critiqued SDNY opinion in Enron, the SDNY bankruptcy court disallowed claims brought by secondary transferees because the original claimants allegedly received millions of dollars in fraudulent...more
4/29/2020
/ Avoidable Transfer ,
Bank Fraud ,
Bankruptcy Code ,
Banks ,
Chapter 11 ,
Commercial Bankruptcy ,
Corporate Crimes ,
Criminal Proceeds ,
Debtors ,
Fraudulent Transfers ,
Secondary Markets ,
Section 502
Section 365(f) of the Bankruptcy Code allows the assignment of leases and executory contracts notwithstanding any provision in the contract or the applicable law that “prohibits, restricts, or conditions the assignment….” So,...more
Confirmation of a Chapter 11 plan generally requires the consent of each impaired class of creditors. A debtor can “cramdown” a plan over creditor dissent, however, as long as at least one class of impaired claims accepts the...more
2/24/2020
/ Bankruptcy Code ,
Bifurcation ,
Chapter 11 ,
Commercial Bankruptcy ,
Commercial Buildings ,
Confirmation Proceedings ,
Cramdown ,
Creditors ,
Debtors ,
Flooding ,
Gerrymandering ,
Secured Debt ,
Shopping Centers ,
Unsecured Debt
Yes, says the Third Circuit. The Third Circuit recently held that the Bankruptcy Court has the authority to confirm a chapter 11 plan which contains nonconsensual, third-party releases when such releases are integral to the...more
1/13/2020
/ Bankrtupcy Confirmation Plans ,
Bankruptcy Court ,
Centers for Medicare & Medicaid Services (CMS) ,
Chapter 11 ,
Commercial Bankruptcy ,
Constitutional Challenges ,
Counterclaims ,
Creditors ,
Debtors ,
Department of Justice (DOJ) ,
Equity Investors ,
Injunctions ,
Judicial Authority ,
Lenders ,
Liquidity ,
Non-Consensual Rights ,
Reorganizations ,
Scope of Authority ,
Settlement Agreements ,
Shareholders ,
Stern v Marshall ,
Third-Party Release Agrements ,
Transfer of Assets
In the fifth opinion involving the repo liquidation saga of HomeBanc, the Third Circuit addressed several crucial issues involving the liquidation and valuation of repo collateral in bankruptcy. In re HomeBanc Mortg....more
1/7/2020
/ Affiliates ,
Appeals ,
Auction ,
Automatic Stay ,
Bankruptcy Code ,
Bid Solicitation ,
Buyers ,
Chapter 11 ,
Chapter 7 Conversions ,
Collateral ,
Commercial Bankruptcy ,
Damages ,
Default ,
Deficiency Judgments ,
Foreclosure ,
Good Faith ,
Inside Information ,
Investment Banks ,
Liquidation ,
Mortgage Lenders ,
Mortgage-Backed Securities ,
Mortgages ,
Repossess ,
Safe Harbors ,
Securities ,
Sellers ,
Trustees ,
Valuation
Following various disputes as to the scope of the collateral given to secured creditors, the debtors and certain of their noteholders jointly proposed a chapter 11. The plan included a rights offering that the consenting...more
Two United States Bankruptcy Judges for the Southern District of New York recently issued a joint opinion addressing common issues raised by motions to dismiss in two separate adversary proceedings – one pending before Judge...more
5/14/2018
/ Adversary Proceedings ,
Appeals ,
Avoidance ,
Bankruptcy Court ,
Breach of Duty ,
Chapter 11 ,
Chapter 15 ,
Comity ,
Commercial Bankruptcy ,
Conservators ,
Debtors ,
Dismissals ,
Fiduciary Duty ,
Financial Crisis ,
Foreign Banks ,
Forum Non Conveniens ,
Forum Shopping ,
Fraudulent Transfers ,
Insolvency ,
International Litigation ,
Judicial Review ,
Motion to Dismiss ,
Multi-Jurisdictional Litigation ,
Parent Corporation ,
Receivership ,
Stays ,
Ultra Vires
As has been widely reported, over the last several years Takata Corporation and its various worldwide subsidiaries (together “Takata”) have been involved in a multitude of governmental investigations, class actions and...more
2/1/2018
/ Automobile Recall ,
Bankruptcy Code ,
Chapter 11 ,
Chapter 15 ,
Class Action ,
Constitutional Challenges ,
Corporate Restructuring ,
Creditors ,
Debtors ,
Due Process ,
Foreign Bankruptcies ,
Japan ,
Multi-Jurisdictional Litigation ,
Multidistrict Litigation ,
Proof of Claims ,
Public Policy ,
Takata
U.S. Bankruptcy Rule 9019 provides that on a motion brought by a trustee (and thus a chapter 11 debtor-in-possession as well) the court may approve a settlement. The prevailing view is that due to the court’s approval...more
Directors and officers (D&Os) of troubled companies should be highly sensitive to D&O insurance policies with Prior Act Exclusion. While policies with such exclusion may be cheaper, a recent decision by the U.S. Court of...more
7/13/2017
/ Appeals ,
Banks ,
Breach of Duty ,
Chapter 11 ,
Class Action ,
Commercial Bankruptcy ,
Corporate Officers ,
Creditors ,
D&O Insurance ,
Debt Restructuring ,
Denial of Insurance Coverage ,
Directors ,
Insolvency ,
OTS ,
Parent Corporation ,
Policy Exclusions ,
Prior Wrongful Acts ,
Securities Violations ,
Shareholders ,
Subsidiaries ,
Transfer of Assets