A fraudulent transfer is an attempt to avoid a debt by improperly transferring assets to a third party, or a transfer of assets for less than fair value made while the company is insolvent or will become insolvent as a result...more
Nelson Mullins reported on March 25 that the Fifth Circuit Court of Appeals, in Matter of S. Coast Supply Co., 91 F.4th 376 (5th Cir. 2024), held that preference claims arising under 11 U.S.C. § 547 may be sold, reversing the...more
Joining the Eighth and Ninth Circuit Courts of Appeals, the Fifth Circuit Court of Appeals recently held that a debtor or trustee can sell its avoidance actions to third-party, non-estate representatives. See Briar Capital...more
Two recent decisions in the Madoff bankruptcy cases illustrate that the legacy of Bernie Madoff will long survive the man himself. Bernie Madoff died on April 14, 2021, while incarcerated in the Federal Medical Center in...more
A bankruptcy trustee's ability to avoid and recover pre-bankruptcy preferential transfers is essential to preserving or augmenting the estate for the benefit of all stakeholders. In 2019, however, the Bankruptcy Code was...more
In 2022, there were several high-profile crypto bankruptcy filings. A big question in these cases is whether there will be any money to satisfy unsecured creditor claims. If there are funds to distribute, then the...more
Preference defense received an important boost this week when the Eleventh Circuit decided that invoices paid under 11 U.S.C. § 503(b)(9) can count as "new value" in defending against preference claims. It is the first...more
This is how Tribune ends: not with a bang, but a whimper. The 12-year litigation saga, rooted in the spectacular failure of the media and sports conglomerate’s 2007 leveraged buyout, reached an end in late February with a...more
For most non-bankruptcy attorneys, their first experience in bankruptcy court could very likely begin with a call from an agitated and bewildered client asking for help to understand why they have been sued by a trustee in a...more
AVOIDING POWERS - Fraudulent Transfers - Trustee may avoid transfer as actual fraudulent transfer only if ultimate decision-maker has fraudulent intent. Before entering into a two-step LBO transaction, the debtor formed...more
The Bankruptcy Code grants the power to avoid certain transactions to a bankruptcy trustee or debtor-in-possession. See, e.g., 11 U.S.C. §§ 544, 547–48. Is there a general requirement that these avoidance powers only be...more
Traditional avoidance actions under the Bankruptcy Code, i.e., preferences and fraudulent transfers, have laudable goals: (a) to provide equal treatment to creditors of an insolvent company and (b) to claw back otherwise...more
The U.S. Bankruptcy Court for the Southern District of New York recently added some weight to the majority rule on a hot-button issue for claims traders. In In re Firestar Diamond, Inc., 615 B.R. 161 (Bankr. S.D.N.Y. 2020),...more
The impact of the internet on brick-and-mortar retail, compounded by the economic devastation of the COVID-19 crisis, has created an unpredictable environment for trade vendors and service providers amid an uptick in...more
The U.S. Bankruptcy Court for the Eastern District of North Carolina recently added some weight to the majority rule on an issue that has long divided bankruptcy and appellate courts. In In re Southern Produce Distributors,...more
Yes, says the First Circuit. The First Circuit recently affirmed the District Court’s decision to deny a group of bondholders’ (the “Bondholders”) motion to have a trustee appointed for the Employees Retirement System of the...more
We have noodled on the impact that the Supreme Court’s decision in Merit Management Group, LP v. FTI Consulting, Inc., which held that the safe harbor provided in Section 546(e) of the Bankruptcy Code does not apply when the...more
The Second Circuit Court of Appeals recently held in In re Tribune Company Fraudulent Conveyance Litigation, No. 13-3992-cv (L) (2d Cir., Dec. 19, 2019) that Bankruptcy Code Section 546(e) barred claims seeking to avoid...more
Bankruptcy trustees continue to vigorously pursue actions in which they sue colleges, universities and other institutions of higher education to recover tuition payments made by parents for their children when the parents...more
In Jones v. Brand Law Firm, P.A. (In re Belmonte), Case No. 18-2098-bk (2d Cir. July 25, 2019), the Second Circuit affirmed both the bankruptcy court and district court decisions that found the Trustee was not barred by 11...more
Transfers and transactions up to ten years old may be scrutinized, unwound and recovered by a trustee, the bankruptcy court sitting in Massachusetts recently held in the NECCO (think chalky wafer candy) bankruptcy case. The...more
In In re Tribune Co. Fraudulent Conveyance Litig., 2019 WL 1771786 (S.D.N.Y. Apr. 23, 2019), the U.S. District Court for the Southern District of New York denied a litigation trustee’s motion to amend a complaint seeking to...more
The ability of a bankruptcy trustee to avoid fraudulent or preferential transfers is a fundamental part of U.S. bankruptcy law. However, when an otherwise avoidable transfer by a U.S. entity takes place outside the U.S. to a...more
Creditors’ recoveries often hinge on claw-back lawsuits that trustees bring under bankruptcy law and non-bankruptcy law. Trustees can file claims based on non-bankruptcy law because Bankruptcy Code section 544(b) allows them...more
A recent decision from the U.S. District Court for the Southern District of New York has breathed new life into the Bankruptcy Code Section 546(e)’s securities transaction safe harbor for fraudulent conveyance actions. Judge...more