News & Analysis as of

Bad Faith Bankruptcy Code

Patterson Belknap Webb & Tyler LLP

Eighth Circuit Issues Decision on Involuntary Bankruptcy Case and Damages Arising from a Bad Faith Filing

An appeals court has issued an insightful decision on the availability of damages when an involuntary bankruptcy petition is filed in bad faith. See Stursberg v. Morrison Sund PLLC, No. 23-1186, 2024 U.S. App. LEXIS 20286...more

Dechert LLP

Non-Debtor Awarded Sanctions for an Improper Filing of an Involuntary Petition

Dechert LLP on

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

Vinson & Elkins LLP

Fifth Circuit Holds Debtor’s Alleged Bad Faith Dealings Do Not Negate Business Judgment Deference on Lease Rejection

Vinson & Elkins LLP on

In Matter of J.C. Penney Direct Marketing Services, L.L.C.,1 the United States Fifth Circuit Court of Appeals clarified the extremely deferential standard afforded to a debtor’s “business judgment” decision to reject an...more

Kramer Levin Naftalis & Frankel LLP

Northern District of Texas Bankruptcy Court Dismisses NRA Bankruptcy Cases

The Northern District of Texas Bankruptcy Court in In re National Rifle Association of America and Sea Girt LLC, Case No. 21-30085 (Bankr. N.D. Tex. May 11, 2021), ECF No. 740, dismissed the National Rifle Association...more

Ward and Smith, P.A.

Their Aim Wasn't True – The NRA and Bad Faith Bankruptcy Filings

Ward and Smith, P.A. on

Bankruptcy offers a temporary sanctuary for parties seeking relief from a variety of problems – financial crisis, lawsuits, collection actions, repossessions, foreclosure, and pandemics. Filing bankruptcy before a money...more

King & Spalding

Not in My Court: Northern District of Texas Bankruptcy Court Dismisses NRA Bankruptcy Cases as Filed in Bad Faith

King & Spalding on

On May 11, 2021, Judge Harlin D. Hale, of the Bankruptcy Court for the Northern District of Texas (the “Court”) found that the bankruptcy cases of the National Rifle Association of America (“NRA”) and its subsidiary Sea Girt...more

Pullman & Comley, LLC

The NRA's Chapter 11 Filing Takes Aim at the State of New York: Is it off Target?

Pullman & Comley, LLC on

The National Rifle Association (commonly known as the NRA), a New York not-for-profit corporation with its principal place of business in Virginia, has tested the limits of how accommodating Chapter 11 can be to a solvent...more

Smith Debnam Narron Drake Saintsing & Myers,...

Court Approves Sale of Assets to Third Party Despite Stalking Horse Bad Faith Allegations Against Purchaser

United States Bankruptcy Judge John E. Waites approved a sale of substantially all the assets of a small business Chapter 11 Debtor over the protests of a “Stalking Horse” bidder who claimed the successful bidder was acting...more

Kramer Levin Naftalis & Frankel LLP

"Time Is On My Side" — When a "Time of the Essence" Closing Date Keeps Rolling Like a Stone for 60 Days

The recent decision of the Bankruptcy Court for the Southern District of New York in In re AAGS Holdings LLC, Case No. 19-13029 (SMB) (Bankr. D. Del. Nov. 12, 2019), underscores the ability of debtors — and specifically, for...more

Snell & Wilmer

Is a Bankruptcy Plan that Violates Federal Criminal Law Proposed in Bad Faith?

Snell & Wilmer on

Although legal in many states, marijuana remains illegal under federal criminal law. See 21 U.S.C. § 856(a)(1). One would think that engaging in illegal activity under federal criminal law would preclude relief under federal...more

Orrick, Herrington & Sutcliffe LLP

Ninth Circuit Holds Protecting A Claim To Its Fullest Extent Is Not Evidence Of Bad Faith

The Ninth Circuit Court of Appeals recently held that a secured creditor’s purchase of general unsecured claims to block confirmation of a Chapter 11 plan did not in itself constitute bad faith....more

Patterson Belknap Webb & Tyler LLP

Punitive Damages for Involuntary Bankruptcy Petitions Filed in Bad Faith are Ineligible for Setoff

We generally advise clients to think carefully before commencing an involuntary bankruptcy petition against an alleged debtor. One of the primary reasons for our caution is section 303(i) of the Bankruptcy Code, which...more

Cole Schotz

Petitioning Creditors Beware: No Right To Setoff For Punitive Damages From Bad Faith Involuntary Bankruptcy Filings

Cole Schotz on

Creditors often think that an involuntary bankruptcy petition is a great bargaining chip when faced with a recalcitrant debtor. However, the actual filing of an involuntary bankruptcy petition (when that petition is filed in...more

Mintz - Bankruptcy & Restructuring Viewpoints

Ninth Circuit: No Ulterior Motive, No Bad Faith When Buying Claims to Block Confirmation

A recent Ninth Circuit Court of Appeals decision provides insight into “bad faith” claims-buying activity; specifically whether a creditor’s purchase of claims for the express purpose of blocking plan confirmation is...more

Polsinelli

The Devil's Dictionary of Bankruptcy Terms: Forum Shopping

Polsinelli on

The "Devil's Dictionary" is a quick-reference guide for commercial lenders and other restructuring professionals. In this series, we highlight many of the buzz words found in the Dictionary and used in today's bankruptcy...more

Cozen O'Connor

Third Circuit Affirms Bad Faith Involuntary Bankruptcy Dismissal, Increasing Risk of Punitive Damages

Cozen O'Connor on

Last week’s decision by the U. S. Court of Appeals for the Third Circuit in In re: Forever Green Athletic Fields, Inc., No. 14-3906 (3d Cir. Oct. 16, 2015) held that an involuntary bankruptcy petition filed under 11 U.S.C. §...more

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