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Bill on Bankruptcy: Junk Debt Interest Rates at 30-Year Low
The ability to assume, assume and assign, or reject executory contracts and unexpired leases is a power central to ability of a bankruptcy trustee or chapter 11 debtor-in-possession ("DIP") to maximize the value of the estate...more
In the high-stakes world of bankruptcy asset acquisitions, Bankruptcy Code Section 363 provides a powerful mechanism for purchasing assets “free and clear” of most claims, liens, and encumbrances. Success in these...more
Bankruptcy debtors have special rights in contracts or leases where both parties have outstanding obligations, known in legal terms as “executory contracts” or “unexpired leases”. If you are doing business with a company that...more
In a recent decision of interest, the Bankruptcy Court for the Eastern District of Michigan held that a non-compete clause within a franchise agreement as well as confidentiality agreement could not be rejected as an...more
A Michigan bankruptcy court held that a debtor-franchisee seeking to reject a franchise agreement for an auto repair center could not reject either a stand-alone confidentiality agreement with the franchisor or the...more
Financial distress persists in the commercial real estate market, raising the prospects that property owners and landlords could seek relief under chapter 11 of the Bankruptcy Code. The Bankruptcy Code contains numerous...more
The ordinary course of business, new value, and contemporaneous exchange for new value defenses are the most frequently used defenses in a preference action. However, there are additional, less common defenses that a...more
Sales under Section 363 of the Bankruptcy Code have become commonplace in bankruptcy cases as a mechanism to liquidate a debtor's assets and maximize value for creditors. Selling the debtor's assets to a third party offers...more
A bankruptcy sale is an opportunity to potentially acquire assets at distressed pricing. A bankruptcy sale also presents prospective bidders with a level playing field to conduct due diligence, submit a bid, and compete...more
A Michigan bankruptcy court recently granted debtor/franchisee Empower Central Michigan Inc.’s motion to reject a franchise agreement as an executory contract but found that a non-compete clause and a related confidentiality...more
The Bankruptcy Code invalidates "ipso facto" clauses in executory contracts or unexpired leases that purport to modify or terminate the contract or lease (or the debtor's rights or obligations under the contract or lease)...more
The transition to online shopping, interest rate increases, labor costs, maturing debt and rising inflation have collectively taken a significant toll on the retail industry, contributing to store closures and a growing...more
A recent bankruptcy court decision determined that a debtor cannot reject an unexercised option for the purchase of its real estate, raising a potentially significant bar to any debtor extricating itself from an under-market...more
During a U.S. bankruptcy case, can a debtor pay something less than the full contract rate provided for in a contract entered into prior to the bankruptcy while still requiring the counterparty to fully perform its...more
Three years have passed since the COVID-19 pandemic reached the United States and its effects are still being felt today. Even though lockdown measures have largely disappeared and many workers have returned to the office,...more
In a recent decision, the Second Circuit held that only parties with the right to pursue a breach of contract claim under an executory contract or unexpired lease have the right to demand a cure payment in the event the...more
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
Bankruptcy Code Section 365(d)(5) provides personal property lessors with important rights concerning lease payments that come due after a lessee commences a U.S. bankruptcy proceeding. Generally, that section requires that...more
The bankruptcy court’s decision in Svenhard’s provides a path forward for potentially increased creditor recoveries. To assume an agreement under section 365, the agreement must be an “executory contract,” which generally...more
The recent decision of the Ninth Circuit in In re Hawkeye Entertainment, LLC contains a few important takeaways with respect to the treatment of executory contracts and unexpired leases under section 365 of the Bankruptcy...more
The intersection between Medicare and state Medicaid regulatory schemes on the one hand and bankruptcy proceedings on the other continues to be an interesting, often highly contested, source of bankruptcy litigation. In...more
To encourage parties to transact with debtors in bankruptcy, the Bankruptcy Code in corporate bankruptcies provides highest priority to “administrative expenses,” which include “the actual, necessary costs and expenses of...more
This entry is part of Nelson Mullins’s ongoing “Bankruptcy Basics” blog series that is intended to address foundational aspects of bankruptcy for non-bankruptcy practitioners and professionals. This entry will discuss how...more
As we pass the midpoint of 2022 and the world expresses a collective sigh of relief that the worst of the COVID-19 pandemic seems to be behind us, a perfect storm of extraordinary factors is creating conditions for financial...more
This entry is part of Nelson Mullins’s ongoing “Bankruptcy Basics” blog series that is intended to address foundational aspects of bankruptcy for non-bankruptcy practitioners and professionals. This entry will discuss lease...more