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First Circuit Holds Creditors Committees Always Have the Right to Intervene (Sort Of)

On September 22, 2017, the First Circuit Court of Appeals reversed the district court, and overruled its own prior guidance, to hold that a committee of unsecured creditors had the right to be heard in adversary proceedings related to the restructuring of Puerto Rico’s debt.  The Court’s decision in Assured Guar. Corp. v. Fin. Oversight … Continue Reading

Blockchain: Banks Are Taking Back Control – Time for the Real Estate Industry to Do the Same?

In a recently published article, John Danahy, a real estate partner based in Squire Patton Boggs’ London office, explores the development of a new cryptocurrency and its impact on the worlds of finance and global real estate. Of particular relevance to restructuring and insolvency professionals is the use of so-called “blockchains” in title transfers and … Continue Reading

The Interminable ‘Insured vs. Insured’ Battle

In an article just published in the Bankruptcy Strategist, Norman Kinel and Elliot Smith explore the practical impact of the Sixth Circuit Court of Appeal’s recent decision in Indian Harbor Insurance Company v. Zucker, et al., 2017 U.S. App. LEXIS 10821, which bankruptcy practitioners – particularly those representing creditors’ committees – need to consider, because … Continue Reading

“Insured Versus Insured” – – Who is the Debtor-in-Possession, Anyway

In a decision rendered earlier this year by the Sixth Circuit Court of Appeals, the court examined the difference between a debtor and a debtor-in-possession in the context of the “insured verses insured” exclusion contained in a D&O liability policy. Indian Harbor Insurance Company v. Zucker, et al, arose in connection with the bankruptcy case … Continue Reading

Sentinel Management – The Seventh Circuit Sides With Trust Beneficiaries

In its fifth trip to the Seventh Circuit Court of Appeals, the Sentinel Management Group’s bankruptcy case recently explored complex issues bankruptcy practitioners often encounter in large chapter 11 cases with financial services debtors.  In a far-ranging opinion, the Seventh Circuit held that the Bankruptcy Court’s oral “clarification” of an earlier order, which had already … Continue Reading

Mass Layoffs When Section 363 Sales Fail and Cases Convert: Third Circuit Adopts Probability Standard for WARN Act Liability

On August 4, 2017, the Third Circuit Court of Appeals issued its ruling in Varela v. AE Liquidation, Inc. (In re AE Liquidation, Inc.), 2017 U.S. App. LEXIS 14359 (3d Cir. 2017), holding that WARN Act liability is triggered only when a mass layoff becomes probable – “that is, when the objective facts reflect that … Continue Reading

Lessees Left in Limbo

Do a lessee’s possessory interests in real property survive a “free and clear” sale of the property under section 363 of the Bankruptcy Code? In a recent decision, the Ninth Circuit Court of Appeals said “no,” holding that section 365(h) did not protect the interest of the lessee in the context of a section 363 … Continue Reading

Delaware Court Shuts Down Creditor’s “Unreasonable” Motion to Amend its Proof of Claim

A recent opinion by the Bankruptcy Court for the District of Delaware underscores how important it is for creditors to file complete and well-reasoned proofs of claim. The opinion also highlights the problems creditors may encounter if they have to amend their claims. SNMP Research International, Inc. (“SNMPRI”) sold and licensed software to customers. In … Continue Reading

Seeing the Forest Instead of the Trees

Recently, the bankruptcy court presiding over the Energy Futures chapter 11 case issued an opinion analyzing the interplay between an intercreditor agreement’s distribution waterfall and payments to be made under the debtors’ multi-step reorganization plan. The court rejected a secured creditor’s argument that the intercreditor agreement’s distribution waterfall was triggered by one step of that … Continue Reading

An Important Ruling for Secured Lenders – Ninth Circuit Holds that the Proper Cramdown Valuation is Replacement Value

In an important decision for secured creditors, the Ninth Circuit recently held that the proper “cramdown” valuation of a secured creditor’s collateral is its replacement value, regardless of whether the foreclosure value would generate a higher valuation of the collateral.  The appellate court’s decision has the potential to significantly impact lenders that include certain types of restrictions … Continue Reading

Statutory Limits to Retained Jurisdiction – – The Contract May Not Be The Answer

A recent decision by the United States Court of Appeals for the First Circuit provides additional guidance with respect to jurisdictional disputes that bankruptcy professionals often see in practice. In particular, the Gupta v. Quincy Med. Ctr., 2017 U.S. App. LEXIS 9814 (1st Cir. June 2, 2017) case analyzed whether a bankruptcy court had jurisdiction … Continue Reading

How safe is safe?

Earlier this month, the United States Supreme Court agreed to review a Seventh Circuit decision regarding the scope of the so-called “safe harbor” from avoidable transfers provided in Section 546(e) of the Bankruptcy Code.  Many in the U.S. bankruptcy industry expect that the Supreme Court granted certiorari to hear Merit Management Group, LP v. FTI … Continue Reading

Chapter 15 Does Not Prohibit Foreign Representatives From Pursuing State And Foreign Law Avoidance Actions

Last month Bankruptcy Judge Isacoff in the Southern District of Florida held that a foreign representative may bring state law and foreign law avoidance actions notwithstanding section 1521(a)(7) of the Bankruptcy Code. The case, Laspro Consulores LTDA v. Alinia Corp. (In re Massa Falida Do Banco Cruzeiro Do Sul S.A.), deals with the fraudulent activity … Continue Reading

GM Runs Into a Dead-End at the Supreme Court

This Monday, the U.S. Supreme Court rejected General Motors’ petition for a writ of certiorari, which GM filed in an attempt to overturn a ruling by the Second Circuit Court of Appeals related to the sale of substantially all of GM’s assets in bankruptcy.  When we last visited the case in a prior blog post, … Continue Reading

A Big Haircut for Indenture Trustee Counsel Fees

In Nortel Network’s (“Nortel”) chapter 11 case, In re: Nortel Networks Inc., et al., United States Bankruptcy Court for the District of Delaware, Case No. 09-10138(KG), Bankruptcy Judge Kevin Gross recently reduced the Indenture Trustee’s counsel fees by $913,936.00 in response to heavily litigated objections to the fees by noteholders, Solus Alternative Asset Management LP … Continue Reading

Jevic Holding: The Supreme Court Puts an End to Non-Consensual Structured Dismissals That Violate Bankruptcy Code Priority Scheme

Yesterday, the Supreme Court issued is highly awaited ruling in Czyzewski et al. v. Jevic Holding Corp. et al.  The Jevic case presented the question whether bankruptcy courts may approve non-consensual structured dismissals that vary the distribution scheme established by the Bankruptcy Code.  With Justice Breyer writing for the majority, the Court held that bankruptcy … Continue Reading
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