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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

Protecting Committee Members – Ninth Circuit Expands Protections Afforded to Individual Committee Members

In a recent opinion, the United States Court of Appeals for the Ninth Circuit expanded the protections afforded to individual members of an official creditors’ committee against certain lawsuits.  Specifically, in In re Yellowstone Mountain Club, LLC, 841 F.3d 1090 (9th Cir. 2016), the Court unanimously held that the Barton doctrine (also known as the … Continue Reading

But I Didn’t DO Anything! — Can Non-action Violate the Automatic Stay?

It is commonly understood that, upon commencement of a bankruptcy case, section 362 of the Bankruptcy Code operates as an automatic statutory injunction against a wide variety of creditor actions and activities. The automatic stay enjoins (1) “commencement or continuation” of certain proceedings, (2) “enforcement” of a judgment, (3) “any act” to obtain possession of or exercise control … Continue Reading

A Long Road Trip: The GM Bankruptcy Saga Continues

In a prior blog post, we discussed the Second Circuit Court of Appeals’ reversal of the bankruptcy court in In re General Motors.  In its opinion, the Second Circuit held that a sale of assets without proper notice to potential plaintiffs with defect claims violated the plaintiffs’ due process rights and resulted in a sale … Continue Reading

Stormy Waters for Hanjin Shipping re-examined

Laura Crawford and Jon Chesman wrote an article in November 2016 commenting on Hanjin Shipping Co’s filing for bankruptcy protection in the Seoul Central District Court and applications for temporary protection in the US. See Stormy Waters for the Shipping Industry Jon Chesman has been quoted in a further article about Hanjin Shipping Co written by Tom … Continue Reading

Sixth Circuit Weighs in on the Phrase “Applicable Nonbankruptcy Law” Under the Bankruptcy Code

In Metropolitan Government of Nashville & Davidson County v. Hildebrand, the Sixth Circuit Court of Appeals explains how to read the phrase “applicable nonbankruptcy law” as it is used in the United States Bankruptcy Code.  The case – a chapter 13 individual bankruptcy case – discussed the phrase in the context of section 511(a) of … Continue Reading

What You Do Won’t Help (But What You Can’t Do Might): The Sixth Circuit Clarifies Defenses to Fraudulent Transfers

In Meoli v. The Huntington National Bank (In re Teleservices Group, Inc.), the U.S. Court of Appeals for the Sixth Circuit examined the elements of “good faith” and “knowledge of the voidability of the transfer avoided” that initial and subsequent transferees must establish when defending against fraudulent transfer claims brought under sections 548 and 550 … Continue Reading

Is It Really Over? Appellate Court Finds Lack of Jurisdiction to Hear Bankruptcy Appeal

In a recent ruling, the U.S. Court of Appeals for the Eleventh Circuit examined whether circuit courts have jurisdiction to hear direct appeals of unauthorized bankruptcy court orders that have not been reviewed by a district court. This was an issue of first impression in the Eleventh Circuit.  The appellate court held that a bankruptcy … Continue Reading

Marblegate’s Lost Marbles and Why Bondholders and Indenture Trustees Should Care

This week the U.S. Court of Appeals for the Second Circuit issued its highly-anticipated ruling in Marblegate Asset Management, LLC v. Education Management Corp. (“Marblegate”).  At issue in Marblegate was whether Education Management Corp. (“EDMC”) violated the Trust Indenture Act when it implemented a restructuring that impaired the rights of Marblegate Asset Management, LLC (“MAM”).  … Continue Reading

Are Structured Dismissals on Hold Pending the Supreme Court’s Decision in Jevic?

American Apparel, the struggling clothing manufacturer and retailer, found itself in chapter 11 this past November after failing to implement its turnaround plan amid a challenging retail environment.  Last week, Judge Shannon in the District of Delaware approved a largely consensual sale of American Apparel’s assets to Gildan Activewear.  While the hearing transcript is not … Continue Reading

The Road Ahead for 2017 – Restructuring & Insolvency in US

Slide Rules and Hula Hoops – Business Obsolescence and Bankruptcy One of the functions that bankruptcy proceedings can serve is to encourage entrepreneurship by allowing people to pursue bold innovations while still allowing them to recover if their new ideas don’t prove successful. Another equally important function is to provide a structure for restructuring or liquidation … Continue Reading

Serial Filers: Lenders And Lessors Given A New Remedy

What can a lender do about successive bankruptcy filings by a borrower? What can lessors do when their tenants file successive bankruptcy petitions?  A recent decision by a bankruptcy court in the Eastern District of New York gives guidance on these questions. Readers of this blog know that immediately upon the filing of a bankruptcy … Continue Reading

Quantum Foods – – Administrative Expense Claims as an Avoidance Offset.

Judge Carey in the District of Delaware recently ruled on an intriguing question—can a defendant in a preference action reduce the amount of a recoverable preference by setting off the value of an allowed administrative expense claim? Though not late-breaking news, this case provides a thorough examination of the essential character of administrative expense claims.… Continue Reading

Jevic Holding Corp.: Is The Supreme Court Now Ready To Strike Down Structured Dismissals?

In a prior post, we discussed the Third Circuit Court of Appeals’ decision in Jevic Holding Corp., where the court upheld the use of so-called “structured dismissals” in bankruptcy cases, and the Supreme Court’s grant of certiorari.  Yesterday, the Supreme Court heard oral argument in Jevic.  The Court’s ultimate ruling will likely have a significant … Continue Reading

Equitable Mootness – – Are Bankruptcy Courts Still to be “Courts of Equity?”

The concept of “equitable mootness” is a doctrine of relatively long-standing in bankruptcy jurisprudence. It has been used by courts to avoid determination of issues raised on appeal that would require the unscrambling of a plan previously confirmed and implemented. However, that doctrine has recently been questioned in a variety of decisions. It appears that … Continue Reading

Stormy Seas for Indenture Trustees and Bondholders Settling Claims in Bankruptcy

Recently, in Caesars Entertainment Operating Co. (“Caesars”), U.S. Bankruptcy Judge A. Benjamin Goldgar denied payment of indenture trustee Wilmington Trust’s attorneys’ fees and costs in connection with the Debtors’ motion to approve a settlement.  The U.S. Trustee objected to payment arguing that the Debtor could not rely on 11 U.S.C. § 363 (seeking settlement approval) … Continue Reading
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