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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

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
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