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How does the EU Restructuring Directive compare to Chapter 11?

On June 26, 2019, the European Parliament and the Council of the European Union published a new EU Restructuring Directive on preventive restructuring frameworks, discharge of debt and disqualifications, and measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt (“Directive”). This is an extraordinary achievement given the existing differences in … Continue Reading

Up in Smoke: More Cannabis Companies Get Shut Out of Bankruptcy

Marijuana Cannabis LeafsIn another loss for the cannabis industry, a district court recently affirmed the dismissal of chapter 11 petitions filed by companies that sold product used by both state-licensed marijuana growers and non-marijuana growers.  The district court’s decision in Way to Grow, Inc. demonstrates that the door that was opened by the Ninth Circuit in Garvin … Continue Reading

Bankruptcy Court Tells Debtors They Must Choose Between Bankruptcy Or Being Able To Buy Medical Marijuana

We have written before about the virtual dead end faced by marijuana companies who try to seek protection in the bankruptcy courts.  Almost uniformly, bankruptcy courts have shut their doors on marijuana companies, including their landlords and suppliers.  These courts have held that although marijuana use may be legal in a majority of the States, … Continue Reading

It Should Be Settled Law – Unsecured Attorney’s Fees Claims Are Permissible

In Travelers Cas. & Sur. Co. of Am. v. PG&E, 549 U.S. 443 (2007), the Supreme Court held that bankruptcy law does not disallow a post-petition unsecured claim for attorney’s fees to the extent such claim is authorized by a pre-petition contract and not otherwise expressly disallowed. That pronouncement should have stopped all future litigation over … Continue Reading

Section 363(o) Implications: Bankruptcy Court Denies Debtor’s Request to Disband Consumer Creditors’ Committee

On May 17, 2019, the Bankruptcy Court for the Southern District of New York announced that the Official Committee of Consumer Creditors (the “Consumer Committee”) appointed in the In re Ditech Holding Corp. bankruptcy case would not be disbanded.  Ditech, supported by the ad hoc group of term loan lenders (the “Ad Hoc Group”), had … Continue Reading

Attorneys Beware: Federal Court Reinstates Aiding and Abetting Breach of Fiduciary Duty Claim Against Law Firm

Attorneys who advise a distressed company usually work very closely with members of the board of directors.  A recent opinion from the United States District Court for the Western District of Texas provides a cautionary reminder to such attorneys not to lose sight of the fact that, notwithstanding that the company acts through its board, … Continue Reading

The Small Business Reorganization Act Reintroduced: A Way Forward for Small Business Reorganization?

Last month, Congress reintroduced the Small Business Reorganization Act (“SBRA”), under which a new subchapter V would be added to chapter 11 of the United States Bankruptcy Code.  This new subchapter would provide small businesses with aggregate liabilities that do not exceed $2,566,050 with an opportunity to resolve outstanding liabilities through a streamlined and cost‑effective … Continue Reading

Careful Consideration Can Pay Dividends

Following our 2016 article, the Court of Appeal has upheld the decision of the High Court that dividends are liable to challenge as transactions defrauding creditors under section 423 of the Insolvency Act 1986 (the “IA”). The case of BTI 2014 LLC v Sequana S.A. & Others [2019] EWCA Civ 112 should serve as a … Continue Reading

Bankruptcy Court Gives And Then Takes Away In Latest Stern-Related Ruling

What are the limits of a bankruptcy court’s authority to issue final orders and judgments?  Does a bankruptcy court have authority under Article III of the U.S. Constitution to enter final orders in quintessential bankruptcy matters such as fraudulent transfer claims, or are the court’s powers more constrained?  While the Supreme Court’s rulings in Stern … Continue Reading

The Real Estate Problem of Retail

The retail sky is falling.  At least that is how it appears from recent and unprecedented number of retailers filing for bankruptcy. From iconic stores such as Sears and Toys ‘R’ Us, to department stores such as Bon Ton, to mall stores including Brookstone, The Rockport Company, Nine West, among others.  The reasons given for … Continue Reading

Will Bankruptcy Stay Criminal Proceedings For PG&E?

On January 29, 2019, California’s Pacific Gas and Electric, one of the nation’s largest utilities, filed for Chapter 11 bankruptcy protection.  PG&E’s bankruptcy is certain to be one of the largest and most complex restructurings in recent years and will involve state and federal regulators and a myriad number of issues, including the impact of … Continue Reading

State Marijuana Laws vs. Bankruptcy: The Tension Grows

In prior posts, we examined whether state-licensed marijuana businesses, and those doing business with marijuana businesses, can seek relief under the Bankruptcy Code.  As we noted, the Office of the United States Trustee (the “UST”) has taken the position that a marijuana business cannot seek bankruptcy relief because the business itself violates the Controlled Substances Act … Continue Reading

Third Circuit Confirms There’s No Wiggle Room With Jurisdictional Limitations

A precedential decision issued on November 28, 2018 by the U.S. Court of Appeals for the Third Circuit highlights the limits of bankruptcy judges’ authority to transfer non-core proceedings to other courts.  The Third Circuit’s opinion in In re IMMC Corp. f/k/a Immunicon Corp., et al., Case No. 18-1177, also emphasizes the importance of choosing the right … Continue Reading

Did Jevic Doom Future Chapter 11 Recovery Efforts By Unsecured Creditors?

Can a senior secured creditor, who credit bid for substantially all of a debtor’s assets, contribute non-estate property to a litigation trust for the benefit of general unsecured creditors without following the absolute priority rule?  In the recent Constellation Enterprises case, the Bankruptcy Court for the District of Delaware ruled that, as a result of … Continue Reading

“I’ll Be Back . . . Probably”: The Terminator’s Conundrum

A recent decision in the In re RMH Franchise Holdings bankruptcy case pending in the District of Delaware, highlights the importance of complying with a contract’s termination provision before the contract counterparty files for bankruptcy. In RMH, Applebee’s Restaurants LLC and Applebee’s Franchisor LLC (collectively, “Applebee’s”) entered into 160 pre-petition franchise agreements (the “Franchise Agreements”) … Continue Reading

Third Circuit Makes Clear That Plan Releases Can Extend To Post-Confirmation Acts

We have discussed plan releases in prior posts.  Oftentimes, disputes involving plan releases revolve around whether, and in what contexts, third-party releases in plans are appropriate.  Recently, the Third Circuit Court of Appeals addressed the relatively unique question of whether releases in a confirmed plan are binding upon post-confirmation purchasers of the debtor’s stock. The … Continue Reading

I’ll Gladly Pay You Tuesday for an Ice Cream Cone Today: 11th Circuit Clarifies Availability of “New Value” Defense in Bankruptcy Preference

Last month, the Eleventh Circuit Court of Appeals clarified the circumstances under which a creditor can assert a “new value” defense to a preference action under section 547(c)(4) of the Bankruptcy Code—rejecting as dictum language in a prior decision indicating that the new value provided needed to remain unpaid in order to setoff against preference … Continue Reading
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