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Washing Away Actual Fraud? One Court Says You Can.

Can the recipient of an actual fraudulent transfer effectively “cleanse” the transfer if the funds are returned to the debtor?  In a recent opinion, the United States Bankruptcy Court for the Eastern District of Pennsylvania answered that question in the affirmative. In Holber v. Nikparvar (In re Incare, LLC), the Chapter 7 Trustee (the “Trustee”) … Continue Reading

Interests and Good Faith Under Section 363 – A New Decision Explores the Limits of Both

A recent decision from the Bankruptcy Court for the District of Montana highlights the limits of the term “interests” under section 363(f) of the Bankruptcy Code, and the limits of “good faith” under section 363(m). In In re Mountain Divide, LLC, Case No. 16-61015-11 (Bankr. D. Mont. 2016), the debtor filed a Chapter 11 petition, and shortly … Continue Reading

Montana Court Refuses to Shift Venue of “Related to” CFPB Police Action to Texas Bankruptcy Court

On February 6, 2018, the District Court for the District of Montana refused a debtor’s request to change the venue of a post-petition “related to” police/regulatory action commenced by a federal agency in district court.  The decision will have important implications on how “related to” litigation is treated for venue purposes—especially in the context of … Continue Reading

Are Trademark Licenses Protected In A Licensor Bankruptcy? The Circuits Are Split.

Certain licensees of intellectual property are expressly given expanded rights when their licensors file bankruptcy.  But what about trademark licensees?  Trademarks are not among the defined categories of “intellectual property” for bankruptcy purposes.  Nonetheless, are trademark licensees otherwise protected in a licensor bankruptcy?  Unfortunately for these licensees, a recent circuit court decision put the brakes … Continue Reading

Texas Showdown Over Class Claims

This past November, the Bankruptcy Court for the Southern District of Texas sided with the majority of circuit courts when it held (i) that bankruptcy courts may apply Federal Rule of Civil Procedure 23 to class proofs of claim and administrative proofs of claim, and (ii) that a putative representative may file a conditional claim … Continue Reading

District Court Opinion Puts the Brakes on Involuntary Bankruptcy Petitions

Filing an involuntary bankruptcy petition is fraught with risk.  If the court dismisses the involuntary petition, the creditors who filed the petition (referred to as the petitioning creditors) may be liable for damages caused by the filing and even punitive damages.  A recent opinion from the District Court for the District of Nevada in State … Continue Reading

The Business of Cannabis – Getting into the Weeds

In a prior post, 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, most recently in Congressional testimony given in June 2017, that a marijuana business cannot seek bankruptcy … Continue Reading

Marijuana Businesses Barred from the Bankruptcy Courts: But How Far Will the Bar Extend?

As more and more states pass laws allowing the sale of marijuana, whether for medicinal or recreational purposes, investors will try to claim their share of what is certainly going to be a lucrative market. However, even in a growing market, private enterprises fail or need restructuring. This raises the question of whether distressed marijuana … Continue Reading

“But I Didn’t DO Anything – – Passive Conduct and the Automatic Stay

One of the fundamental elements of the American bankruptcy system is the automatic stay under section 362 of the bankruptcy code. The stay protects the debtor and its assets from creditor activity, in order to facilitate equitable treatment of creditors in the collective bankruptcy process. The remedies provided for violations of the stay allow the … Continue Reading

Gawker Media: Hulk Hogan Body Slams Company Into Bankruptcy And Court Pins

The American Bankruptcy Institute Journal just published our article analyzing an important decision issued in the Gawker Media bankruptcy case.  As we discuss, the court’s decision is likely to have a dramatic impact on media-industry debtors because of the court’s refusal to apply the California anti-SLAPP statute to the Debtors’ claim objection.  But the decision is … Continue Reading

SunEdison Court Strikes Down Third-Party Releases On Multiple Grounds

A recent decision by Bankruptcy Judge Stuart Bernstein, made in connection with plan confirmation in the SunEdison bankruptcy case, strikes down non-consensual third-party releases on a variety of bases. The decision analyzes issues regarding subject matter jurisdiction, the circumstances of deemed consent, and the applicable substantive requirements for a non-consensual release. In their plan of … Continue Reading

The Bankruptcy Rule Changes are Almost Here – and You Should Care

You have been reading for months that the U.S. Supreme Court approved amendments to the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) that go into effect on December 1, 2017.  You also may have ignored these changes because they affect Chapter 13 consumer cases and may not impact your commercial bankruptcy practice. Right? Wrong.  … Continue Reading

Secured Lenders Take Note: Second Circuit Rejects Make-Whole Premiums But Opens The Door To Higher Interest Rates

As they say, what one hand giveth, the other hand taketh. In its recent decision in In re MPM Silicones, LLC, the U.S. Court of Appeals for the Second Circuit addressed make-whole premiums and cramdown rates of interest (among other issues not addressed here), issuing rulings that will impact creditors and debtors alike. Not only … Continue Reading

Blockchain: Buying a Property in 60 seconds…

In a recently published article, John Danahy, a real estate partner in Squire Patton Boggs’ London office, explores transactions of the future using cryptocurrencies, blockchains and “data vaults”containing both personal and property information.  Restructuring and insolvency professionals will need to keep up to date on these developments which will have an impact not only on … Continue Reading

Are You Breaking Up with Me? Termination Fees in Bankruptcy Called into Question.

In a move that surprised bankruptcy practitioners and other observers, a Delaware bankruptcy court recently rescinded an order approving a $275 million break-up fee relating to a failed merger.  Judge Christopher Sontchi held that Debtor Energy Future Holdings could not pay the merger termination fee to NextEra Energy, the prospective buyer of nondebtor subsidiary, Oncor … Continue Reading

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
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