Courts disagree over whether provisions in a borrower's organizational documents designed to prevent the borrower from filing for bankruptcy are enforceable as a matter of federal public policy or applicable state law. There...more
In In re Bernard L. Madoff Investment Securities LLC, 12 F.4th 171 (2d Cir. 2021), the U.S. Court of Appeals for the Second Circuit revived litigation filed by the trustee administering the assets of defunct investment firm...more
11/10/2021
/ Bankruptcy Code ,
Bankruptcy Court ,
Bernie Madoff ,
Chapter 11 ,
Fraud ,
Fraudulent Transfers ,
Good Faith ,
Investment Funds ,
Investors ,
Ponzi Scheme ,
SIPA
Chapter 15 petitions seeking recognition in the United States of foreign bankruptcy proceedings have increased significantly during the more than 16 years since chapter 15 was enacted in 2005. Among the relief commonly sought...more
11/10/2021
/ Appeals ,
Bankruptcy Code ,
Bankruptcy Court ,
Chapter 15 ,
Commercial Bankruptcy ,
Cross-Border ,
Discovery ,
Foreign Bankruptcies ,
Insolvency ,
Transfer of Assets ,
UNCITRAL
It is well recognized that, in keeping with the "fresh start" or "rehabilitative" policy, the Bankruptcy Code invalidates after-acquired property clauses in prepetition security agreements, but also includes an exception to...more
In yet another chapter in the tortured saga of the fallout from the failed 2007 leveraged buyout ("LBO") of media giant The Tribune Co. ("Tribune") in a transaction orchestrated by real-estate mogul Sam Zell, the U.S. Court...more
11/10/2021
/ Bankrtupcy Code Section 550 ,
Bankruptcy Code ,
Bankruptcy Court ,
Breach of Duty ,
Chapter 11 ,
Citigroup ,
Commercial Bankruptcy ,
Common Stock ,
ESOP ,
Fraudulent Transfers ,
Leveraged Buyout ,
Merrill Lynch ,
Section 548 ,
The Tribune Company ,
Unregistered Securities
Despite the absence of any explicit directive in the Bankruptcy Code, it is well understood that a debtor must file a chapter 11 petition in good faith. The bankruptcy court can dismiss a bad faith filing "for cause," which...more
11/10/2021
/ Bankruptcy Code ,
Bankruptcy Court ,
Chapter 11 ,
Chapter 15 ,
COMI ,
Commercial Bankruptcy ,
Creditors ,
Cross-Border ,
Debtors ,
Foreign Bankruptcies ,
Good Faith ,
Liquidation ,
Reorganizations ,
UNCITRAL
At a conference to be held at the end of the summer recess on September 27, 2021, the U.S. Supreme Court will consider whether to grant petitions seeking review during the new Term that begins on October 4 of three notable...more
In In re Energy Future Holdings Corp., 990 F.3d 728 (3d Cir. 2021), the U.S. Court of Appeals for the Third Circuit ruled that even though a "stalking horse" bidder failed to obtain necessary regulatory approvals to close an...more
U.S. courts have a long-standing tradition of recognizing or enforcing the laws and court rulings of other nations as an exercise of international "comity." It has been generally understood that recognition of a foreign...more
Whether a contract is "executory" such that it can be assumed, rejected, or assigned in bankruptcy is a question infrequently addressed by the circuit courts of appeals. The U.S. Court of Appeals for the Third Circuit...more
9/21/2021
/ 363 Sales ,
Bankruptcy Code ,
Bankruptcy Court ,
Chapter 11 ,
Commercial Bankruptcy ,
Contract Terms ,
Creditors ,
Debtors ,
Debtors-in-Possession ,
Executory Contracts ,
Film Industry ,
Materiality ,
Profits ,
Section 365 ,
Work Made For Hire Doctrine
In Czyzewski v. Jevic Holding Corp., 137 S. Ct. 973 (2017), the U.S. Supreme Court held that the Bankruptcy Code does not allow bankruptcy courts to approve distributions to creditors in a "structured dismissal" of a chapter...more
A secured creditor's right to "credit bid" the amount of its allowed claim in a bankruptcy sale of its collateral is an important creditor protection codified in section 363(k) of the Bankruptcy Code. Even so, a ruling...more
Chapter 15 Update: U.S. Bankruptcy Court Refuses To Enforce Order Approving Indonesian Debt Restructuring Plan Due To Third-party Releases -
Cross-border bankruptcy cases filed in the U.S. under chapter 15 of the...more
7/23/2021
/ Article III ,
Bankruptcy Court ,
Chapter 11 ,
Chapter 15 ,
Comity ,
Commercial Bankruptcy ,
Foreign Bankruptcies ,
Restructuring ,
Safe Harbors ,
Setoff Rights ,
Sharia Law ,
Standing ,
Subordination Agreement ,
Third-Party ,
Tolling
In In re Fencepost Productions Inc., 2021 WL 1259691 (Bankr. D. Kan. Mar. 31, 2021), the U.S. Bankruptcy Court for the District of Kansas recently addressed the enforceability of a provision in a pre-bankruptcy subordination...more
In In re Bankr. Est. of Norske Skogindustrier ASA, 2021 WL 1687903 (Bankr. S.D.N.Y. Apr. 29, 2021), the U.S. Bankruptcy Court for the Southern District of New York held that a foreign representative in a case under chapter 15...more
In cases under both chapter 15 of the Bankruptcy Code and its repealed predecessor, section 304, U.S. bankruptcy courts have routinely recognized and enforced orders of foreign bankruptcy and insolvency courts as a matter of...more
Cross-border bankruptcy cases filed in the U.S. under chapter 15 of the Bankruptcy Code on behalf of foreign businesses doubled during 2020 and are on pace to set another record-breaking year in 2021 (with more than 123...more
Madoff -
In what may be the beginning of the final chapter of more than a decade of litigation involving efforts to recover $41 million of the fictitious profits paid to certain investors in Bernard Madoff's defunct...more
7/22/2021
/ Bankruptcy Code ,
Bankruptcy Court ,
Bernie Madoff ,
Chapter 11 ,
Denial of Certiorari ,
Fraud ,
Investment Funds ,
Investors ,
Ponzi Scheme ,
SCOTUS ,
SIPA
In In re Arcapita Bank B.S.C., 2021 WL 1603608 (Bankr. S.D.N.Y. Apr. 23, 2021), the U.S. Bankruptcy Court for the Southern District of New York addressed the interaction between purported setoff rights arising under...more
In This Issue:
First Impressions: Third Circuit Scuttles Triangular Setoff in Bankruptcy -
In In re Orexigen Therapeutics, Inc., 990 F.3d 748 (3d Cir. 2021), the U.S. Court of Appeals for the Third Circuit ruled as a...more
5/27/2021
/ Bankruptcy Code ,
Bankruptcy Court ,
Chapter 11 ,
Chapter 7 ,
Commercial Bankruptcy ,
Corporate Restructuring ,
Debt Restructuring ,
Leveraged Buyout ,
Mootness ,
Mutuality ,
Safe Harbors
In Stream TV Networks, Inc. v. SeeCubic, Inc., 2020 WL 7230419 (Del. Ch. Dec. 8, 2020), the Delaware Court of Chancery held that the assets of Stream TV Networks, Inc. ("Stream"), an insolvent Delaware-incorporated 3-D...more
On April 19, 2021, the U.S. Supreme Court declined to hear the appeal of a landmark 2019 decision issued by the U.S. Court of Appeals for the Second Circuit regarding the applicability of the Bankruptcy Code's safe harbor for...more
To encourage creditors, equity interest holders, indenture trustees, and unofficial committees to take actions that benefit a chapter 9 or chapter 11 estate, the Bankruptcy Code confers administrative expense status on claims...more
It is generally recognized that a bankruptcy court has the power—either equitable or statutory—to recharacterize a purported debt as equity if the substance of the transaction belies the labels the parties have given it. A...more
The court-fashioned doctrine of "equitable mootness" has traditionally been invoked to bar appeals of orders confirming "substantially consummated" chapter 11 plans. Some appellate courts, however, have applied it to bar...more