News & Analysis as of

Fiduciary Duty Creditors Bankruptcy Code

Jones Day

Chapter 11 Filing Without Consent of Independent Director Dismissed as Unauthorized

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Courts disagree over whether provisions in a borrower's organizational documents or loan agreements designed to restrict or prevent the borrower from filing for bankruptcy are enforceable as a matter of federal public policy...more

DLA Piper

US Bankruptcy Court Denies Stalking Horse Bidder’s Motion to Disregard Late Filed Overbids

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In re Parkcliffe Development, LLC, Case No. 24-30814 - The US Bankruptcy Court for the Northern District of Ohio in In re Parkcliffe Development, LLC, Case No. 24-30814 (JPG) entered an order on January 28, 2025 denying a...more

Kilpatrick

When Provisions in a Loan and LLC Agreements Do Not Impermissibly Restrict a Bankruptcy Filing

Kilpatrick on

In In re 301 W North Avenue, LLC, 2025 WL 37897 (Bankr. N.D. Ill. 2025), a bankruptcy court recently addressed provisions in a loan agreement and limited liability company (“LLC”) operating agreement as to their effect on...more

DLA Piper

US Bankruptcy Court Grants Motion to Dismiss LLC Chapter 11 Case for Failure to Obtain Requisite Corporate Filing Authority

DLA Piper on

The US Bankruptcy Court for the Northern District of Illinois (Bankruptcy Court) recently issued an opinion in In re 301 W North Avenue, LLC, Case No. 24 B 2741 (DDC) [Docket No. 253] (January 6, 2025) granting a secured...more

Morris James LLP

Delaware LLCs, Independent Managers, and Bankruptcy Remote Structures: Lessons from 301 W North Avenue

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Overview Limited liability companies (LLCs)—curious creatures of state law—often file bankruptcy. Bankruptcy courts have, therefore, developed a dynamic body of law to evaluate the “bankruptcy remoteness” of LLCs, assessing...more

Lowndes

Understanding Non-Dischargeable Debts Under the Bankruptcy Code: A Guide for Creditors

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When a debtor files for bankruptcy, creditors often fear their claims will be wiped away. However, under Section 523 of the Bankruptcy Code, certain debts are categorized as non-dischargeable, meaning the debtor cannot...more

Eversheds Sutherland (US) LLP

Recent Bankruptcy Decision Reminds of the Importance of Corporate Governance Documents

On January 6, 2025, the United States Bankruptcy Court for the Northern District of Illinois (the Bankruptcy Court) granted a mortgage lender’s motion to dismiss a debtor’s bankruptcy filing due to the debtor’s lack of...more

Troutman Pepper Locke

5 Issues to Consider When Liquidating Through an ABC

Troutman Pepper Locke on

Assignments for the benefit of creditors, or ABCs, continue to grow in popularity as a tool for the orderly wind-down of companies. Originally published in Law360 - March 21, 2024....more

Proskauer Rose LLP

Conflict Between Delaware LLC Act and Bankruptcy Code Affects Creditor Toolbox

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As you know from our prior alerts, creditors of borrowers formed as Delaware LLCs (as opposed to corporations) lack standing under Delaware law to sue directors for breaching fiduciary duties even when, to the surprise of...more

Mintz - Bankruptcy & Restructuring Viewpoints

Delaware Bankruptcy Court Grants Derivative Standing to Creditors’ Committee to Sue Members and Officers of Delaware LLC

In early February, a Delaware bankruptcy judge set new precedent by granting a creditors’ committee derivative standing to pursue breach of fiduciary duty claims against a Delaware LLC’s members and officers. At least three...more

Fuerst Ittleman David & Joseph

Florida’s Insurers Rehabilitation and Liquidation Act: What Happens in Florida When Insurers Become Insolvent

Current state of affairs - Even before Hurricane Ian made landfall and devastated southwest Florida in September 2022, six property & casualty insurers had voluntarily declared themselves insolvent and allowed the State to...more

Nelson Mullins Riley & Scarborough LLP

Practice Pointer: Reliance on Bankruptcy Court Appointed Examiner’s Report—Not so Fast

You represent the unsecured creditors committee in a complex Chapter 11 case, where you have reason to believe that the debtor’s officers and directors have, and continue to, engage in self-dealing and are breaching their...more

Proskauer Rose LLP

Del. Bankruptcy Rulings Instruct on Creditors' Rights to Sue

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Creditors of distressed businesses are often frustrated by shareholder- controlled boards when directors pursue strategies that appear to be designed to benefit shareholders at the creditors' expense. In these...more

Proskauer Rose LLP

Suing Directors of a Troubled Business: When Form Trumps Substance

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Creditors of distressed businesses are often frustrated by shareholder-controlled boards when directors pursue strategies that appear to be designed to benefit shareholders at the creditors’ expense. In these circumstances,...more

Mintz - Bankruptcy & Restructuring Viewpoints

The Expanding Contours of Permissible Non-Debtor Releases in the Ninth Circuit

Until recently, courts in the Ninth Circuit have generally followed the minority view that non-debtor releases in a bankruptcy plan are prohibited by Bankruptcy Code Section 524(e), which provides that the “discharge of a...more

Jones Day

Delaware Bankruptcy Court Rules that Bankruptcy Blocking Right in Debtor's Corporate Charter Violates Federal Public Policy

Jones Day on

Courts sometimes 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...more

Winstead PC

Charges Against Marble Ridge Capital Founder Illustrate the Pitfalls That Await Members of Unsecured Creditors’ Committees Who...

Winstead PC on

On September 3, 2020, the Securities & Exchange Commission charged Daniel Kamensky with abusing his fiduciary position as co-chair of the Neiman Marcus Group Unsecured Creditors’ Committee by pressuring a rival bidder to...more

Patterson Belknap Webb & Tyler LLP

Another Ruling on Public Auctions Versus Private Sales Under Section 363

Two weeks ago, we discussed asset sales under Bankruptcy Code section 363. As that post noted, section 363 requires court approval for asset sales outside the ordinary course of business, with courts ensuring that sales...more

Patterson Belknap Webb & Tyler LLP

Chapter 15: Decision Reviews Jurisdictional Issues and Bankruptcy Code Section 109

In a recent decision, In re B.C.I Fins. Pty Ltd. (In Liquidation), No. 17-11266, 2018 Bankr. LEXIS 1217 (Bankr. S.D.N.Y. Apr. 24, 2018), Judge Sean Lane granted a chapter 15 petition after rejecting a challenge to...more

Patterson Belknap Webb & Tyler LLP

Bankruptcy Remoteness Going to a Court of Appeals (Progress Report No. 2)

Our February 22 post reported that the Franchise Services of North America, Inc. decision of Bankruptcy Judge Edward Ellington of the Southern District of Mississippi dismissing a Chapter 11 petition because a shareholder had...more

Patterson Belknap Webb & Tyler LLP

Bankruptcy Remoteness Going to a Court of Appeals (Progress Report No. 1)

Our February 22 post reported that the Franchise Services of North America, Inc. decision of Bankruptcy Judge Edward Ellington of the Southern District of Mississippi dismissing a Chapter 11 petition because a holder of...more

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