An appeals court ruled recently that chapter 5 avoidance actions are property of a debtor’s bankruptcy estate that can be sold in section 363 sales. In re Simply Essentials, LLC, No. 22-2011, 2023 U.S. App. LEXIS 21814 (8th Cir. Aug....

Section 544(b)(1) of the Bankruptcy Code enables a trustee to step into the shoes of a creditor and avoid a transfer “of an interest of the debtor in property” that an unsecured creditor could avoid under applicable state law.  See...

On June 30, the Supreme Court ruled that the Biden administration did not have authority to forgive student loans under the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act).  Despite this defeat, the Biden administration is still...

Sometimes we blog about cases with unusual fact patterns.  The cases don’t stand for any overriding legal principle.  They might not have application beyond the parties to them.  But they can make for good reading, giving insight into how judges...

We have blogged a few times about the Supreme Court’s decision in Siegel v. Fitzgerald and its implications. In Siegel, the Supreme Court invalidated the disparity in debtor-paid fees prevailing in most of 2018 between the 88 judicial districts that...

On May 8, cryptocurrency platform Bittrex filed for chapter 11 in Delaware.  Bittrex’s first day filings emphasize that, unlike many other crypto filings over the past year, this case is not a “free fall” bankruptcy.  In fact, a plan has...

Although in the Ninth Circuit the decision to revisit an order under FRCP 60 is “highly discretionary,” judges still must explicitly grapple with the relevant factors.  That was the clear message sent by Judge Haywood Gilliam Jr. of the Northern...

Persuading a bankruptcy judge to find “excusable neglect” after missing a filing deadline is usually a tough sell. You’d think it would be particularly hard when the party seeking relief was “belligerent and disrespectful to the Court and opposing counsel.” But...

We have previously blogged about Bartenwerfer v. Buckley, No. 21-908, a Supreme Court case concerning the scope of the fraud exception to the dischargeability of debts in bankruptcy. Section 523 of the Bankruptcy Code exempts from discharge “any debt ....

Last Friday, state regulators closed the Silicon Valley Bank (SVB), a federally insured institution with 17 branches throughout California and Massachusetts.  It’s the first bank insured by the Federal Deposit Insurance Corporation (FDIC) to close since 2020.  In December, SVB reported...

In a recent per curium opinion, the Fifth Circuit recommitted to its practice of dismissing claims against court-appointed fiduciaries when plaintiffs fail to obtain permission before bringing suit.  The court rested its decision on the Barton doctrine, which other courts,...

This post is about a junkyard, hogs getting slaughtered, and a bankruptcy judge poised to sanction a creditor and her counsel.  The message from the case to would-be claimants in other cases is simple: do not “overreach.”  In re U Lock,...

The concept of “property of the estate” is important in bankruptcy because it determines what property can be used or distributed for the benefit of the debtor’s creditors. Defined by section 541 of the Bankruptcy Code, “property of the estate”...

In 2022, there were several high-profile crypto bankruptcy filings.  A big question in these cases is whether there will be any money to satisfy unsecured creditor claims.  If there are funds to distribute, then the creditors’ claims will become more...

It’s often hard to persuade a bankruptcy court to grant a motion for substantial contribution.  Any attorney thinking about making a motion should first ask herself two questions.  First, has my work benefitted both my client and other creditors?  Second,...

We have previously blogged about Siegel v. Fitzgerald, the Supreme Court decision last June that invalidated the 2018 difference in fees between bankruptcy cases filed in Bankruptcy Administrator judicial districts and U.S. Trustee judicial districts.  As we explained, the parties...

Another domino has fallen.  Earlier this year, we wrote about the challenges facing the crypto industry that resulted in the bankruptcy filings of Three Arrows Capital, Celsius Network, and Voyager Digital. We noted that other crypto entities could also end...

The ramifications of uneven increases to fees in chapter 11 bankruptcies continue to ripple through federal courts.  As we discussed previously, Congress enacted legislation in 2017 that temporarily increased U.S. Trustee fees chapter 11 debtors had to pay in virtually...

A U.S. bankruptcy court recently denied chapter 15 recognition to a case in the Isle of Man (IOM).  The court ruled that the foreign case was neither a foreign main proceeding nor a foreign non-main proceeding.  Although the IOM proceeding...

To encourage parties to transact with debtors in bankruptcy, the Bankruptcy Code in corporate bankruptcies provides highest priority to “administrative expenses,” which include “the actual, necessary costs and expenses of preserving the estate.”  11 U.S.C. § 503(b); id. § 507(a)(2). ...

On September 15, President Biden announced a tentative deal with unions representing tens of thousands of railroad workers that helped narrowly avoid a strike that threatened to devastate the country’s delicate supply chains that have been strained since the beginning...

A bankruptcy court ruled that a creditor didn’t need to seek derivative standing to sue a liquidating trustee.  The creditor, himself a trustee of the debtor’s employee stock-option plan, had standing to sue without prior court permission because his suit...

The owners of an ambitious Hawaiian golf project in the Makaha Valley of Oahu said Aloha (hello) to new owners, and Aloha (goodbye) to old debt obligations. In an adversary proceeding, the collective owners of the Makaha Valley Country Club, golf...

It’s been a hard year for cryptocurrency.  The values of most cryptocurrencies, including major coins such as Bitcoin and Ethereum, have continued to tumble.  In fact, the price of one stablecoin, which is a form of cryptocurrency tied to another...

We have previously written about Siegel v. Fitzgerald, No. 21-441, the Supreme Court case considering the question of whether the 2018 difference in fees between Bankruptcy Administrator judicial districts and U.S. Trustee judicial districts was consistent with the Constitution’s uniformity...

A Delaware bankruptcy court recently held that Texas’s “trust fund doctrine” remains applicable for companies that have not availed themselves of Texas’s formal dissolution process.  Nonetheless, fiduciary claims by a chapter 7 debtor were dismissed because the debtor failed to assert...

The doctrine of equitable mootness is in the news again.  The Supreme Court recently denied a cert. petition in a case where the petitioner wanted the doctrine ruled unconstitutional. KK-PB Financial LLC v. 160 Royal Palm LLC, Case No. 21-1197,...

In the world of cryptocurrency, exchange platforms act as intermediaries allowing investors to buy and sell assets while making money through commissions and transaction fees.  Any assets purchased may be held in either non-custodial or custodial wallets.  If a customer...

A discharge in bankruptcy usually discharges a debtor from the debtor’s liabilities.  Section 523 of the Bankruptcy Code, however, sets forth certain exceptions to this policy, including for “any debt . . . for money, property, services, or an extension,...

The U.S. Bankruptcy Court in Manhattan recently reminded us why Delaware choice-of-law provisions are so popular in limited partnership and other agreements.  In an adversary proceeding, Judge David S. Jones held that proposed fiduciary claims were futile because of the...

The Fifth Circuit recently dismissed an appeal of a confirmation order as equitably moot.  The decision was based on three key factors: the appellant hadn’t obtained a stay pending appeal, the plan had been substantially consummated, and practical relief couldn’t...

As a result of Purdue Pharma’s proposed plan of reorganization, and the ongoing opioid epidemic that continues to grip the nation, the debate over non-consensual third-party releases has gone mainstream despite being a popular tool for debtors for decades. The...

Article I, Section 8 of the United States Constitution gives Congress the power to “establish . . .  uniform Laws on the subject of Bankruptcies throughout the United States.”  While Congress has general authority to establish a bankruptcy system, bankruptcy...

“[E]nsnared between his involvement in a business that is legal under the laws of Arizona but illegal under federal law,” one debtor’s chapter 13 petition was recently dismissed due to his undisputed violations of the Controlled Substances Act. In November...

A recent decision applied the ordinary course of business defense to a preferential transfer claim where the parties had engaged in only two transactions.  In re Reagor Dykes Motors, LP, Case No. 18-50214, Adv. No. 20-05031, 2022 LEXIS 70 (Bankr....

Another case shows the perils of waiting until the final minutes to meet a court deadline.  In re U-Haul, 21-bk-20140, 2021 Bankr LEXIS 3373 (Bankr. S.D. W. Va. Dec. 10, 2021). The debtor is a well-known truck rental company.  Years before the...

“Messrs. Woods and Wu are fraudsters,” Judge Christopher S. Sontchi declared in the opening salvo of his scathing opinion.  According to the former Chief Judge of the U.S. Bankruptcy Court for the District of Delaware, Woods and Wu fraudulently obtained...

A federal judge recently allowed a trustee’s preferential transfer claim against a law firm to proceed but dismissed a constructive fraudulent transfer claim.  The decision highlights the pleading standards and analytical framework for motions to dismiss such claims.  Insys Liquidation...

In many chapter 11 cases, creditors’ committees play a vital role in maximizing the recoveries of unsecured creditors. But the powers of creditors’ committees are circumscribed by both the Bankruptcy Code and case law. One way committees try to enhance...

U.S. Bankruptcy Judge Craig A. Gargotta rejected a debtor’s attempt to use CARES Act funds, which it did not actually qualify for, to pay creditors in its chapter 11 case.  BR Healthcare Solutions (the “Debtor”) operated a nursing home under the...

In a recent decision, a district court reversed the decision of the bankruptcy court and clarified the independent obligation of the Bankruptcy Court to ensure that a Chapter 13 Plan satisfies the necessary requirements of the Bankruptcy Code, irrespective of the parties’ conduct.  In...

Earlier this month – citing the “virtually unflagging obligation” of an Article III appellate court to exercise its subject matter jurisdiction – the Eighth Circuit Court of Appeals decried the pervasive overreliance by district courts on the doctrine “equitable mootness”...

Judge Stacey Jernigan did not mince words in a recent opinion sanctioning the former CEO of Highland Capital Management, LP.  Entities related to the former CEO brought suit against Highland (the debtor in a Chapter 11 bankruptcy proceeding), and sought...

A key goal of the Bankruptcy Code is to prevent corporate insiders from profiting from their employer’s misfortune. Section 503(c) of the Code makes clear: “there shall neither be allowed, nor paid... a transfer made to, or an obligation incurred...

Some courts permit debtors to designate vendors crucial to their business as “critical vendors.”  These are vendors that supply debtors with necessary goods or services.  With court permission, debtors are allowed to pay critical vendors amounts owing when a bankruptcy...