We now address assets sales under Bankruptcy Code section 363.  The statute allows debtors to use, sell, or lease their property in the ordinary course of business without court permission.  But a debtor’s use, sale, or lease of property outside...

It always amazes me when, after more than a half-century of Uniform Commercial Code (“UCC”) jurisprudence, an issue one thinks would arise quite commonly appears never to have been decided in a reported case.  Such an issue was recently decided...

Ruling from the bench on April 4, Bankruptcy Judge Alan Koschik of the United States Bankruptcy Court for the Northern District of Ohio denied approval of a disclosure statement proposed by FirstEnergy Solutions Corp. because the plan it described was...

When a debtor files for bankruptcy, almost all proceedings to recover property from the debtor are automatically stayed by force of law. See 11 U.S.C. § 362(a). This provision, known as the automatic stay, is a central feature of the...

Under Section 1141(c) of the Bankruptcy Code, property “dealt with” in a confirmed plan is free and clear of the claims and interests of creditors, provided the holder of the claim or interest participated in the bankruptcy case.  But what...

It’s time for a primer on the Wagoner rule and the in pari delicto defense, two concepts that arise when a debtor’s fraud leads to bankruptcy.  Trustees who replace a debtor’s management often sue those involved in the corporation’s misdeeds. ...

There have been two significant developments in the ongoing restructuring case for the Commonwealth of Puerto Rico.  First, as was widely expected, District Judge Laura Taylor Swain entered orders on February 4 and 5, respectively, approving the Commonwealth’s entry into...

When a party files for bankruptcy, the Bankruptcy Code imposes an automatic stay of litigation against a debtor for claims arising prior to the commencement of the bankruptcy case. See 11 U.S.C. § 362(a). Where there is a basis for...

Can another vain attempt to mitigate a $1.5 billion mistake provide the occasion for a thorough review of the doctrine of earmarking?  It did for Southern District Bankruptcy Judge Martin Glenn in the long tail on the General Motors bankruptcy...

Indentures often provide that an indenture trustee’s expenses incurred after an event of default constitute administration expenses under applicable bankruptcy law. However, § 503(b)(5) requires indenture trustees to show that they have made a “substantial contribution” in a case in...

If the National Labor Relations Board (“NLRB”) fines an employer for unlawfully firing workers who tried to unionize, can the employer discharge the fine in bankruptcy, or will the exception to discharge found in Bankruptcy Code section 523(a)(6) apply?  That...

A court in New York has allowed offshore debtors to take control of an investment account in the U.S. over the objection of a shareholder.   At stake was the court’s discretion to permit chapter 15 debtors to access the funds...

On January 14, 2019, facing “billions of dollars in liability claims from two years of deadly wildfires,”[i] PG&E Corporation and its regulated utility subsidiary, Pacific Gas and Electric Company, reported that they expect to file petitions under Chapter 11 of...

Fraudulent transfer law allows creditors and bankruptcy trustees, under certain circumstances, to sue transferees to recover funds received where a debtor’s transfers to the transferees actually or constructively defrauded its creditors. Under both the Uniform Fraudulent Transfer Act adopted by...

Our January 22, May 23, June 28, July 13, August 3, September 11 and October 29, 2018 posts discussed the First Circuit’s January 12, 2018 decision in Mission Product Holdings, Inc. v. Tempnology, LLC[1] and the pending appeal therefrom to...

In a recent cross-border insolvency case, Judge Glenn of the United States Bankruptcy Court for the Southern District of New York recognized an insurance company rehabilitation proceeding in Curaçao as a “foreign main proceeding” under Chapter 15 of the Bankruptcy...

Section 365(h) of the Bankruptcy Code provides considerable protection to a tenant in the event of a bankruptcy filing by its landlord.  Despite rejection of its lease, the tenant can elect to retain its rights, including the right to possession,...

A sex-abuse scandal has landed another organization in bankruptcy court.  USA Gymnastics (“USAG”) filed chapter 11 last week in Indiana following a team doctor’s conviction for abusing hundreds of girls.[i]  The background has been widely reported.  Larry Nassar was a Michigan...

In a recent cross-border insolvency case, In re Agrokor d.d., 591 B.R. 163 (Bankr. S.D.N.Y. 2018), Judge Glenn of the United States Bankruptcy Court for the Southern District of New York recognized and enforced a restructuring plan approved by a...

The Sears bankruptcy case made headlines this month in the complex world of credit default swaps (CDS).  A credit default swap is a contract pursuant to which the seller receives payment from a buyer in exchange for which the seller...

Defendants in a lawsuit didn’t waive their right to arbitrate even after moving to dismiss and answering a complaint, a court held last week.  Arbitration wasn’t waived because the defendants hadn’t filed affirmative defenses or counterclaims and had taken no...

Although it may be difficult to define precisely what an “executory contract” is (with the Bankruptcy Code providing no definition), I think most bankruptcy lawyers feel how the late Supreme Court Justice Potter Stewart famously felt about obscenity--we know one...

As we reported last year, on August 10, 2017, Judge Swain entered an order establishing procedures to govern resolution of the Commonwealth-COFINA dispute (the “Resolution Stipulation”).  In recognition of the fact that the Oversight Board acts for both the Commonwealth...

Our May 23, June 28, July 13, August 3 and September 11 posts discussed the First Circuit’s January 12 decision in Mission Product Holdings, Inc. v. Tempnology, LLC.[1] and, most recently, the pending petition for certiorari.  On October 26, the...

Started as a mail-order retailer, evolved to brick-and-mortar stores in urban areas and expanded to a big-box retailer through merger, Sears is now facing the most turbulent time in its history.  On October 15, 2018, Sears Holdings Corp.—the holding company...

It’s hard to find something positive to write about Venezuela.  Some basic facts tell the story of the misery there. Consumer prices this year might rise one million percent.  The minimum wage was increased by 3,000 percent so that seven million...

The failure of Toys ‘R Us to successfully reorganize in Chapter 11 sent shockwaves throughout the retail world and the restructuring community.  Saddled with unsustainable debt and unable to chart a viable path forward, the company – in bankruptcy since...

In hindsight, it seems inevitable that constitutional and other jurisdictional problems would arise when Congress, in enacting the Bankruptcy Reform Act of 1978, created impressive new powers and responsibilities for the bankruptcy courts (along with a considerable degree of independence)...

When a bankruptcy petition is filed, an automatic stay comes into effect staying proceedings against the debtor or the debtor’s property. 11 U.S.C. § 362(a). The stay centralizes litigation regarding the debtor and its property in the debtor’s bankruptcy case....

The Third Circuit denied a $275 million break-up fee to a bidder that was unsuccessful in its attempt to buy the crown-jewel assets in the high-profile EFH bankruptcy case.  In re Energy Future Holdings Corp., No 18-1109, 2018 U.S. App....

Our May 23, June 28, July 13 and August 3 posts discussed the First Circuit’s January 12 decision in Mission Product Holdings, Inc. v. Tempnology, LLC.[1] and, most recently, the pending petition for certiorari.[2]  Since our last post, the respondent...

We generally advise clients to think carefully before commencing an involuntary bankruptcy petition against an alleged debtor.  One of the primary reasons for our caution is section 303(i) of the Bankruptcy Code, which provides that “(i) If the court dismisses...

Bankruptcy plans often include provisions releasing debtors and their officers and directors from certain potential liability. In Zardinovsky v. Arctic Glacier Income Fund, No. 17-2522 (3d Cir. Aug. 20, 2018), the United States Court of Appeals for the Third Circuit...

In January 2014, Lehman Brothers Holdings, Inc. (“Lehman”) settled claims filed by Fannie Mae and Freddie Mac arising out of each of their purchases of mortgage loans from Lehman and its affiliates. Lehman then sought to recoup the amounts paid...

The Bankruptcy Court in Delaware recently denied a request for an administrative expense claim to an entity that tried but failed to buy a debtor’s key assets.  The decision arises out of the first of three attempts by entities to purchase...

Our July 13 post stated that the deadline for the respondent in Mission Product Holdings, Inc. v. Tempnology, LLC, 879 F.3d 389 (1st Cir. 2018), petition for cert. filed, No. 17-1657 (June 11, 2018), to submit a reply to the...

In the era that preceded the Bankruptcy Reform Act of 1978 and its enactment of the Bankruptcy Code, bankruptcy estates often lost the value of leases and other contracts that could have been realized for creditors by use or sale...

In 2010, Lehman Brothers Special Financing Inc. (“Lehman”) commenced an adversary proceeding against Shinhan Bank (“Shinhan”) to avoid and recover pre-bankruptcy transfers made to the South Korean bank.  In 2015, while a motion to dismiss the case was pending, a...

An accounting firm in the United States must produce workpapers to a chapter 15 foreign representative even if the law where the foreign main proceeding is pending would not permit such production.  CohnReznick LLP v. Foreign Representatives of Platinum Partners Value...

Our June 28 post discussed the petition for certiorari in the U.S. Supreme Court seeking review of the First Circuit’s January 12 decision in Mission Product Holdings, Inc. v. Tempnology, LLC.[i]  We noted that the respondent’s response to the petition...

Section 327(a) of the Bankruptcy Code imposes restrictions on the employment of professionals to assist a trustee, requiring that such professionals “not hold or represent an interest adverse to the estate” and be “disinterested persons.” Section 363(b) permits the trustee,...

Our January 22 post discussed “a long-running issue concerning the treatment of trademark licenses in bankruptcy” and its resolution in the January 12 decision of the First Circuit in Mission Product Holdings, Inc. v. Tempnology, LLC.[1]  Mission Product Holdings filed...

A recent decision from the Ninth Circuit Court of Appeals highlights an existing circuit split regarding appellate standing.[1]  Courts in the Fourth and Seventh Circuits have disagreed whether objection and attendance at a hearing are prerequisites for satisfying the “person aggrieved”...

On June 4, the Supreme Court decided Lamar, Archer & Cofrin, LLP v. Appling, No. 16-1215, in a unanimous opinion by Justice Sotomayor. The Court affirmed the Eleventh Circuit and resolved a circuit split about the meaning of “statement respecting...

Judge Martin Glenn granted recognition to a UK scheme of arrangement with third-party releases that lacked full creditor consent.  In re Avanti Communs. Grp., PLC, No. 18-10458, 2018 Bankr. LEXIS 1078 (Bankr. S.D.N.Y. Apr. 9, 2018).  While stating that “granting...

On May 14, a large coalition of stakeholders in the COFINA-Commonwealth litigation, which we previously reported on here, announced a proposed settlement outline to resolve the long-running dispute over who owns the sales and use taxes pledged by COFINA to...

Our February 22 post (with updates on March 19, April 17 and April 25) reported on a bankruptcy court decision dismissing a voluntary corporate Chapter 11 petition that had not been approved by a preferred stockholder of the debtor whose...