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...

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]  On May 17, the...

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 jurisdiction in the Southern...

Section 544 of the Bankruptcy Code permits a bankruptcy trustee to avoid any transfer that would be avoidable by creditors under state fraudulent transfer law. Section 550 of the Bankruptcy Code permits the bankruptcy trustee to recover from the transferee...

This week Dan Lowenthal and Taylor Kirklin published an article in The Bankruptcy Strategist: “SCOTUS Recap: What Lies Ahead for the Lower Courts’ Tests for ‘Non-Statutory Insiders.’”  The article examines the Supreme Court’s recent opinion in U.S. Bank Nat’l Ass’n...

In BFP v. Resolution Tr. Corp., 511 U.S. 531 (1994), the Supreme Court held that a mortgage foreclosure sale conducted in accordance with state law was shielded from avoidance under the Bankruptcy Code’s fraudulent conveyance provision, 11 U.S.C. § 548.  In...

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 not approved the filing as required...

Section 549 of the Bankruptcy Code permits a trustee or debtor in possession to avoid (and ultimately recover) a transfer of the debtor’s property “that occurs after the commencement of the case” and “is not authorized under this title or...

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 not approved the filing as required...

Substantive consolidation is the ultimate disregard of the corporate separateness of a group of related debtors--it is “the effective merger of two or more legally distinct (albeit affiliated) entities into a single debtor with a common pool of assets and...

The Bankruptcy Code provides for the appointment of a creditors’ committee in chapter 11 bankruptcy cases. See 11 U.S.C. § 1102. There is no parallel provision applicable to chapter 7 cases. When a bankruptcy case is converted from chapter 11...

This post reviews some concepts concerning executory contracts. The ground covered will be familiar to insolvency experts and should be insightful for readers who don’t specialize in U.S. bankruptcy law. The springboard for the overview is an opinion issued last week,...

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 “golden share” stock had not approved...

In U.S. Bank Nat'l Ass'n v. Village at Lakeridge, LLC, No. 15-1509, 2018 U.S. LEXIS 1520 (Mar. 5, 2018), the Supreme Court analyzed the appropriate standard of review for appellate courts reviewing a bankruptcy court’s determination of a “mixed question”...

On March 7, 2018, Journal of Corporate Renewal featured an article written by Daniel A. Lowenthal, Chair of Patterson Belknap’s Business Reorganization and Creditors' Rights Practice, entitled “Venezuelan Debt Crisis Intensifies as Its Leaders Ponder Responses.” Mr. Lowenthal discusses Venezuela's current debt crisis...

In September, we reported on the possible bankruptcy of Connecticut’s capital city and questioned whether anything short of a State-led bailout could save the City from its crippling deficit and mounting debt service payments.  Recent news reports suggest that the...

Our post last year concerning “[t]he long-running litigation spawned by the leveraged buyout of Tribune Company . . . and the subsequent bankruptcy case”[1] described a case--FTI v. Merit[2]--that was then pending in the Supreme Court.  In that case, the...

Section 1141(d)(6)(A) and section 523(a)(2) of the Bankruptcy Code together provide that debts owed by a corporation to a government entity are not dischargeable if such debts were obtained by false representations. Does this rule apply to claims by government...

Back in the day--say, the last two decades of the twentieth century--we bankruptcy lawyers took it largely on faith that the right structural and contractual provisions purporting to confer bankruptcy-remoteness[1] were enforceable and likely to be successful in preventing an...

The Second Circuit recently issued an important decision on a “related to” jurisdiction case arising out of the Bernie Madoff Ponzi scheme.  SPV Osus, Ltd. v. UBS AG, 2018 U.S. App. LEXIS 3088 (2d Cir. Feb. 9, 2018). SPV originally sued...

Confirmation of a Chapter 11 plan of reorganization generally requires the consent of each impaired class of creditors.[1]  But, upon satisfaction of additional statutory requirements, a plan proponent can obtain confirmation of a “cramdown” plan over the dissent of one...

In Dahlin v. Lyondell Chemical Co., 2018 U.S. App. LEXIS 1956 (8th Cir. Jan. 26, 2018), the Eighth Circuit Court of Appeals rejected an argument that bankruptcy debtors were required by due process to provide more prominent notice of a...

A long-running issue concerning the treatment of trademark licenses in bankruptcy has seen a new milestone with the January 12 decision of the First Circuit in Mission Product Holdings, Inc. v. Tempnology, LLC.[1]  The issue was implicit in the Bankruptcy...

In Crystallex Int'l Corp. v. Petróleos de Venez., S.A., Nos. 16-4012, 17-1439, 2018 U.S. App. LEXIS 95 (3d Cir. Jan. 3, 2018), the U.S. Court of Appeals held there could be no fraudulent transfer liability under the Delaware Uniform Fraudulent...

In this post, we return to cross-border insolvencies and examine one of the first decisions issued in 2018 by a bankruptcy court in a chapter 15 case: In re Energy Coal S.P.A., No. 15-12048 (LSS), 2018 Bankr. LEXIS 10 (Bankr....

Section 303(b)(1) of the Bankruptcy Code generally requires three petitioning creditors to join an involuntary petition, each of which must hold claims against the debtor that are not contingent as to liability and are not the subject of a bona...

Bankruptcy courts lack the power to impose serious punitive sanctions, a federal district judge ruled recently in PHH Mortgage Corporation v. Sensenich, 2017 U.S. Dist. LEXIS 207801 (D. Vt.  Dec. 18, 2018). Judge Geoffrey Crawford reversed a bankruptcy judge’s ruling...

This post examines an interesting intersection between bankruptcy and tax laws: if a corporation terminates its Subchapter S status pre-bankruptcy, can a bankruptcy trustee bring fraudulent transfer claims against the corporation’s shareholders to recover resulting tax refunds they receive?  One...

When the fallout from failed intellectual-property litigation collides with bankruptcy, the complexities may be dizzying enough, but when the emerging practices and imperatives of litigation financing are imposed on those complexities, the situation might be likened to three-dimensional chess.  But...

Every lawyer knows that it is important to enter into a signed engagement letter with a client before commencing legal representation.  But, as one law firm recently discovered, even an unsigned engagement letter is better than none at all.  The...

On November 9, responding to a request from the U.S. Supreme Court, the Solicitor General filed a brief at the Court recommending that the petition for writ of certiorari in Lamar, Archer & Cofrin, LLP v. Appling, No. 16-11911, be...

Perhaps this is one of the first articles you’re reading about the debt crisis in Venezuela. It won’t be the last. The situation there is bad and will get worse. Venezuela has accumulated at least $120 billion in debt. Of that,...

A recent decision of the United States Bankruptcy Court for the Southern District of New York provides important guidance on the limits of nonconsensual third-party releases in the Second Circuit.[1]  SunEdison, Inc. sought confirmation of a plan for itself and...

It is a unique characteristic of debt restructuring under Chapter 11 of the Bankruptcy Code that a majority of a class of creditors can accept a modification of the terms of the debts owed to the class members, as provided...

In Levin v. Verizon Bus. Global, LLC (In re OneStar Long Distance, Inc.), 2017 U.S. App. LEXIS 18374 (7th Cir. Sept. 22, 2017), the Seventh Circuit recently addressed a situation where a debtor sought to reduce a creditor’s new value...

Figuring out when a pre-petition waiver of a jury trial will be respected in lawsuits brought in bankruptcy cases can be tricky. In a recent case, In re D.I.T., Inc., 2017 Bankr. LEXIS 3386 (Bankr. S.D. Fla. Oct. 2, 2017),...

Unsecured creditors and other stakeholders sometimes challenge the reasonableness of fees incurred by estate professionals in a bankruptcy case.  Whether this is to augment unsecured creditor recoveries or serve as a check on the private bar is in the eye...

In a recent post, here, we wrote about a court decision that discussed deadlines for proofs of claim in a case involving a Ponzi scheme.  Then, last week, another court issued a decision concerning late amendments to proofs of claim. ...

On Tuesday, two leading credit-rating agencies again downgraded the city of Hartford:  Moody’s Investors Service now rates the struggling city at Caa3, while S&P Global Ratings has lowered its rating to CC.  They attribute the junk classification to the increasing...

Court decisions about failed Ponzi schemes often make good reading. The fact patterns always involve actual fraud. The illicit schemes give rise to insightful discussions on various legal concepts. In the typical Ponzi scheme, the wrongdoer pays supposed “investment returns” to...

Last week, in Assured Guaranty Corp. v. Fin. Oversight and Mgmt. Bd. for Puerto Rico, No. 17-1831, 2017 U.S. App. LEXIS 18387 (1st Cir., Sept. 22, 2017), the U.S. Court of Appeals for the First Circuit issued a noteworthy decision...

Avoiding a fraudulent transfer to the Internal Revenue Service (“IRS”) in bankruptcy has become easier, or at least clearer, as a result of a recent unanimous decision by a panel of the Court of Appeals for the Ninth Circuit, Zazzali...

Background On May 3, 2017, the Financial Oversight and Management Board for Puerto Rico (“Oversight Board”), which was established under the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”), filed a voluntary petition for relief for the Commonwealth of...

The long-running litigation spawned by the leveraged buyout of Tribune Company, which closed in December 2007, and the subsequent bankruptcy case commenced on December 8, 2008[1] has challenged the maxim that “there’s nothing new under the sun” even for this...

For over eight years, In re Lehman Bros., No. 08-13555-scc (Bankr. S.D.N.Y.), has been one of the most active, complex bankruptcy dockets in the country.  A large portion of the remaining contested matters in that case are claims by trustees...

Some legal malpractice defendants are content to litigate claims asserted by debtors in the bankruptcy court.  But many others, fearing that the debtor’s creditors may view them as a deep-pocketed resource to augment their own recoveries, would prefer to defend...