Second Circuit Clarifies Tribune in New Decision

Update on Sovereign Debt Restructurings

January 24, 2024

Daniel A. Lowenthal, Kimberly Black

In 2023, the economies of some nations stagnated, but developing economies particularly struggled. As a new year commences, some of these countries will continue their efforts at restructuring their debts—a process that has been going on for years.

Back in February 2020, the International Monetary Fund (IMF) published a report finding that half of low-income countries were at a high risk for debt distress or were already in debt distress. When the pandemic hit, the financial burdens faced by these countries only increased. In May 2020, the G20 nations responded by creating the Debt Service Suspension Initiative (DSSI), which suspended debt service payments for some of these low-income countries upon request from such countries.

Although the DSSI was undoubtedly successful–providing $12.9 billion in relief to 48 different countries during the approximate year and a half that the program was in effect–the relief was temporary because the initiative did not address more large-scale issues. For that, the G20 needed to create a comprehensive debt restructuring program. In November 2020, the G20 launched the Common Framework for Debt Treatments, a mechanism meant to speed up the process for dealing with more protracted liquidity issues.

Under the Common Framework, the debtor’s official bilateral creditors[1] first participate in transparent negotiations with the debtor to establish the “key parameters” of debt treatment. The goal is to establish an agreeable framework that will fairly distribute the burden among the creditors. The key parameters may include changes to nominal debt service, debt reduction in present value terms, and extension of the claims. Once agreed, the key parameters will be set out in a non-binding Memorandum of Understanding, which will then be implemented through bilateral agreements between the official bilateral creditors and the debtor country.

Beyond the claims of participating official bilateral creditors, the debtor is also required to seek agreements on the treatment of claims held by other creditors, including private creditors. Such treatment must be at least as favorable as the treatment of the official bilateral creditors using the principle of comparability of treatment. To assist debtors in these negotiations, the Common Framework relies on an IMF financing program.

The Common Framework was initially met with optimism, in particular because it united the official bilateral creditors from both the traditional “Paris Club” countries, such as France and the United States, as well as newer creditor countries, such as China and India. Since its inception over three years ago, Chad, Ethiopia, Ghana, and Zambia have all made requests for debt relief under the Common Framework. Although little progress has been made in any of these countries, as we enter a new year, and new fiscal quarter, some of these debtors are hoping to make important strides.

For example, Ghana first sought a restructuring under the Common Framework in January 2023 (making it the most recent country to do so), and quickly obtained $3 billion in financing from the IMF. The IMF immediately made $600 million of the financing available with subsequent tranches to be made available depending on Ghana’s restructuring progress. This was a good first step, and observers were hopeful because of how quickly the IMF financing was obtained, but the restructuring hit a major obstacle regarding the appropriate “cut-off date.” This question was critical because any debt incurred after the cut-off date would not be restructured.

Kicking off the new year right, Ghana’s creditors agreed last week to set the cut-off date for December 2022. Along with this agreement came a larger agreement on a restructuring of $5.4 billion in loans, which was announced on January 12. This agreement, which still needs to be memorialized in a memorandum of understanding, should allow Ghana to access its next tranche of IMF funding so the country can continue this momentum as it seeks to restructure a total of $20 billion in external debt.

While Ghana only started the Common Framework process last year, Zambia was already making substantial strides. Unfortunately, hope for a major breakthrough was dampened in November 2023 when the official bilateral creditors rejected a deal Zambia had reached with certain investment and pension funds holding $3 billion in bonds on the basis that the deal failed to provide for comparability of treatment. Despite the setback, Zambia is still working towards a deal. The country hopes to reach an agreement on the restructuring of that bond debt during the first quarter of 2024, but the first step is coming to an agreement on what is meant by comparability of treatment, which has proven to be a difficult task.

Restructuring professionals around the world will certainly be watching closely to see whether the Common Framework can obtain tangible wins early on this year. Because experts predict that economic growth will be sluggish in 2024, it is even more important that Ghana and Zambia are able to make substantial progress early in the calendar.

[1] Official bilateral creditors are sovereign governments, or their appropriate institutions, that loan money to another government or public entity.

Case Summaries

Second Circuit Clarifies Tribune in New Decision

December 21, 2023

Daniel A. Lowenthal

We have previously blogged about the section 546(e) defense to a trustee’s avoidance powers under the Bankruptcy Code. A trustee has broad powers to set aside certain transfers made by debtors before bankruptcy. See 11 U.S.C. §§ 544, 547, 548. Section 546(e), however, bars avoiding certain transfers, including a “settlement payment . . . made by or to (or for the benefit of) . . . a financial institution [or] a transfer made by or to (or for the benefit of) a . . . financial institution . . . in connection with a securities contract.” 11 U.S.C. § 546(e). The applicability of section 546(e) can thus hinge on what qualifies as a “financial institution.” The Bankruptcy Code’s definition of “financial institution” is counterintuitive: it includes not only certain institutions that fall within the colloquial understanding of “financial institution” (“a Federal reserve bank, or an entity that is a commercial or savings bank, industrial savings bank, savings and loan association, trust company, federally-insured credit union, or receiver, liquidating agent, or conservator for such entity”), but also a customer of such institutions “when” such institutions are “acting as agent or custodian for [such] customer . . . in connection with a securities contract.” 11 U.S.C. § 101(22)(A).

In In re Tribune Co. Fraudulent Conveyance Litigation, 946 F.3d 66 (2d Cir. 2019) (“Tribune”), the Second Circuit held that this definition extended to Tribune Co. with respect to Tribune’s payments to shareholders in connection with a merger, because Tribune was a “customer” of a financial institution, and that institution served as Tribune’s agent for the payments. As such, the Second Circuit held that the payments were protected from avoidance by the safe harbor.

The precise scope of Tribune remains in question. For purposes of section 546(e), what does it mean for a financial institution to be “acting as agent” for a customer? And when a financial institution is acting as an agent for a customer, rendering the customer itself a financial institution for section 546(e) purposes, how broadly does that classification extend? These issues are addressed in a recent Second Circuit decision on section 546(e), In re Nine West Holdings Inc., __ F.4th __, 2023 U.S. App. LEXIS 31258 (2d Cir. Nov. 27, 2023).

The case arose from a leveraged buyout of the apparel company Jones Group, Inc. (“Jones Group”) by the private equity firm Sycamore Partners (“Sycamore”), and the subsequent bankruptcy of the surviving company Nine West Holdings, Inc. (“Nine West”). Because the court’s decision turned on the facts of the merger, we provide a summary of the key facts as the court described them. To effectuate the merger, Sycamore created Jasper Parent LLC (“Jasper Parent”) and Jasper Merger Sub, Inc. (“Jasper Merger Sub”), a wholly owned subsidiary of Jasper Parent. On December 19, 2013, Jasper Parent, Jasper Merger Sub, and Jones Group entered into the Merger Agreement, under which Jones Group merged with Jasper Merger Sub, leaving Jones Group (later Nine West) as the survivor. The Merger Agreement provided for a “paying agent” to be hired to make payments to the public shareholders, and also provided that Jasper Parent would deposit the merger consideration with the paying agent. Jasper Parent and Jones Group hired Wells Fargo to act as the paying agent and entered into the Paying Agent Agreement (“PAA”) with it. The PAA specified that the paying agent would act as Jones Group’s “special agent” for distributing the merger consideration and outlined the payment mechanics in detail. The Merger Agreement also provided for payments to Jones Group’s former directors, officers, and employees for their restricted shares, share-equivalent units, and accumulated dividends, which were to be made through payroll and other means.

In April 2018, Nine West filed for bankruptcy. A plan was confirmed in February 2019. In February 2020, the Litigation Trustee for the Nine West Litigation Trust and the Indenture Trustee for certain notes issued by Nine West brought 17 actions against Jones Group’s former directors and officers for unjust enrichment, and against its former public shareholders for fraudulent conveyance. The public shareholders and the directors and officers moved to dismiss on the basis that the transfers to them were shielded by the section 546(e) safe harbor. The district court granted both motions and Plaintiffs appealed.

The Second Circuit affirmed in part and reversed in part. First, the Second Circuit held that whether Nine West qualified as a “financial institution” for purposes of section 546(e) was properly analyzed on a transfer-by-transfer basis rather than a contract-by-contract basis. For an entity to qualify as a financial institution by virtue of a financial institution serving as its agent, the Second Circuit held that agency relationship must pertain to the transaction at issue. To justify that requirement, the Second Circuit pointed to the statutory text, which provides that customers qualify as financial institutions “when” a bank is acting as its agent, and to the principle that courts should interpret statutes to avoid absurd results, reasoning that a contrary interpretation would mean that every transfer in connection with an LBO would be shielded as long as at least one such transfer involved a bank serving as agent. The Second Circuit also reasoned that a more expansive interpretation of the safe harbor would undermine the avoidance powers critical to the Bankruptcy Code and would shield transfers unrelated to Congress’s purpose of protecting the stability of the financial system.

Second, based on this framework, the Second Circuit held that Nine West qualified as a financial institution as to the transfers to the public shareholders, but not as to the transfers to the directors and officers. As to the transfers to the public shareholders, the Second Circuit held that Wells Fargo acted as Nine West’s agent, rendering Nine West a financial institution for 546(e) purposes. As to the transfers to the directors and officers, however, the Second Circuit rejected certain defendants’ arguments that Wells Fargo had a role in cancelling certain restricted shares and, as such, was Nine West’s “agent” as to those transfers as well. The Second Circuit noted that the factual record was unclear, but even if Wells Fargo had a ministerial role in cancelling the shares, the court held that this was insufficient for Wells Fargo to be an agent, since Nine West did not exercise control over Wells Fargo for this role. In reaching this conclusion, the Second Circuit emphasized that a further expansion of section 546(e)’s scope would not fulfill Congress’s purpose.

Third, the Second Circuit briefly rejected Plaintiffs’ argument that the safe harbor did not apply because the Merger Agreement was not a “securities contract,” relying on the expansive statutory definition of “securities contract” and noting that the payments were also “settlement payments.”

Judge Sullivan dissented. He argued that, based on the “connection with a securities contract” language in section 546(e) and in the statutory definition of “financial institution,” the contract-by-contract approach was the appropriate one, and all the transfers at issue were safe harbored.

Navigating Asset Tracing Challenges in Bankruptcy

December 11, 2023

Daniel A. Lowenthal

This article originally appeared on Law360.

The uptick in bankruptcy cases will mean more work for insolvency professionals who specialize in asset tracing. Some of the most interesting work will arise in cases where companies engaged in significant fraud.

Each bankruptcy cycle has these cases. In 2001, Enron Corp. filed for bankruptcy. In 2008, there was Bernie Madoff. The latest example is FTX Trading Ltd.

But scores of less headline-grabbing cases will also require asset tracing. The work will be needed not just when there's intentional fraud, but also when constructive fraud and preferential transfers are present.

A big challenge for plaintiffs — debtors and post-confirmation liquidating trustees — can occur after a transfer is found to be voidable. It can be hard to locate, determine ownership of, and recover assets.

In the typical situation, a defendant receives funds from a debtor prepetition, commingles the money in one or more accounts, and transfers some amount of the funds to another person or entity.

Five common asset tracing rules that experts and courts use are the lowest intermediate balance rule, the restated tracing rules, last-in and first-out, first-in and first-out, and the pro rata method.

The lowest intermediate balance rule dates from English common law and was first recognized by the U.S. Supreme Court in Cunningham v. Brown in 1924.[1]

This rule assumes that the "secured funds deposited into a commingled bank account are the last funds disbursed from that account, and any disbursements made from the account are taken first from funds other than the ... secured funds until the balance in the account dips below the amount of those ... secured funds."[2]

As the U.S. Court of Appeals for the Fourth Circuit explained in United States v. Miller in 2018,

The lowest intermediate balance rule originated in trust law as a rule to determine the rights of a trust beneficiary to a trustee's bank account where the trust funds and the trustee's personal funds are commingled. In this regard, the Rule assumes that the funds at issue remain in the account and are available to be traced provided that the balance does not fall below the amount of the disputed funds. In the event that the balance of the account dips below the amount of funds at issue, the funds at issue abate accordingly.[4]

Less often cited in bankruptcy cases are the restated tracing rules. These provide that when "property of the claimant has been commingled by a recipient who is a conscious wrongdoer. Withdrawals that yield a traceable product and withdraws that are dissipated are marshaled so far as possible in favor of the claimant."

When an innocent recipient commingles the property, "restitution from property so identified may not exceed the amount for which the recipient is liable by [other rules.]"[5]

Last-in, first-out is the presumption that the last finds deposited into an account are the first to be withdrawn. This method is sometimes used as an alternative to the lowest intermediate balance rule.

First-in, first-out is the presumption that the first funds deposited into an account are the first to be withdrawn. Like last-in, first-out, this method is also an alternative to the lowest intermediate balance rule.

The pro rata methodology presumes that each claimant is entitled to a portion of commingled funds based on its percentage contribution to the account. This method lacks the timing element for deposits and withdraws that is present in the other methodologies.

According to the U.S. Court of Appeals for the Tenth Circuit's ruling in United States v. Henshaw in 2004, "courts exercise case-specific judgment to select the [tracing] method best suited to achieve a fair and equitable result on the facts before them."[6]

Bankruptcy courts "have broad discretion to determine which monies of commingled funds derive from fraudulent sources."[7]

As noted above, the lowest intermediate balance rule is widely utilized by experts and often cited in bankruptcy decisions. The November opinion from the Health Diagnostic Laboratory Inc.'s bankruptcy in the U.S. Bankruptcy Court for the Eastern District of Virginia demonstrates how the lowest intermediate balance rule is applied.

In that case, the debtor sold test strips that provided early detection of cardiovascular disease, diabetes and more. The company and affiliates filed for Chapter 11 in 2015. The liquidating trustee brought multiple Chapter 5 avoidance actions.

One adversary proceeding concerned funds that HDL transferred to Bradford Johnson as an initial transferee. Johnson was a principal and sales agent of HDL's marketing consultant, BlueWave Healthcare Consultants Inc.

The trustee obtained a judgment against BlueWave of just over $220 million. The court in HDL referred to this amount as the avoided transfers.

In 2018, Johnson and several of his business entities filed for bankruptcy in Alabama, a filing that stayed the trustee's lawsuit against him.

But Johnson had used funds he received from HDL to make charitable contributions to First United Methodist Church Centre, Alabama. The trustee pursued recovery against the defendant.

The trustee and the defendant stipulated that Johnson had received $1,719,200.61 in transfers from HDL. The HDL decision referred to those funds as the avoidable transfers.

As noted above, the trustee could not pursue recovery from Johnson given the automatic stay in his bankruptcy case, and thus the transfers of these funds were avoidable but could not be avoided.

The evidence at trial showed that $1,085,000 that had been transferred from HDL to Johnson were sent as donations from Johnson to the defendant from four commingled accounts, including a BlueWave account.

The question before the court was how much of what was transferred to the defendant from the commingled accounts was part of the avoided transfers and the avoidable transfers.

In other words, not necessarily all funds that Johnson had sent the defendant were subject to Chapter 5 recovery, even if Johnson had initially received those and other funds from HDL.

The trustee's expert examined all the inflows and outflows concerning those accounts on a transaction-by-transaction basis. Millions of dollars had moved in, out of, and between the accounts. A complicating factor was that the accounts included funds from sources other than HDL.

To trace the transfers from those accounts to the defendant, the expert relied primarily on the lowest intermediate balance rule method, but also utilized the restated tracing rules.

The assumption under the lowest intermediate balance rule was that all non-HDL funds in the commingled accounts were deemed to have been transferred out before disbursement of the funds from HDL.

Applying the lowest intermediate balance rule, the evidence showed that of the total $1,085,000 transferred to the defendant from the four commingled accounts, $569,435 could be traced directly to the avoided transfers and the avoidable transfers.

The other transfers were not subject to the trustee's avoiding powers. As a result, the court entered judgment in favor of the liquidating trustee and against the defendant for $569,435.

The decision shows how an expert can make sense of a complicated situation. Millions of dollars of funds entered accounts from multiple sources, and funds also moved between those accounts.

Certain transfers from HDL through those accounts and to the defendant were subject to clawback under federal and state law.

Use of the lowest intermediate balance rule in this case enabled the expert to identify the subset of transfers that the liquidating trustee could seek to recover for the beneficiaries of the trust.

[1] Cunningham v. Brown, 265 U.S. 1 (1924).

[2] Health Diagnostic Laboratory, Inc., No. 22-03023, 2023 Bankr. LEXIS 2721, at *10 (Bankr. E.D. Va. Nov. 9, 2023).

[3] Id. at *14-15.

[4] United States v. Miller, 295 F. Supp. 3d 690, 703-04 (E.D. Va. 2018), aff'd, 911 F.3d 229 (4th Cir. 2018).

[5] Id. § 59(3).

[6] United States v. Henshaw, 388 F.3d 738, 741 (10th Cir. 2004).

[7] Picard v. Charles Ellerin Revocable Tr. (In re Bernard L. Madoff Inc. Sec. LLC), No. 08-01789 (BRL), 2012 Bankr. LEXIS 1099, at *8 n.7 (Bankr. S.D.N.Y. 2011).

Resources

To read the article on Law360, click here.

Mr. Lowenthal, Chair of the firm’s Business Reorganization and Creditors' Rights Practice, has earned recognition as a skilled advocate in the bankruptcy, creditors' rights, and corporate restructuring arena. He represents creditors' committees, trade creditors, indenture trustees, and bankruptcy trustees and examiners in domestic and international cases.

Mr. Lowenthal recently served as counsel to the court-appointed Examiner in the chapter 11 cases of FTX Trading Ltd. and its affiliates. In this position, he investigated issues critical to the FTX bankruptcy cases, including potential conflicts of interest and fraudulent transfers, that were summarized in two publicly filed reports.

Mr. Lowenthal also represents U.S. and non-U.S. business entities in a wide range of complex litigation issues, including creditors’ rights disputes, purchases of intellectual property assets, and distressed debt acquisitions and restructuring. He has achieved numerous favorable results for clients in trial and appellate courts as well as commercial arbitration. Recently, he successfully defended former executives of a failed European bank against allegations that they had defrauded investors.

A regular speaker on bankruptcy law topics, Mr. Lowenthal recently presented for the American Bankruptcy Institute, the Practising Law Institute, INSOL International, INSOL Europe, and the Association of Corporate Counsel. Most recently, Mr. Lowenthal was a member of INSOL Europe’s 2023 Amsterdam Congress Technical Committee. He has been recognized by JD Supra’s Readers’ Choice Awards as one of the top ten authors in the Bankruptcy category from 2023-2026. Mr. Lowenthal has received Martindale-Hubbell’s highest rating of "AV Preeminent" based on both peer and client reviews and has been named to The Best Lawyers in America in the area of Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law. He has also been named by Super Lawyers in the areas of bankruptcy: business and business litigation. Lastly, Mr. Lowenthal has been named to the 2022-2026 editions of the Lawdragon 500 Leading U.S. Bankruptcy & Restructuring Lawyers guide.

Representative Matters

Represented court-appointed Examiner in chapter 11 cases of FTX Trading Ltd., including assisting him with various investigations summarized in two publicly filed reports.

Represented foreign administrators of a global alternative energy company in its chapter 15 cross-border bankruptcy case, successfully petitioning the court for the return of over $28 million held in a U.S. bank account.

Representing noteholders of a Brazilian company in a lawsuit arising from a debt default.

Representing the Oversight Committee for a post-confirmation liquidating trust in the Southern District of Texas.

Representing the Indenture Trustee for a series of unsecured notes in connection with an Italian insolvency proceeding and a related chapter 15 case.

Represented a bidder in a competitive auction to acquire the assets of a chapter 11 debtor.

Lead counsel to the Official Committee of Unsecured Creditors of multi-state real estate developer with liabilities in excess of a billion dollars. The Bankruptcy Court praised the “remarkable results” achieved through the “extraordinary efforts” of Patterson Belknap attorneys in this case.

Representing an international financial institution as Indenture Trustee in cross-border insolvency cases pending in Grand Cayman and Hong Kong.

Represented an Indenture Trustee and Co-Chair of the Official Committee of Unsecured Creditors on over $5 billion of unsecured debt in one of the largest, most complex cases ever filed in Delaware, the Energy Future Holdings Corp. cases.

Represented an Indenture Trustee in the Nortel Networks Inc. cross-border cases, a set of insolvency cases filed in the U.S., the U.K., and Canada.

Represented an Indenture Trustee on bonds governed by New York law in an insolvency case in London.

Represented an Indenture Trustee on $1.7 billion of unsecured debt in the Washington Mutual, Inc. case.

Representing a former member of the Board of Directors in The Weinstein Company Holdings bankruptcy case.

Represented an international law firm in a proceeding before the U.S. Bankruptcy Court relating to conflicts of interest in a Chapter 11 representation.

Represented the winning bidder in an auction to acquire the assets and intellectual property from a Chapter 7 debtor over the objection and competing bid of the debtor’s secured lender.

Special litigation counsel to an Official Committee of Unsecured Creditors to investigate fraudulent conveyance claims.

Conducted an internal investigation of a multi-national law firm following its role in a large Chapter 11 bankruptcy case.

Representing the Post-Confirmation Trustee in the Tarragon Corporation case.

Special litigation counsel to a Chapter 7 trustee in the bankruptcy of an employee leasing company.

Represented an Indenture Trustee in the Nortel Networks Inc. cross-border cases, a set of insolvency cases filed in the U.S., the U.K., and Canada.

Represented the Liquidating Trust Board in the TerreStar Networks Inc. case.

Represented the Trust Oversight Committee in the Disney retail store chain case.

Represented Harrison J. Goldin, an Examiner in the Enron Corp. case, in an investigation of many of Enron's special-purpose-entity transactions.

Representing international creditors, including entities in the U.K., the Netherlands, and Germany, in the Lehman Brothers Holdings Inc. case.

Represented a Scottish aviation company in the Hawker Beechraft Corporation case.

Defending a reinsurance company in a fraudulent conveyance lawsuit brought by creditors of Tribune Company in U.S. Federal Court.

Representing a Mexican creditor in the Stanford International Bank Ltd. case.

Obtained a favorable result on behalf of the largest private bank in Brazil in connection with the Chapter 15 case of a Brazilian company.

Represented the Retiree Committee in the U.S. Airways, Inc. case, including serving as trial counsel on the debtor’s motion to eliminate retiree benefits.

Won a crucial decision of first impression for financial institutions whose security interests were challenged by the bankruptcy trustee in The Bennett Funding Group, Inc. case, a case that stemmed from an alleged $1 billion Ponzi scheme.

Represented the Official Committee of Unsecured Creditors in the STAR Telecommunications, Inc. case.

U.S. Courts of Appeals, Second Circuit; Third Circuit
U.S. District Court, Southern, Eastern and Northern Districts of New York
New York

MEMBERSHIPS: American Bar Association; Bankruptcy and Corporate Reorganization Committee of the New York City Bar Association; American Bankruptcy Institute; Board of Editors, The Bankruptcy Strategist; INSOL International; INSOL Europe (2023 Amsterdam Congress Technical Committee); Turnaround Management Association and the New York Institute of Credit.

"Federal District Court Ruling Upholds Uptier Transactions," INSOL International (February 18, 2026)
"Judge Blasts Defendant for Ignoring Discovery Obligations and More," Law.com (January 27, 2026)
"Ninth Circuit Rules that Decision Reimposing the Automatic Stay is Immediately Appealable," The Bankruptcy Strategist (October 1, 2025)
"The Divestiture Rule Explained: A Judge-Made Doctrine Doesn’t Necessarily Deprive a Lower Court of Ongoing Subject Matter Jurisdiction," The Bankruptcy Strategist (June 30, 2025)
"Non-Creditor Was Entitled to Actual Notice of A Chapter 11 Plan's Injunction Barring Suits Against Insurance Carriers," The Bankruptcy Strategist (May 14, 2025)
"Formal & Informal Negotiation ASAP!" Eurofenix, the Journal of INSOL Europe (Spring 2025)
"A Primer on Chapter 11 Trustees & Examiners," New York Law Journal (April 9, 2025)
"The Barton Doctrine: Suit Against Receiver Did Not Require Court Permission," The Bankruptcy Strategist (March 31, 2025)
"Court Rules Mere Conduit Defense Not Suitable for a Motion to Dismiss," The Bankruptcy Strategist (November 2024)
"Ch. 11 Ruling Shows Early Attempt To Tackle Purdue Fallout," Law360 (September 5, 2024)
"Courts Split Over Requirement for Chapter 15 Jurisdiction In the U.S.," The Bankruptcy Strategist (June 2024)
"Bankruptcy Courts Have Contempt Power, Del. Case Reminds," Law360 (May 14, 2024)
"Bankruptcy Ruling Stresses Value of Client Communication," Law360 (March 25, 2024)
"Navigating Asset Tracing Challenges in Bankruptcy," Law360 (December 11, 2023)
"Section 363 Ruling Lines Up With Avoidance Action Precedent," Law360, (September 26, 2023)
"Post-Siegel Trustee Fee Rulings Further Debtor-Friendly Trend," Law360, (June 9, 2023)
"A Curious Bankruptcy Case Where Bad Behavior's Overlooked," Law360, (April 14, 2023)
"Substantial Contribution: a New Decision from the 3rd Circuit," Westlaw Today, (January 11, 2023)
“U.S. Bankruptcy Court Denies Chapter 15 Recognition to a Case on the Isle of Man,” The Bankruptcy Strategist, (January 2023)
"FTX Bankruptcy Provides A Road Map For Crypto Regulation" Law360, (December 1, 2022)
"What to Do If Your Tenant Is Bankrupt" American Bar Association, (November 29, 2022)
"Bankruptcy Ruling Provides Clarity On Administrative Priority" Law360, (October 28, 2022)
"Golf Project Ch. 11 Ruling Is A Deal Term Negotiation Lesson" Law360, (August 29, 2022)
"Examining Equitable Mootness After High Court Ch. 11 Denial" Law360, (July 2022)
"Recent Decision on Derivative Standing by a Creditors' Committee to Challenge a Lender's Liens" INSOL International News Update, (November 2021)
"The Impact of the CARES Act on US Consumers, Small Businesses, Bankruptcy and Insolvency Laws and Procedures" International Corporate Rescue, (May 2020)
"Bankruptcy Sales Under Section 363: The Business Judgment Test That Judges Often Cite Isn't Always the One They Use" Norton Journal of Bankruptcy Law and Practice, (February 2020)
"Bankruptcy Courts Don’t Need to Hold an Evidentiary Hearing in Order to Appoint a Chapter 11 Trustee" National Association of Credit Management, eNews, (January 2020)
"Court Decision Discusses the Barton Doctrine and the Automatic Stay in Chapter 15," INSOL International News Update, (December 2019)
"A Bankruptcy Code Chapter 15 Primer: Decision in New York Addresses Key Issues of Jurisdiction, Recognition, Public Policy, and More," INSOL International News Update, (November 2019)
Contributor to the Firm's Bankruptcy Update Blog
"New York Bankruptcy Court Issues Ruling on Recognition of Foreign Proceedings," INSOL International News Update, (September 2019)
"Buyers vs. Tenants in a Bankruptcy Sale A Tension Between §§363(f) and 365(h)," New York Law Journal, (June 2019)
Co-Author "The 'Substantial Contribution' Test for Indenture Trustees," ABI Journal, (February, 2019)
"Chapter 15: Court Permits Foreign Debtors to Access and Receive Funds in U.S. Account," INSOL International News Update, (February, 2019)
Co-Author "SCOTUS Recap: What Lies Ahead For the Lower Courts’ Tests for ‘Non-Statutory Insiders’," The Bankruptcy Strategist, (May, 2018)
"Venezuelan Debt Crisis Intensifies as Its Leaders Ponder Responses," Journal of Corporate Renewal, (March, 2018)
"Chapter 15: U.S. Creditor Required to Seek Recovery in Foreign Main Proceeding," INSOL International News Update, (February, 2018)
"Federal judge joins others, says bankruptcy court not allowed to impose punitive sanctions," Legal Newsline, (January, 2018)
"Retail Woes Mount as List of Troubled Companies Grows," Journal of Corporate Renewal, (June, 2017)
"In re Creative Finance Ltd: Chapter 15 Case Dismissed," INSOL International News Update, (February, 2016)
“Rights of Trade Creditors in the US,” Eurofenix, The Journal of INSOL Europe, (Spring 2015)
"Tough Choices Confront Trade Creditors When a Retailer Faces Bankruptcy," Journal of Corporate Renewal, (October, 2014) and the Sydney (Australia) Insolvency News, (February 3, 2015)
"Equitable Mootness: Two Recent Third Circuit Decisions," The Bankruptcy Strategist, (January, 2014)
"Stanwich Clarifies Wagoner Rule in Fraudulent Transfer Cases," Journal of Corporate Renewal, (October, 2013)
"Section 365(o) Coming into Focus," The Bankruptcy Strategist, (January, 2011)
"The Absolute Priority Rule: An Analysis in Terms of Armstrong World Indus., Inc.," The Bankruptcy Strategist, (June, 2006)
"Revisions to Bankruptcy Code Sections 365 and 366," The Bankruptcy Strategist, (April/May, 2005)
"Critical Vendor Actions: Paying Vendors to Supply Chapter 11 Debtors," The Bankruptcy Strategist, (June, 2003)
"Fraudulent Conveyance of Licenses Auctioned by the FCC: The 5th Circuit View," The Bankruptcy Strategist, (December, 2000)
"Analyzing Letter of Credit Issues in the Bankruptcy Context," The Bankruptcy Strategist, (June, 1998)
"3d Circuit Offers Primer on Valuing Debtor's Assets, Liabilities," The Bankruptcy Strategist, (April, 1998)
"Is a 'Mere Conduit' an 'Initial Transferee' Under Section 550?," The Bankruptcy Strategist, (March, 1998)

The George Washington University Law School (J.D., with honors, 1987)
Duke University (A.B., magna cum laude, 1982)

Recent Speaking Engagements

"Dissecting the Role of Chapter 11 Examiners and Trustees," Celesq Webinar (April 17, 2025)
"Formal and Informal Negotiation ASAP!" INSOL Europe's 2024 Congress in Sorrento, Italy (October 4, 2024)
"Tracing and recovery of debtor's assets by insolvency practitioners," INSOL Europe Annual Congress in Amsterdam (October 13, 2023)
"Are Bankruptcies/Insolvencies/Restructurings Returning?," SCG Legal's Midyear Meeting in Berlin, Germany - Panel Moderator (May 12, 2023)
“An Overview of Chapter 11,” Conseil National des Administrateurs Judiciaires et des Mandataires Judiciaires in La-Colle-sur-Loup, France (June 10, 2022)
“Equitable Mootness: What Should the Law Be?” American Bankruptcy Institute’s Annual Spring Meeting in Washington, D.C. (April 29, 2022)
"Chapter 15 at 15," New York City Bar Committee on Bankruptcy and Corporate Reorganization — Event Co-Chair (May 12, 2021)
“Venezuelan Debt Crisis and Related Social and Political Issues,” New York City Bar Committee on Bankruptcy and Corporate Reorganization (June 19, 2019)
"Asset Sales in Bankruptcy,"American Bankruptcy Institute's New York City Bankruptcy Conference (May 22, 2019)
"Venezuelan Debt Crisis," Expert Webcast (October 11, 2018)
"Cross-border Bankruptcy Issues," American Bankruptcy Institute's New York City Bankruptcy Conference (May 24, 2018)
"Cross-border Insolvencies," Fashion Institute of Technology State University of New York, International Finance Class (May 3, 2018)
"Cross-Border Panel," American Bankruptcy Institute's New York City Bankruptcy Conference (May 18, 2017)
“Cross-Border Insolvency Concepts,” Global Restructuring and Insolvency Conference in Barcelona (March 10, 2017)
"Current Issues in Retention and Compensation of Bankruptcy Professionals," American Bankruptcy Institute's 18^thAnnual New York City Bankruptcy Conference (May 12, 2016)
"View from the Islands: How Does Common Law Compare with Statutory Recognition Principles?," INSOL Annual Regional Conference in Dubai (January 25, 2016)
“Bankruptcy and the Retail Industry,” Industry Event in New York City (June 15, 2015)
"Cross-Border Bankruptcy Issues," ABI New York City Bankruptcy Conference (May 14, 2015)
Pre-Packaged Insolvency Proceedings: Developments and Hard Lessons Learned," INSOL Europe Annual Congress in Istanbul (October 10, 2014)
“Cross-Border Bankruptcy Issues,” ABI New York City Bankruptcy Conference (May 15, 2014)
“Bankruptcies in the United States: Key Chapter 11 Concepts,” Australian Restructuring Insolvency & Turnaround Association in Sydney (April 14, 2014)
“Intellectual Property Issues in Bankruptcy,” Asian American Bar Association of New York (July 11, 2013)
“Trademark and Patent Licenses in Bankruptcy,” ABI New York City Bankruptcy Conference (May 16, 2013)
“What In-House Counsel Need to Know Before a Counterparty Bankruptcy,” Association of Corporate Counsel Webcast (September 12, 2012)
"How Are the Lower Courts Dealing with Stern v. Marshall?" ABI New York City Bankruptcy Conference (May 9, 2012)
"Strategies to Succeed in a Crisis - How to Protect Creditors' Interests in the U.S. and Germany," Bankruptcy Seminar in Frankfurt, Germany (April 29, 2009)

News

October 28, 2024

Patterson Belknap Attorney Served as
Independent Examiner in FTX Bankruptcy Case
Firm Serves as Counsel to the Examiner

Patterson Belknap attorney Robert J. Cleary served as the Independent Examiner in the FTX Trading Ltd. bankruptcy cases pending in Delaware. Mr. Cleary was responsible for drafting an initial report summarizing the findings and status of all previous investigations into the...

December 15, 2023

Firm Secures Settlement in Multi-Million Dollar Investment Fraud Case

December 7, 2022

Firm Represents Global Alternative Energy Company in Cross-Border Chapter 15 Bankruptcy

October 28, 2024

Patterson Belknap Attorney Served as
Independent Examiner in FTX Bankruptcy Case
Firm Serves as Counsel to the Examiner

December 15, 2023

Firm Secures Settlement in Multi-Million Dollar Investment Fraud Case

December 7, 2022

Firm Represents Global Alternative Energy Company in Cross-Border Chapter 15 Bankruptcy

October 31, 2022

Firm Attorneys Honored by Legal Aid Society at 2022 Pro Publico Awards

January 12, 2021

Patterson Belknap Launches Commercial Real Estate Workouts and Litigation Group

September 14, 2017

Patterson Belknap Launches Bankruptcy Update Blog

January 31, 2017

Daniel A. Lowenthal Named Chair of the Firm’s Business Reorganization and Creditors’ Rights Practice

September 23, 2010

Partner Dan Lowenthal Profiled in Bankruptcy Professional

October 31, 2022

Firm Attorneys Honored by Legal Aid Society at 2022 Pro Publico Awards

January 12, 2021

Patterson Belknap Launches Commercial Real Estate Workouts and Litigation Group

September 14, 2017

Patterson Belknap Launches Bankruptcy Update Blog

January 31, 2017

Daniel A. Lowenthal Named Chair of the Firm’s Business Reorganization and Creditors’ Rights Practice

September 23, 2010

Partner Dan Lowenthal Profiled in Bankruptcy Professional

Update on Sovereign Debt Restructurings

Second Circuit Clarifies Tribune in New Decision

Navigating Asset Tracing Challenges in Bankruptcy

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In the Media

News

Bankruptcy Update Blog

Bankruptcy Court Denies Motions to Convert Case and to Appoint an Examiner

Arbitration and Bankruptcy: Can a Debtor that is Party to an Arbitration Agreement Lack Authority to Arbitrate Core Bankruptcy Claims?

Bankruptcy Avoidance Law: Court Allows Bankruptcy Trustee to Sue a Subsequent Transferee Even When the Initial Transferee Isn’t a Defendant

Bankruptcy Court Denies Motions to Convert Case and to Appoint an Examiner

Arbitration and Bankruptcy: Can a Debtor that is Party to an Arbitration Agreement Lack Authority to Arbitrate Core Bankruptcy Claims?

Bankruptcy Avoidance Law: Court Allows Bankruptcy Trustee to Sue a Subsequent Transferee Even When the Initial Transferee Isn’t a Defendant

Judge Blasts Defendant For Ignoring Discovery Obligations and More

Debts Related to Ponzi Scheme Deemed Non-Dischargeable

Federal District Court Ruling Upholds Uptier Transactions

Bankruptcy Court Clarifies Scope of Trustee’s Due Diligence Prior to Filing Preference Action

The Bourbon Industry Faces Hard Times

Ninth Circuit Rules that Decision Reimposing the Automatic Stay is Immediately Appealable

Judge Blasts Defendant For Ignoring Discovery Obligations and More

Debts Related to Ponzi Scheme Deemed Non-Dischargeable

Federal District Court Ruling Upholds Uptier Transactions

Bankruptcy Court Clarifies Scope of Trustee’s Due Diligence Prior to Filing Preference Action

The Bourbon Industry Faces Hard Times

Ninth Circuit Rules that Decision Reimposing the Automatic Stay is Immediately Appealable

Publications

Judge Blasts Defendant for Ignoring Discovery Obligations and More

Ninth Circuit Rules that Decision Reimposing the Automatic Stay is Immediately Appealable

The Divestiture Rule Explained: A Judge-Made Doctrine Doesn't Necessarily Deprive a Lower Court of Ongoing Subject Matter Jurisdiction

Judge Blasts Defendant for Ignoring Discovery Obligations and More

Ninth Circuit Rules that Decision Reimposing the Automatic Stay is Immediately Appealable

The Divestiture Rule Explained: A Judge-Made Doctrine Doesn't Necessarily Deprive a Lower Court of Ongoing Subject Matter Jurisdiction

Formal & Informal Negotiations ASAP!

A Primer on Chapter 11 Trustees & Examiners

Court Rules Mere Conduit Defense Not Suitable for a Motion to Dismiss

Ch. 11 Ruling Shows Early Attempt To Tackle Purdue Fallout

Bankruptcy Ruling Stresses Value of Client Communication

Navigating Asset Tracing Challenges in Bankruptcy

Formal & Informal Negotiations ASAP!

A Primer on Chapter 11 Trustees & Examiners

Court Rules Mere Conduit Defense Not Suitable for a Motion to Dismiss

Ch. 11 Ruling Shows Early Attempt To Tackle Purdue Fallout

Bankruptcy Ruling Stresses Value of Client Communication

Navigating Asset Tracing Challenges in Bankruptcy

Firm Highlights