Retention of Bankruptcy Professionals: Court Concludes that a Debtor’s First Cousin Is Not a “Relative” and Thus Not an “Insider”

Microsoft has discontinued support for Internet Explorer. To access the Patterson Belknap website, please install a modern browser like Microsoft Edge or Google Chrome.

Publications

Back to Publications

July 1, 2026

Retention of Bankruptcy Professionals: Court Concludes that a Debtor’s First Cousin Is Not a “Relative” and Thus Not an “Insider”

The Bankruptcy Strategist

A professional seeking to represent a debtor under Bankruptcy Code section 327(a) must not hold an interest adverse to the bankruptcy estate and must be disinterested.

A debtor’s insiders often cannot satisfy these tests. The Bankruptcy Code defines “insider” to include a “relative” of the debtor. And a “relative” is someone related to the debtor “within the third degree as determined by the common law."

What does this latter phrase mean and how is it applied?

To continue reading Daniel A. Lowenthal's article in The Bankruptcy Strategist, please click here.

Firm Highlights

Rest Assured: Pillow Design Patent Survives Inventorship and Invalidity Challenges

On June 7, 2026, District Judge Brian Cogan (E.D.N.Y.) granted Plaintiff Hit Notion LLC’s (Hit Notion’s) summary judgment motion on patent inventorship, on-sale bar, and obviousness, denying a summary judgment motion by Defendant Digitalprints USA Corporation d/b/a Cheer Collection (Cheer Collection) for invalidity based on similar issues and indefiniteness. Hit Notion LLC v. Digitalprints USA Corp., No. 24-cv-7986, 2026 BL 219173 (E.D.N.Y. June 7, 2026). This dispute arose in March 2017 when the parties, both pillow retailers, requested custom pillow designs from the same Chinese pillow manufacturer, MJ Textile. MJ Textile sent the same photo of a sample pillow to both parties, and the parties unknowingly purchased and began selling similar pillows. Id. at *1-2. Hit Notion filed a patent application for...

Insider Trading Safeguards Can Mitigate Sports Betting Risk

From sports betting to prediction markets, the phenomenon some call "the casino-ification of America" has captured the American zeitgeist. Sports betting in particular has become ubiquitous since the U.S. Supreme Court's 2018 decision in Murphy v. NCAA, which opened the door for states to legalize sports gambling. Fans can now regularly bet on games and player performances directly from their smartphones. And, as several recent criminal indictments have alleged, some bettors are capitalizing on their access to inside information to obtain an unfair advantage on their wagers. This article will discuss how, because sports-related inside information continues to become more valuable, organizations including professional sports leagues, governing bodies, college athletic conferences, athletic departments and teams are playing an increasingly prominent role in...

Supreme Court Reaffirms Disgorgement in Sripetch, But Jury Question Looms

In our January 2026 post, Supreme Court to Clarify the SEC’s Disgorgement Powers, we previewed the Supreme Court’s decision to take up Sripetch v. Securities & Exchange Commission,[1] a case in which defendants sought to pare back the SEC’s authority to seek disgorgement. The case resolves a circuit split that arose in the wake of Liu v. SEC.[2] In Liu, the Court sought to clarify the SEC’s ability to impose the penalty of disgorgement, ruling that disgorgement was available as equitable relief, but to avoid transforming an equitable remedy into a punitive one, “the remedy [is restricted] to an individual wrongdoer’s net profits to be awarded for victims.” In response to Liu’s requirement that disgorgement be “awarded for victims,” the Second Circuit...

New Executive Order Regarding IRA Enhancements

Introduction On April 30, 2026, President Trump signed an Executive Order (the “Order”) designed to expand access to retirement savings for the tens of millions of American workers who currently lack employer-sponsored retirement plans, including many small-business employees, part-time workers, independent contractors, and self-employed individuals facing barriers to saving for retirement. The Order is designed to complement the Federal Saver's Match enacted under the SECURE 2.0 Act, which provides eligible workers with a federal matching contribution of up to $1,000 for retirement savings, and to promote high-quality, low-cost individual retirement account (“IRA”) access. Key Provisions and Implications The Order directs the Secretary of the Treasury (the “Secretary”) to establish, by January 1, 2027, an informational website (TrumpIRA.gov) that will serve as a...

Bankruptcy Court Decides Issue of First Impression Concerning Code Section 365(h)

When a debtor that is a landlord rejects a real property lease in bankruptcy, the tenant has a choice. Either the tenant can treat the lease as terminated or retain its rights under the lease. These rights include the use, possession, quiet enjoyment, subletting, and hypothecation of the property. In a recent case, the parties and the court grappled with this question: when does the tenant need to make that decision? When the lease is rejected, or by some other date? Interestingly, neither the court nor the parties found case law on this issue. It was one of first impression. In re All Star Props., LLC, No. 25-41314, 2026 Bankr. LEXIS 1461 (Bankr. N.D. Ga. June 15, 2026). The debtor owns...

Firm Secures Preliminary Injunction on Behalf of Eli Lilly in Prescription Rebate Fraud Litigation

On June 9, 2026, Patterson Belknap secured a preliminary injunction on behalf of the firm's client, Eli Lilly and Co. ("Eli Lilly"), in a litigation alleging that the defendants caused Eli Lilly to pay more than $200 million in fraudulent rebates. The suit was brought against DrugPlace, Inc. ("DrugPlace") and several related entities and individuals in May 2026, alleging that the defendants claimed to have provided prescription drug coverage for tens of thousands of members of two national churches, but in fact neither the healthcare plans nor the patients existed. The U.S. District Court for the Southern District of Florida granted Eli Lilly's preliminary injunction, as agreed upon by DrugPlace and its related entities. The ruling restricts defendants from submitting rebate claims...

Firm Files False Advertising Lawsuit on Behalf of Danone US

On June 15, 2026, Patterson Belknap filed a false advertising lawsuit on behalf of Danone US, LLC against rival Chobani LLC. To read a copy of the complaint, please click here.

Firm Recognized With Top-Tier Rankings in The Legal 500 2026

Patterson Belknap is proud to announce that the firm has been recognized in The Legal 500’s United States guide as well as in its New York Elite and Private Client guides. The following firm practices were recognized by The Legal 500: Advertising and Marketing: Litigation – United States Art and Cultural Property – Private Client Cybersecurity and Data Protection – New York Elite Dispute Resolution: Corporate Investigations and White-Collar Criminal Defense – United States Not-For-Profit: Fortune 1000 Private Foundations, National Trade Associations, and Charities – United States In addition, the following firm attorneys received recognition: Anne-Laure Alléhaut in Art and Cultural Property – Private Client H. Gregory Baker in Dispute Resolution: Corporate Investigations and White-Collar Criminal Defense – United States Michael F. Buchanan in Dispute Resolution: Corporate Investigations and...

Stephanie Bunting Glaser and Jo Backer Laird to Present Children's Art Carnival Webinar

On Wednesday, July 22, Counsel Stephanie Bunting Glaser and Retired Of Counsel Jo Backer Laird will present a webinar for The Children's Art Carnival titled "Contracts and Copyright for Artists." Ms. Glaser and Ms. Laird will share the basics of copyright law and focus on contracts with galleries. They will also cover rights of publicity, including approaches to photography in public places. To learn more, please click here.

Rest Assured: Pillow Design Patent Survives Inventorship and Invalidity Challenges

On June 7, 2026, District Judge Brian Cogan (E.D.N.Y.) granted Plaintiff Hit Notion LLC’s (Hit Notion’s) summary judgment motion on patent inventorship, on-sale bar, and obviousness, denying a summary judgment motion by Defendant Digitalprints USA Corporation d/b/a Cheer Collection (Cheer Collection) for invalidity based on similar issues and indefiniteness. Hit Notion LLC v. Digitalprints USA Corp., No. 24-cv-7986, 2026 BL 219173 (E.D.N.Y. June 7, 2026). This dispute arose in March 2017 when the parties, both pillow retailers, requested custom pillow designs from the same Chinese pillow manufacturer, MJ Textile. MJ Textile sent the same photo of a sample pillow to both parties, and the parties unknowingly purchased and began selling similar pillows. Id. at *1-2. Hit Notion filed a patent application for...

Insider Trading Safeguards Can Mitigate Sports Betting Risk

From sports betting to prediction markets, the phenomenon some call "the casino-ification of America" has captured the American zeitgeist. Sports betting in particular has become ubiquitous since the U.S. Supreme Court's 2018 decision in Murphy v. NCAA, which opened the door for states to legalize sports gambling. Fans can now regularly bet on games and player performances directly from their smartphones. And, as several recent criminal indictments have alleged, some bettors are capitalizing on their access to inside information to obtain an unfair advantage on their wagers. This article will discuss how, because sports-related inside information continues to become more valuable, organizations including professional sports leagues, governing bodies, college athletic conferences, athletic departments and teams are playing an increasingly prominent role in...

Supreme Court Reaffirms Disgorgement in Sripetch, But Jury Question Looms

In our January 2026 post, Supreme Court to Clarify the SEC’s Disgorgement Powers, we previewed the Supreme Court’s decision to take up Sripetch v. Securities & Exchange Commission,[1] a case in which defendants sought to pare back the SEC’s authority to seek disgorgement. The case resolves a circuit split that arose in the wake of Liu v. SEC.[2] In Liu, the Court sought to clarify the SEC’s ability to impose the penalty of disgorgement, ruling that disgorgement was available as equitable relief, but to avoid transforming an equitable remedy into a punitive one, “the remedy [is restricted] to an individual wrongdoer’s net profits to be awarded for victims.” In response to Liu’s requirement that disgorgement be “awarded for victims,” the Second Circuit...

New Executive Order Regarding IRA Enhancements

Introduction On April 30, 2026, President Trump signed an Executive Order (the “Order”) designed to expand access to retirement savings for the tens of millions of American workers who currently lack employer-sponsored retirement plans, including many small-business employees, part-time workers, independent contractors, and self-employed individuals facing barriers to saving for retirement. The Order is designed to complement the Federal Saver's Match enacted under the SECURE 2.0 Act, which provides eligible workers with a federal matching contribution of up to $1,000 for retirement savings, and to promote high-quality, low-cost individual retirement account (“IRA”) access. Key Provisions and Implications The Order directs the Secretary of the Treasury (the “Secretary”) to establish, by January 1, 2027, an informational website (TrumpIRA.gov) that will serve as a...

Bankruptcy Court Decides Issue of First Impression Concerning Code Section 365(h)

When a debtor that is a landlord rejects a real property lease in bankruptcy, the tenant has a choice. Either the tenant can treat the lease as terminated or retain its rights under the lease. These rights include the use, possession, quiet enjoyment, subletting, and hypothecation of the property. In a recent case, the parties and the court grappled with this question: when does the tenant need to make that decision? When the lease is rejected, or by some other date? Interestingly, neither the court nor the parties found case law on this issue. It was one of first impression. In re All Star Props., LLC, No. 25-41314, 2026 Bankr. LEXIS 1461 (Bankr. N.D. Ga. June 15, 2026). The debtor owns...

Firm Secures Preliminary Injunction on Behalf of Eli Lilly in Prescription Rebate Fraud Litigation

On June 9, 2026, Patterson Belknap secured a preliminary injunction on behalf of the firm's client, Eli Lilly and Co. ("Eli Lilly"), in a litigation alleging that the defendants caused Eli Lilly to pay more than $200 million in fraudulent rebates. The suit was brought against DrugPlace, Inc. ("DrugPlace") and several related entities and individuals in May 2026, alleging that the defendants claimed to have provided prescription drug coverage for tens of thousands of members of two national churches, but in fact neither the healthcare plans nor the patients existed. The U.S. District Court for the Southern District of Florida granted Eli Lilly's preliminary injunction, as agreed upon by DrugPlace and its related entities. The ruling restricts defendants from submitting rebate claims...