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In June, the U.S. Supreme Court, by unanimous decision, resolved a split amongst five circuits and determined that a 2017 Congressional amendment to the bankruptcy fee provisions was unconstitutional as violating the Bankruptcy Clause of the US. Constitution. See, Siegel v. Fitzgerald, 142 S. Ct. 1770 (2022). The Bankruptcy Clause of the U.S. Constitution empowers Congress to establish “uniform laws on the subject of Bankruptcies throughout the United States.” U.S. Const. art. I, §8, cl. 4. The meaning of “uniform” became the subject of debate in the Siegel case. The Supreme Court concluded that because the 2017 amendments exempted debtors located in two States, it was not “uniform” as it did not apply equally to all debtors regardless of where they were situated and, therefore, the statute was unconstitutional. Siegel, 142 S. Ct. 1770 (2022). A discussion of the Supreme Court’s decision in Siegel, and relevant factual backdrop precipitating such decision, appears below.
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Delaware District Court Could Guide Supreme Court Purdue Pharma Decision
By Michael L. Cook
A bankruptcy court properly held that derivative claims based on “piercing the corporate veil theory of liability [were] released under” a confirmed reorganization plan, but that direct “claims for negligent undertaking” were not released and “could be asserted” in state court against the debtors’ equity sponsors.
Court Caps Landlord's Bankruptcy Claim Against Lease Guarantor
By Andrew C. Kassner and Joseph N. Argentina Jr.
A big issue in real estate and retail bankruptcies, among others, involves the disposition of commercial real estate leases, given the potential magnitude of landlord damage claims under state law resulting from a tenant’s default under a long-term lease.
Delaware Bankruptcy Court Rejects Equity Holder's Challenge to Revoke Confirmation Order
By Lawrence J. Kotler
The equity owner asserted that the confirmation order previously entered by the court should be revoked based on the equity owner’s claim that value was lost due to improper sale and marketing efforts by the debtors and its professionals both pre- and post-bankruptcy and, as such, they should have been “in the money” and entitled to a distribution under the confirmed plan.
By George Williams
One of the major catalysts of the “Crypto Winter” that began in 2022 was the collapse of Terraform Labs’s native token LUNA in May 2022. Now two years and a dozen crypto-related bankruptcies later, Terraform Labs has filed for Chapter 11 protection.