Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
How to Identify a Non-Statutory Insider
There are distinct disadvantages to being an insider in bankruptcy litigation. A transfer of property of a debtor to a creditor who is an insider made within one year preceding the debtor's bankruptcy filing may be avoidable as a preference, whereas the preference window for transfers to non-insider creditors is limited to transfers made within 90 days preceding the bankruptcy filing. 11 U.S.C. ' 547(b)(4). Moreover, the conduct of insiders toward a debtor is subjected to rigorous scrutiny such that the claims of insiders are more susceptible to equitable subordination than those of non-insiders. See In re Fabricators, 926 F.2d at 1458, 1465 (5th Cir. 1991).
It is well-established that the definition of an “insider” contained in ' 101(31) of the Bankruptcy Code is not exhaustive and that there exists a category of insiders, commonly known as “non-statutory insiders,” whose description is not set forth in the Bankruptcy Code itself. In Schubert v. Lucent Techs., Inc. (In re Winstar Commc'ns, Inc.), 554 F.3d 382 (3d Cir. 2009), the Third Circuit Court of Appeals affirmed the lower courts' rulings that a public company was an insider of another non-affiliated public company and was therefore required to return a $188.2 million payment made over four months before the debtor's bankruptcy filing. This decision, in which the Third Circuit clarified the standards for identifying a non-statutory insider, deserves special attention because it illustrates how critical it is for lenders and vendors to conform their conduct toward troubled companies so as to reduce their risk of being deemed non-statutory insiders.
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
Judge Rules Shaquille O'Neal Will Face Securities Lawsuit for Promotion, Sale of NFTs
A federal district court in Miami, FL, has ruled that former National Basketball Association star Shaquille O'Neal will have to face a lawsuit over his promotion of unregistered securities in the form of cryptocurrency tokens and that he was a "seller" of these unregistered securities.
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It
Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?
Blockchain Domains: New Developments for Brand Owners
Blockchain domain names offer decentralized alternatives to traditional DNS-based domain names, promising enhanced security, privacy and censorship resistance. However, these benefits come with significant challenges, particularly for brand owners seeking to protect their trademarks in these new digital spaces.
Coverage Issues Stemming from Dry Cleaner Contamination Suits
In recent years, there has been a growing number of dry cleaners claiming to be "organic," "green," or "eco-friendly." While that may be true with respect to some, many dry cleaners continue to use a cleaning method involving the use of a solvent called perchloroethylene, commonly known as perc. And, there seems to be an increasing number of lawsuits stemming from environmental problems associated with historic dry cleaning operations utilizing this chemical.