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Second Circuit Rules That Lien Is Extinguished Under Chapter 11 Only if Secured Creditor Participates in Case
A hornbook principle of U.S. bankruptcy jurisprudence is that valid liens pass through bankruptcy unaffected. This longstanding tenet, however, is at odds with section 1141(c) of the Bankruptcy Code, which provides that, under certain circumstances, “the property dealt with by [a Chapter 11] plan is free and clear of all claims and interests of creditors,” except as otherwise provided in the plan or the order confirming the plan. Several courts have attempted to reconcile the pass-through principle with the statute by requiring that the creditor “participate in the reorganization” as a prerequisite to the application of section 1141(c).
This judicial gloss clouds the question of whether the terms of a Chapter 11 plan providing for the treatment of secured creditor claims are binding on non-participating secured creditors. The U.S. Court of Appeals for the Second Circuit recently weighed in on this issue as a matter of first impression. In City of Concord, N.H. v. Northern New England Telephone Operations LLC (In re Northern New England Telephone Operations LLC), 2015 BL 248853 (2d Cir. Aug. 4, 2015), the court ruled that a lien is extinguished by a Chapter 11 plan if: 1) the text of the plan does not preserve the lien; 2) the plan is confirmed; 3) the property encumbered by the lien is “dealt with” by the plan; and 4) the secured creditor participated in the bankruptcy case.
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.