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When a company declares bankruptcy, avoidance actions under Chapter 5 of the Bankruptcy Code (the Code) can assist in securing extra cash for the debtor’s dwindling estate. When a debtor-in-possession does not pursue these claims, creditors’ committees often seek the bankruptcy court’s authorization to pursue them on behalf of the estate, through “derivative standing.” Once granted such authorization through a “standing order,” a creditors’ committee is said to “stand in the debtor’s shoes” because it has permission to litigate certain claims belonging to the debtor that arose before bankruptcy. A standing order typically specifies which claims and rights originally belonging to the debtor the committee may pursue in the litigation.
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By Marisa L. Byram
While commercial leases and the force majeure clauses contained in such leases vary widely, a recent decision from the United States Bankruptcy Court for the Northern District of Illinois may provide guidance to parties and help them to resolve similar disputes without resorting to the courts.
By Dana Delman and John Vukmanovic
In attempts to alleviate the impact of job losses and business disruption due to COVID-19, state and local governments have passed emergency orders and regulations temporarily prohibiting evictions and extending deadlines to pay rent, among other restrictions. When those restrictions are lifted, there is no guarantee that they will have done more than delay the inevitable: eviction and bankruptcy.
By Rudolph J. Di Massa, Jr. and Geoffrey A. Heaton
In a recent decision, the U.S. Bankruptcy Court for the Southern District of New York held that claim disallowance issues under Section 502(d) of the Bankruptcy Code “travel with” the claim, and not with the claimant.
By Francis J. Lawall and Marcy J. McLaughlin Smith
Under the Bankruptcy Code, not only can the initial recipient of a fraudulent conveyance be held liable, but so too can a subsequent transferee. However, there can be important nuances in the challenged transaction that may provide a subsequent transferee with a substantial defense.