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“… [P]ayments owed to a shareholder by a bankrupt debtor, which are not quite dividends but which certainly look a lot like dividends, should be treated like the equity interests of a shareholder and subordinated to claims by creditors of the debtor,” held the U.S. Court of Appeals for the Fifth Circuit on Sept. 3, 2019. In re Linn Energy, LLC, 2019 WL 4149481 (5th Cir. Sept. 3, 2019). According to the court, subordination of a purported creditor’s claims “was appropriate” when “deemed dividends gave the [creditor] benefits normally reserved for equity investors.” Affirming the lower courts, the Fifth Circuit found the creditor-shareholder’s claim to be for “damages” involving “securities,” “aris[ing] from” a “purchase or sale,” and having a “nexus with those securities.” Because the estate had “limited assets,” the “subordination order effectively gutted the [creditor-shareholder’s] chances to receive any money.” Id. at 2.
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By Jonathan Friedland and Hajar Jouglaf
Using Subchapter V’s Unlimited Debt Limit & Confirmation Requirements to Eradicate Personal Guarantees
Limitations to Subchapter V suggest that it will be of no use to all but very small companies, but before turning completely away from the topic, there are other considerations in play.
By Francis J. Lawall and Patrick M. Ryan
In 2020, we’ve become all too familiar with the struggles of the gas and oil producers upon which many of our most popular industries rely. The resultant surge in restructuring activities, including Chapter 11 proceedings, among gas and oil producers is the highest in years.
By Charles M. Tatelbaum, Christina V. Paradowski and Brittany L. Hynes
A recent ruling in the U. S. Court of Appeals for the Tenth Circuit represents a significant departure from the generalized belief that student loan debts cannot be discharged in bankruptcy, and which, if followed by other circuit courts, could have a dramatic impact on bankruptcy law.
By Jeffrey T. Zaino
Bankruptcy courts are embracing virtual alternative dispute resolution (ADR) processes to handle cases during this extraordinary period. Engaging in online mediation, and arbitration, can expedite Chapter 11 cases toward an equitable conclusion for the parties involved, while ensuring everyone can practice safe social-distancing.