Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

The Bankruptcy StrategistFeaturesBankruptcyLitigation

What a Post-COVID-19 World: Debtors' Extraordinary Responses to COVID-19

By Gerard S. Catalanello and Kimberly J. Kodis
March 01, 2021

It has been said by many, in many different ways and in many different settings, that "desperate times call for desperate measures." Practically since its enactment more than 40 years ago, that idiom has been the foundation of various business and legal strategies employed by those clinging to the Bankruptcy Code while pressing an argument in court for some form of relief.  Indeed, the Bankruptcy Code is, by all accounts, a safe harbor for businesses and people in search of a "fresh start," a venue to liquidate in an orderly fashion or just the opportunity to demonstrate that it is worth saving through a balance sheet and/or operational restructuring. Current times are desperate indeed, as the impact of the pandemic rages on and, in its path leaves many businesses and industries demolished or, at best, severely impaired. Once again, the Bankruptcy Code has been called upon to provide relief to those in dire need, relief that could certainly be called extraordinary in many respects.

Abstention and Inherent Power: The Suspension of Proceedings

In relevant part, section 305(a)(1) of the Bankruptcy Code provides that "[t]he court, after notice and a hearing, may … suspend all proceedings in a case under … [T]itle [11], at any time if — the interests of creditors and the debtor would be better served by such dismissal or suspension." Traditionally, courts have interpreted section 305(a) to apply to a suspension of all proceedings, rather than to certain proceedings. See, e.g., In re Rookery Bay, No. 95-04781 (Bankr. M.D. Fla. Nov. 17, 1995) (granting the debtor's motion for abstention, holding that it was "appropriate to suspend any further proceeding in the involuntary case" until the debtor's pending appeal of the creditor's judgment was resolved); In re Milestone Educ. Inst., No. 93-20747 (Bankr. D. Mass. May 25, 1994) (finding that a creditor's "motion for relief from stay for cause and concomitant suspension of all activity" would, among other things, permit the state appellate court to "address novel and unsettled issues of receivership law").

This premium content is locked for Entertainment Law & Finance subscribers only

  • 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

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It Image

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?

Bankruptcy Sales: Finding a Diamond In the Rough Image

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.

The DOJ's Corporate Enforcement Policy: One Year Later Image

The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.

A Lawyer's System for Active Reading Image

Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.

Protecting Innovation in the Cyber World from Patent Trolls Image

With trillions of dollars to keep watch over, the last thing we need is the distraction of costly litigation brought on by patent assertion entities (PAEs or "patent trolls"), companies that don't make any products but instead seek royalties by asserting their patents against those who do make products.