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If you think public policy favoring the freedom to file a Chapter 11 trumps the freedom to negotiate specific restrictions to such a filing, think again. On July 22, 2021, Bankruptcy Judge Michael Kaplan of the United States Bankruptcy Court for the District of New Jersey dismissed the Chapter 11 case of 3P Hightstown, LLC, finding that the debtor lacked the proper authority to commence its Chapter 11 due to its failure to comply with its LLC agreement. Unwilling to follow Judge Walrath’s approach in a COVID-related Delaware Chapter 11 case, Judge Kaplan concluded that the governing LLC agreement — which contained a provision restricting the debtor’s ability to commence a bankruptcy case — was not void as contrary to public policy. In making its determination, the court provided analysis that is helpful and instructive to anyone considering filing a bankruptcy petition for an LLC, particularly where the LLC is organized under Delaware law. This article explores Judge Kaplan’s analysis and the basis for his opinion.
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Landmines In Bankruptcy Appellate Practice, Part III
By Michael L. Cook
When courts have made important exceptions in the past year, they have either added a gloss on the Judicial Code, corrected lawyers’ errors, filled in statutory gaps, or clarified the relevant statutory language.
A Strategic Guide for Lenders to Navigate Anticipated Distressed Loan Fallout
By Jay Steinman and Karina Leiter
The steps outlined in this article offer a strategic guide for lenders, empowering them to navigate the complexities of loan workouts and enforcement actions with resilience and foresight.
Third Circuit: Bankruptcy Code Mandates Appointment of Examiner In Chapter 11 Cases
By Francis J. Lawall and Brenden S. Dahrouge
The Third Circuit recently held in 'In re FTX Trading' that the plain text of Section 1104(c)(2) mandates the appointment of an examiner under the specified conditions set forth. As a result, the FTX decision will carry significant implications for large and medium-sized bankruptcy cases.
By Lawrence J. Kotler and Ryan Spengler
The Central District of California court held that a bankruptcy court’s administration of cannabis-related state court claims against a debtor’s estate is not a violation of the Controlled Substances Act.