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Nowhere else is the old saying “you can’t escape death and taxes” better exemplified than in Chapter 11. Under the Bankruptcy Code, debtors are subject to stringent reporting and fee requirements imposed by the Department of Justice and the Office of the U.S. Trustee. The U.S. Trustee fees, which have been significantly increased over the last several years, are based on the amount of “disbursements” made by a debtor during the prior reporting period. Therefore, a tension exists between a debtor’s interest in characterizing payments made during the case as something other than a disbursement, in contrast to the U.S. Trustee’s goal to deem all such payments as disbursements subject to fees. In a recent case from the Bankruptcy Court for the District of Delaware, In re Paragon Offshore PLC, 629 B.R. 227 (Bankr. D. Del. 2021), the bankruptcy court provided guidance on whether a post-plan effective date litigation trust’s distributions constituted disbursements subject to the U.S. Trustee fee “tax.”
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Third Circuit Rejects Side-Switching Disqualification Claim
By Michael L. Cook
Conflicts of interest among clients are a chronic problem for law firms with many clients. How law firms address the problem — and they must — is what the Boy Scouts of America decision shows.
Stipulation That Resolves Entire Amount Must Reflect Intent of Parties
By Francis J. Lawall and Kenneth A. Listwak
The Ninth Circuit recently affirmed a lower courts’ rulings that a stipulation between the IRS and a bankruptcy trustee, which allowed the IRS’s priority tax claim, did not prevent the IRS from collecting nondischargeable tax debt above the agreed amount in that stipulation.
Increased Bankruptcy M&A Activity Should Provide Attractive Opportunities for Lenders
By Joel H. Levitin and Richard A. Stieglitz Jr.
It seems clear that bankruptcy filings inevitably will increase in the near future, because of rising interest rates, pandemic-related micro-economic forces, global strife, and other macro-economic factors and their continuing strain on the global economy and individual businesses. Consequently, strategic buyers and private equity sponsors should find expanding opportunities to purchase distressed businesses out of bankruptcy.
The Interplay Between Vendor Finance Agreements and Bankruptcy
By Ann Pille, Richard Tannenbaum, Alexis Leventhal and Emily Costantinou
While regularly used among lenders, manufacturers, and dealers, treatment of Inventory financing program agreements in bankruptcy is not uniform, and uncertainty exists with respect to how such agreements may be treated in the context of a manufacturer’s Chapter 11.
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