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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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Seventh Circuit Applies Safe Harbor to Private Securities Transaction
By Michael L. Cook
“… [T]he term ‘securities contract’ as used in [Bankruptcy Code] §546(e) unambiguously includes contracts involving privately held securities,” The Seventh Circuit held in Petr v. BMO Harris Bank, N.A.
By Lawrence J. Kotler and Elisa Hyder
In Lafferty v. Off-Spec Solutions, the U.S. Bankruptcy Appellate Panel of the Ninth Circuit held that the discharge exceptions under Section 523(a) do not apply to corporate debtors under Subchapter V of Chapter 11 of the Bankruptcy Code.
Merchant Cash Advances Could Be More Trouble Than They’re Worth
By Joseph Pack and Jessey Krehl
As small-business owners have continued to struggle in an uncertain economy, a growing number have begun the dangerous practice of relying on merchant cash advances — essentially seeking financial shelter in a lion’s den.
Biotech Industry Bankruptcy Case Update: ‘Zymergen’ and ‘Humanigen’
By Edward E. Neiger, Marianna Udem and Joo Hee Park
This Bankruptcy Case Update focuses on the recent biotech industry bankruptcy cases of Zymergen and Humanigen.