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As we ring in the New Year, we hope for a “fresh start” out of the pandemic, but recognize that challenges remain, including the latest variant. In the restructuring bar, we see new approaches being attempted to address old problems. And courts continue to be asked to adjudicate these matters. One of the hottest areas of law practice today is antitrust. So today we decided to report on a decision issued by U.S. Bankruptcy Judge John T. Dorsey of the U.S. Bankruptcy Court for the District of Delaware in In re Mallinckrodt, Case No. 20-12522 (JTD), where the court was asked to decide whether claims arising from pre-petition antitrust cases filed against the debtor could constitute post-petition claims entitled to administrative priority status. In a decision issued on Oct. 19, 2021, the court ruled they could, and the public policy that favors a “fresh start” for debtors would not preclude damages from post-petition sales of products in violation of federal antitrust laws from receiving administrative expense priority.
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By Adam Shpeen, Aryeh Ethan Falk and Stephen Ford
Two Recent Cases Shed Light on Potential Risks to Preferred Equity Holders in Chapter 11
Preferred equity is a varied and flexible instrument, but, in practice, it typically has a limited number of common features. One feature is that it is entitled to a “liquidation preference” ahead of common stock. Whether the liquidation preference of preferred equity entitles preferred shareholders to priority over common shareholders in a Chapter 11 reorganization is a question that figured prominently in two recent high profile cases.
By Michael L. Cook
“Good-faith purchasers enjoy strong protection under [Bankruptcy Code] §363(m),” but the silent asset buyer (“B”) with “actual and constructive knowledge of a competing interest” lacks “good faith,” held the U.S. Court of Appeals for the Seventh Circuit.
By David E. Sklar and Cheryl A. Santaniello
Federal bankruptcy courts have been unavailable to marijuana businesses due to the Schedule I status of marijuana. The United States Trustee’s policy is to move to dismiss or object in each case involving marijuana assets, because they cannot be administered under the Bankruptcy Code.
By By Stuart B. Newman and Steven H. Newman
The Small Business Reorganization Act created a new pathway for small businesses to remain in control of running their businesses, which is the usual reason for choosing to seek relief under Chapter 11, while eliminating many of the reasons that typical Chapter 11 proceedings exhausted the patience, and wallets, of both debtors and creditors.