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This installment of our appellate practice series reviews recent cases addressing the appellate jurisdiction of district courts and the courts of appeals, referred to as the “finality” doctrine. The relevant sections of the Judicial Code — §§157, 158, 1298 and 1292 — seem straightforward and clear. As shown below, though, the courts have often been inconsistent in applying the statute. (See Part One: Appellate Standing of this series in the December 2021 issue, and Part 2: Equitable Mootness in the January 2022 issue.)
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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.
Seventh Circuit Bars Bad Faith Asset Buyer Protection
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.
With Federal Bankruptcy Courts Unavailable, Marijuana Businesses Turn to State Options
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.
Why Subchapter V Is More Appealing Than Chapter 11 for Small Businesses
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.
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