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The scope of releases obtainable within a Chapter 11 plan remains a hot issue, as evidenced by high-profile cases such as the Boy Scouts and Mallinckrodt. A standard and noncontroversial form of release often found in a plan involves exculpation provisions that typically hold debtor personnel, committee members and their professionals harmless for actions taking in connection with the prosecution of the bankruptcy case itself. In an important recent U.S. Court of Appeals for the Fifth Circuit decision, the court explored whether exculpation provisions protecting more than just the debtor and committee are appropriate. In the same decision, the scope of equitable mootness was considered, and limited to allow the appeal of an order confirming a substantially consummated liquidating plan that was argued (and found) to contain overly broad exculpation relief. See, Highland Capital Management v. NexPoint Advisors, No. 21-10449 (5th Cir. Aug. 19, 2022).
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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.
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