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In a matter of first impression not yet addressed by any circuit court, the U.S. Court of Appeals for the Fourth Circuit in the case of Cantwell-Cleary v. Cleary Packaging (In re Cleary Packaging), 36 F.4th 509 (4th Cir. 2022), addressed whether the discharge exceptions under Section 523(a) apply to corporate debtors under Subchapter V of Chapter 11 of the Bankruptcy Code. Based on the text and purposes of Subchapter V, the Cleary court held that, unlike corporate debtors in traditional Chapter 11 cases, corporate Subchapter V debtors are subject to Section 523(a) to the same extent as individual debtors and, as such, can be denied a discharge.
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Bankruptcy Risk and Fraud In Cryptocurrency
By J. Eric Wise
Among the risks of cryptocurrency exchanges are bankruptcy risk and fraud, including: the inalienability of account claims, holding an unsecured claim versus an entitlement to the return of coin, and bankruptcy preference risk.
Bankruptcy Court Says Bankruptcy Case Is ‘Filed’ When Uploaded, Not Stamped
By Lawrence J. Kotler and Drew S. McGehrin
The U.S. Bankruptcy Court for the Southern District of New York summed up the importance of the determination as to when a bankruptcy case is actually filed of record, thereby triggering the imposition of the automatic stay and found that the “upload” time of a bankruptcy filing — and not the time physically “stamped” on a bankruptcy petition — determines when a case is commenced. In doing so, the Bankruptcy Court offered direction and guidelines that debtors and creditors will be well advised to observe in future cases.
Fourth Circuit Ruling Underscores Judicial Divide On Use of ‘Texas Two-Step’
By Avalon Zoppo
A sharply divided U.S. Court of Appeals for the Fourth Circuit ruling shielding a nondebtor in bankruptcy proceedings from asbestos lawsuits underscores the wider and growing divide among judges across the country on the bounds of Chapter 11 protection and corporations’ use of the “Texas two-step” to address mass tort litigation.
By Francis J. Lawall and Brenden S. Dahrouge
Chapter 11 cases involving mass tort and complex personal injury claims often require the resolution of novel legal issues that stretch the bounds of existing precedent. As these cases evolve, they can also impact claims against other debtors unrelated to the case at hand through court-approved injunctions, releases or settlements.
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