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The Bankruptcy Strategist
Private Student Loan Debt and the Exception to Discharge As Viewed Through the Eyes of the Circuit Courts
Gerard S. Catalanello and Kimberly (Kodis) Schiffman
A summary of the factors that courts have considered and will likely continue to consider when addressing dischargeability of private student loans under subsection 523(a)(8)(A)(ii) of the Bankruptcy Code, and a cautionary word for practitioners considering whether to put forth an argument to the contrary.
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The Bankruptcy Strategist
Fifth Circuit Ruling Gives Commercial Lessees Likely Protection In Bankruptcy Court Free and Clear Asset Sales
Michael L. Cook
The Fifth Circuit signaled that it would not approve in later cases a bankruptcy court asset sale of real property that summarily cuts off the rights of the debtor’s lessees.
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The Bankruptcy Strategist
Why Bankruptcy Attorneys Need to Help Their Clients Face Distressed Assets Now
William (Bill) Lobel
Cyclical challenges in the economy are nothing new to bankruptcy attorneys and their clients, and 2022 is shaping up to be that kind of year for business owners nationwide. This is likely to result in a greater need for the services of bankruptcy attorneys as business owners face a mounting wave of distressed financial assets.
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Commercial Leasing Law & Strategy
Fifth Circuit Ruling Gives Commercial Lessees Likely Protection In Bankruptcy Court Free and Clear Asset Sales
Michael L. Cook
The Fifth Circuit signaled that it would not approve in later cases a bankruptcy court asset sale of real property that summarily cuts off the rights of the debtor’s lessees.
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The Bankruptcy Strategist
Fifth Circuit Resolves ‘Clash’ Between FERC and Bankruptcy Courts
Douglas S. Mintz and Michael L. Cook
A Chapter 11 debtor’s “rejection [(under Code §365(a)] of a filed-rate [natural gas] contract … relieve[d] it of the obligation to continue performance absent the approval of FERC [(the Federal Energy Regulatory Commission],” held the U.S. Court of Appeals for the Fifth Circuit.
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The Bankruptcy Strategist
Is the Use of Third-Party Releases In Bankruptcy Cases Stretched Too Thin?
Francis J. Lawall and Suzanne Soboeiro
Third-party releases are often incorporated into the bankruptcy plan as a means of protecting nondebtor parties from litigation that is directly or even tangentially related to the debtor’s business. Over the last several years, the scope and use of such third-party releases appears to have been stretched arguably to the breaking point as demonstrated in a recent and important district court decision.
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The Bankruptcy Strategist
Wrestling With the Meaning of ‘Ordinary’ Under the Bankruptcy Code
Andrew C. Kassner and Joseph N. Argentina Jr.
The Bankruptcy Code protects regular, ordinary commercial transactions between distressed companies and vendors willing to continue the relationship. But what is ordinary?
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The Bankruptcy Strategist
Common Issues In Commercial Property Bankruptcies
Robert K. Scheinbaum and Philip W. Allogramento III
A review of landlord-tenant bankruptcy issues that should be in the forefront for landlords and tenants in determining rights, obligations and strategies when a bankruptcy involving a commercial property is filed.
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Entertainment Law & Finance
Sheppard Mullin’s Suit Over Buyer’s Deposit to Acquire Bankrupt Film Co.
Jessie Yount
A suit filed by the law firm Sheppard Mullin as plaintiffs reveals Chapter 11 acquisition talks fell through between the firm’s client Cecchi Gori Pictures and a potential buyer comprising a trio of film producers.
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The Bankruptcy Strategist
The Coming Thaw for Distressed M&A: Opportunities and Best Practices for Lenders In Financing Distressed Business Acquisitions
Joel H. Levitin and Richard A. Stieglitz Jr.
This article focuses on the financing opportunities buying the business of a Chapter 11 debtor will create for lenders, highlights the benefits of financing bankruptcy acquisitions, and identifies some potential challenges and best practices to ensure that lenders minimize any risks and receive maximal protection for themselves.
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The Bankruptcy Strategist
Update on Bankruptcy Appellate Practice Part Four: Interlocutory Appeals — Deadlines
Michael L. Cook
This installment of our appellate series reviews recent cases addressing the district courts’ review of interlocutory bankruptcy court orders and the enforceability of appellate deadlines. As we have shown with other case law governing appeals, real obstacles confront practitioners appealing from bankruptcy court rulings.
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The Bankruptcy Strategist
Corporate Resiliency Revisited: Ensure Financial Health Ahead of an Economic Downturn
Derek F. Meek and Hanna Lahr
now is a critical time for companies to reassess their business and finances if they have not already, so that they can be prepared for the future. Proper planning is key to ensuring a company’s financial health when facing an economic downturn.
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The Bankruptcy Strategist
Poorly Drafted Nondisclosure Agreements Can Have Lasting, and Expensive, Results
Joseph Pack and Jessey Krehl
In today’s increasingly complex, competitive and litigious business environment where nondisclosure agreements have crept in scope to also be noncompete agreements or anti-poaching agreements in addition to confidentiality agreements, the need for legal professionals with generalized knowledge who have managed business enterprises on a whole has become a mainstay of the corporate world.
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The Bankruptcy Strategist
Update on Bankruptcy Appellate Practice Part Three — Finality
Michael L. Cook
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.
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The Bankruptcy Strategist
Bankruptcy Court Gives Pre-Petition Antitrust Claims Administrative Priority Status
Andrew C. Kassner and Joseph N. Argentina Jr.
The Delaware District Bankruptcy Court ruled that claims arising from pre-petition antitrust cases filed against the debtor could constitute post-petition claims entitled to administrative priority status. The court held that 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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The Bankruptcy Strategist
Will Supreme Court Settle Sale of Tax Liens Issue?
Kenneth L. Baum
There's a split among circuit courts on whether tax foreclosure sales may be avoidable as preferential and fraudulent transfers by property owners who subsequently seek relief under the Bankruptcy Code. If the Supreme Court eventually weighs in to resolve this circuit split, property owners, municipalities, and potential bidders for tax liens across the country will receive greater clarity on this critical issue.
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The Bankruptcy Strategist
Bankruptcy Practices Using Slowdown to Restructure, Sniff Out Distressed Sectors
Dan Roe
Bankruptcy practice leaders admittedly have some time on their hands, which they’re using to sniff out insolvency in distressed sectors and market their services to existing and potential clients.
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The Bankruptcy Strategist
Update on Bankruptcy Appellate Practice: Part Two — Equitable Mootness
Michael L. Cook
This installment of our appellate practice series reviews recent cases addressing the equitable mootness doctrine. The issue ultimately often turns on whether it is practical and fair for an appellate court to review an appeal on the merits, enabling that court to avoid review altogether.
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The Bankruptcy Strategist
Chapter 15 Can Impact Foreign Bankruptcy As Well As Domestic Civil Litigation
Francis J. Lawall and Patrick M. Ryan
At first glance, Chapter 15 might appear to have the relatively minor role of staying actions against U.S. assets while the main foreign proceeding moves forward. However, as one recent case out of the Southern District of New York demonstrates, Chapter 15 carries the potential to significantly impact not only the main foreign bankruptcy, but civil litigation in the United States as well.
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The Bankruptcy Strategist
Using Section 365(n) to Minimize Loss of Use of IP In Licensor Bankruptcy
By Richard Assmus, Matthew Wargin, Monique Mulcare and Danielle Corn
This article provides an overview of Section 365 of the Bankruptcy Code, a key provision within the Code that allows a debtor to assume, assume and assign, or reject certain executory contracts and unexpired leases.
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The Bankruptcy Strategist
Purdue Pharma Bankruptcy Settlement Vacation Could Bring More Scrutiny to Non-Debtor Releases
Avalon Zoppo
A ruling tossing OxyContin maker Purdue Pharma’s bankruptcy settlement could tee up a new issue for the U.S. Supreme Court and spur other judges to more closely scrutinize non-debtor releases, a controversial mechanism that shields third parties in Chapter 11 proceedings from liability.
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The Bankruptcy Strategist
Update On Bankruptcy Appellate Practice: Part One — Appellate Standing
Michael L. Cook
Recent cases show that appellate courts continue to wrestle with standing, jurisdiction, mootness, excusable neglect and finality, among other things. The following overview, in a series of installments, shows what the courts have been addressing during just the past three years. This first installment will cover appellate standing.
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The Bankruptcy Strategist
Guidance on Distributions As ‘Disbursements’ and U.S. Trustee Fees
Francis J. Lawall and Marcy J. McLaughlin Smith
In a recent case from the Bankruptcy Court for the District of Delaware, In re Paragon Offshore PLC, 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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The Bankruptcy Strategist
SCOTUS Passes on Bankruptcy Law Cases, Leaving Circuit Court Splits
Corinne Ball
‘Purdue Pharma’ Looms
Although four cases presenting important bankruptcy issues were teed up for the Supreme Court’s consideration this term, the Court denied certiorari for each. Each of these petitions involve splits among the circuit courts of appeals, influencing choice of venue and the extent to which bankruptcy decisions are subject to meaningful appeal.
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The Bankruptcy Strategist
State Attorneys General Issue Support for Bankruptcy Venue Reform Legislation
P.J. D’Annunzio
Attorneys general from 41 states, along with Puerto Rico and Guam, have issued a statement in support of legislation before Congress geared toward stopping corporations from venue-shopping bankruptcy cases.
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The Bankruptcy Strategist
Lateral Market for Bankruptcy Lawyers Not Stifled By Chapter 11 Slowdown
Dan Roe
After a year filled with filings, commercial Chapter 11 bankruptcies fell off a cliff in 2021, causing bankruptcy lawyers to work on out-of-court restructurings or pivot to practices with overlapping skills such as real estate and commercial litigation.
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The Bankruptcy Strategist
Appellate Court Holds FCC Penalty Claim Survives Chapter 11 Corporate Debtor’s Discharge
Michael L. Cook
A Chapter 11 corporate debtor’s monetary penalty obligation owed to the FCC, resulting from “fraud on consumers,” survived the debtor’s reorganization plan discharge, even when the FCC “was not a victim of the fraud,” the U.S. District Court for the Southern District of New York recently held.
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The Bankruptcy Strategist
Payment Under Critical Vendor Order Does Not Bar Pursuing a Preference Claim
Andrew C. Kassner and Joseph N. Argentina Jr.
A supplier’s receipt of payment under a critical vendor order does not bar the debtor or trustee from pursuing a preference claim to recover amounts paid prepetition to the vendor, according to a recent ruling from the U.S. Bankruptcy Court for the District of Delaware.
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The Bankruptcy Strategist
Bankruptcy Court Provides Clarity on Unwritten Elements of Avoidance Actions under the Bankruptcy Code
Rudolph J. Di Massa Jr. and Drew S. McGehrin
The U.S. Bankruptcy Court for the District of New Mexico recently ruled that any attempt to avoid preferential or fraudulent transfers must be supported by evidence that the avoidance will benefit the debtor’s estate and the debtor’s creditors — not just the debtor itself.
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The Bankruptcy Strategist
Plaintiffs Bar Not Happy with J&J’s Shift of Liability to Victim Fund
Amanda Bronstad
A bankruptcy filing allows Johnson & Johnson to shift legal liability over its talc-based baby powder into a potential $2 billion compensation program for cancer victims, but not without a big fight from the plaintiffs bar.
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The Bankruptcy Strategist
Retention of Title Disputes: Don’t Take the Uniform Commercial Code for Granted
Eva D. Gadzheva, Jeremy M. Downs and David E. Morrison
This article reminds us of the conflict-of-laws analysis at the heart of such retention of title disputes, and then discuss the multi-step UCC analysis that is also required.
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The Bankruptcy Strategist
Second Circuit Applies Federal Bankruptcy Law, Not Securities Law, In Madoff SIPA Liquidation
Michael L. Cook
The Second Circuit applied federal bankruptcy law when holding that good faith is an affirmative defense.
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The Bankruptcy Strategist
Congress Seeks to Restrict Nondebtor Releases in New Bankruptcy Reform Bill
Thomas R. Califano and Anna Gumport
Members of Congress recently introduced the Nondebtor Release Prohibition Act, which proposes to amend the Bankruptcy Code to, among other things, restrict courts’ ability to approve third-party releases of nondebtors and related injunctions under plans of reorganization or otherwise in Chapter 11 cases.
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The Bankruptcy Strategist
Authority to File Chapter 11: A Matter of Contract or Public Policy?
Steven B. Smith and Rachel Ginzburg
If you think public policy favoring the freedom to file a Chapter 11 trumps the freedom to negotiate specific restrictions to such a filing, think again.
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The Bankruptcy Strategist
Supreme Court’s Denial to Hear Student Debt Discharge Case Leaves Ambiguity
Joseph Pack and Jessey Krehl
With federal student loan forbearance set to expire at the end of September, many hoped the high court would provide, if not clarity, at least uniformity for the millions of Americans who currently are on the hook for student loans.
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The Bankruptcy Strategist
Abbreviated Name Makes UCC Financing Statement Defective
Rudolph J. Di Massa Jr. and Keri L. Costello
In In re Bryant, the U.S. Bankruptcy Court for the Middle District of Georgia determined that a lender’s UCC-1 financing statements were “seriously misleading” under the Georgia Commercial Code because the financing statements identified the individual debtor with his middle name abbreviated.
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The Bankruptcy Strategist
Sixth Circuit: Section 363 Sale Not ‘Free and Clear’ of Creditor’s Claims
Francis J. Lawall and Kenneth A. Listwak
Buyers generally assume that the multi-page “free and clear” order, which typically follows the sale hearing, will insulate them from any of the seller’s current (and often) future liabilities. However, that is not always the case.
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The Bankruptcy Strategist
Escape New York: Court Dismisses NRA’s Chapter 11 As Improper Tactic to Avoid New York’s Non-Profit Regulatory Scheme
Steven B. Smith and Silvia Stockman
This article explores the competing factors the Bankruptcy Court considered and the rationale underlying its decision to grant the drastic relief of dismissing the NRA’s bankruptcy case.
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The Bankruptcy Strategist
Obtaining Administrative Claim Status When Doing Business With a Debtor
By Andrew C. Kassner and Joseph N. Argentina Jr.
How is administrative claim status obtained in a bankruptcy case, and what risks does a service or goods supplier take by continuing to do business with the debtor after commencement of the bankruptcy case?
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The Bankruptcy Strategist
Trustee Rights and Obligations When Debtor’s Ch. 11 Case Converts to Ch. 7
Rudolph J. Di Massa Jr. and Drew S. McGehrin
U.S. Bankruptcy Court for the District of Delaware court held that a Chapter 7 trustee was bound by the pre-conversion actions of the debtors, and that the trustee would not be permitted to step into the shoes of the then-dissolved official committee of unsecured creditors to pursue certain causes of action.
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The Bankruptcy Strategist
Appellate Court Finds Plaintiffs’ Claims Under Section 362 Not Automatically Stayed
Rudolph J. Di Massa Jr. and Malcolm Bates
Parties holding potential claims against non-debtor third parties that are arguably “related to” the bankruptcy estate must weigh the risks and benefits of actively prosecuting such claims. The mere fact that a bankruptcy trustee could pursue such claims as property of the bankruptcy estate under Section 541 of the Bankruptcy Code will not be enough to argue that such claims are conclusively barred by the automatic stay.
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The Bankruptcy Strategist
Retail Lease Workout In Bankruptcy Trends Show ‘We’re All In This Together’
David Samole
Landlords and commercial tenants have proven savvy and mutually symbiotic. These entities learned quick lessons during the pandemic to sustain the landlord-tenant relationship on adjusted footing or otherwise to provide an agreeable runway for a lease exit minimizing the damage to landlords and tenants. Three workout trends reflect this changing landscape that “we are all in this together.”
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The Bankruptcy Strategist
Subordination Agreements: Enforcement and Reorganization Participation
Andrew C. Kassner and Joseph N. Argentina Jr.
What provisions in a subordination agreement can be enforced, and can the subordinated creditor participate in the reorganization process if there is no prospect it will receive any distribution as a result of being subordinated?
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The Bankruptcy Strategist
Third Circuit: Assertions of Sovereign Immunity Can Be Scrutinized In the Bankruptcy Context
Corinne Ball
In an era of increasing participation and regulation by various governmental agencies in businesses eligible for bankruptcy relief, the Third Circuit's decision in Venoco is an important development for assessing the extent to which a distressed business can address action by a governmental unit through a bankruptcy case.
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The Bankruptcy Strategist
Cross-Border Insolvency In Brazil: The UNCITRAL Model Law Dances to A Samba Beat
Nyana Abreu Miller and Raul Torrao
After years of debate, Brazil recently enacted legislation amending its bankruptcy statute and modernizing the Brazilian insolvency system.
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The Bankruptcy Strategist
Update on Business Bankruptcy Legal Fees and Professionalism
Michael L. Cook
A review of recent cases shows that poor billing judgment and unreasonable billing have been with us for decades.
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The Bankruptcy Strategist
When Does Content of a Debtor’s Bar Date Notice Satisfy Due Process?
Francis J. Lawall and Kenneth A. Listwak
The Third Circuit recently examined whether the content of a debtor’s bar date notice satisfied due process, so as to discharge unknown litigation creditors’ claims against the company after confirmation of the debtor’s Chapter 11 plan of reorganization.
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The Bankruptcy Strategist
There Is No Post-Confirmation True-Up of Projected Disposable Income In Subchapter V
Jonathan P. Friedland, Mark Melickian & Hajar Jouglaf
A large number of reported decisions interpreting Sub V have mostly addressed the eligibility threshold for a debtor to proceed under the new law. And legitimate questions will continue to present themselves. Such is the nature of most new (and even not-so-new) statutes.
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The Bankruptcy Strategist
PPP Loans and Small Business Debtors In Bankruptcy
Alison D. Bauer
At present, there remains no avenue for Chapter 11 debtors to receive PPP Loans during the course of the bankruptcy case. The limitation on PPP availability notwithstanding, other legislative changes have greatly enhanced the eligibility for and efficacy of bankruptcy relief for many small businesses.
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The Bankruptcy Strategist
Employment Law Considerations In Bankruptcy
Wendy Johnson Lario, Alan Brody and Scott Humphreys
This article addresses some of the relevant employment laws and litigation vulnerabilities that companies, including their owners, officers and directors, should consider before ceasing operations or filing for bankruptcy.
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