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The Bankruptcy Strategist
Turn that Frown Upside Down
Jonathan Friedland and Hajar Jouglaf
Using Subchapter V’s Unlimited Debt Limit & Confirmation Requirements to Eradicate Personal Guarantees
Limitations to Subchapter V suggest that it will be of no use to all but very small companies, but before turning completely away from the topic, there are other considerations in play.
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The Bankruptcy Strategist
Transportation Services Agreements At Risk in Chapter 11 Proceedings
Francis J. Lawall and Patrick M. Ryan
In 2020, we’ve become all too familiar with the struggles of the gas and oil producers upon which many of our most popular industries rely. The resultant surge in restructuring activities, including Chapter 11 proceedings, among gas and oil producers is the highest in years.
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The Bankruptcy Strategist
Tenth Circuit Ruling May Impact Treatment of Student Loans In Bankruptcy
Charles M. Tatelbaum, Christina V. Paradowski and Brittany L. Hynes
A recent ruling in the U. S. Court of Appeals for the Tenth Circuit represents a significant departure from the generalized belief that student loan debts cannot be discharged in bankruptcy, and which, if followed by other circuit courts, could have a dramatic impact on bankruptcy law.
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The Bankruptcy Strategist
Bankruptcy Courts Embracing Virtual ADR
Jeffrey T. Zaino
Bankruptcy courts are embracing virtual alternative dispute resolution (ADR) processes to handle cases during this extraordinary period. Engaging in online mediation, and arbitration, can expedite Chapter 11 cases toward an equitable conclusion for the parties involved, while ensuring everyone can practice safe social-distancing.
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The Bankruptcy Strategist
Time Is Running Out On Restructuring Under New Subchapter V
Jerrold L. Bregman
The clock is ticking for small businesses to take advantage of a new way to restructure under Chapter 11 of the Bankruptcy Code. New Subchapter V — part of the CARES Act — is set to expire early next year.
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The Bankruptcy Strategist
Treatment of Straddle Year Federal Taxes in Bankruptcy Cases
Andrew C. Kassner and Joseph N. Argentina Jr.
When does a tax liability claim arise in a bankruptcy case? The issue was recently addressed by the U.S. District Court for the District of Delaware which ruled that federal income taxes for the year in which a debtor files for bankruptcy are entitled to priority treatment as administrative expenses when the end of the taxable year occurred after the bankruptcy petition date.
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The Bankruptcy Strategist
Nondischargeability Judgment Requires Willful and Malicious Injury Under Section 523(a)(6)
Rudolph J. Di Massa Jr. and Keri L. Costello
In re Smith
The Bankruptcy Appellate Panel for the Tenth Circuit recently joined the majority of circuit courts of appeals in finding that a creditor seeking a judgment of nondischargeability must demonstrate that the injury caused by the prepetition debtor was both willful and malicious under Section 523(a)(6) of the Bankruptcy Code.
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The Bankruptcy Strategist
Cash Flows for Bankruptcies During COVID-19
Jonathan Koevary and Robert Gagne
Chapter 11 petition strategy will almost invariably require and depend upon cash flow for continued use of leased stores and restaurants. To say the least, for those companies that filed for bankruptcy on the eve of the COVID-19 shutdowns, the strategies — and available cash flows to pay landlords — did not go as planned.
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The Bankruptcy Strategist
COVID Shutdown Orders v. Statutory Rent Obligations
Brett S. Theisen and Mark B. Conlan
Even though payment of post-petition rent under a nonresidential lease (prior to rejection) has historically been an absolute requirement, bankruptcy courts, as courts of equity, have the ability during these extraordinary times to take a more flexible approach.
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The Bankruptcy Strategist
What’s In Store for Bankruptcy Reform In a Biden Presidency
Mette H. Kurth and Dan Mette
Senator Elizabeth Warren has been relentlessly pursuing bankruptcy reform for two decades. And Joe Biden has adopted her comprehensive proposal. The proposals could impact commercial bankruptcy law and reverberate across our financial systems.
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The Bankruptcy Strategist
Unforeseen Consequences for Bankruptcy Practice In CARES Act
Sourav Chaudhuri and Gregory Plotko
This article highlights several of these outcomes and discrepancies of the CARES Act stimulus package, including how accepting crisis funding could lead to a company becoming more distressed, how bankruptcy courts are inconsistently ruling on the ability for Chapter 11 debtors to receive PPP loans and how changes to the Bankruptcy Code altered the rights of equity holders and debtholders.
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The Bankruptcy Strategist
Bankruptcy and Intellectual Property Executory Contracts
Michael H. Strub Jr.
The economic impact of the pandemic has been catastrophic. For many companies, intellectual property are significant assets, and counsel for these businesses, as well as counsel for their creditors, licensees and licensors, will need to understand these issues that arise to avoid pitfalls and take full advantage of opportunities to exploit the full value of a company’s IP for the benefit of their clients.
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The Bankruptcy Strategist
COVID-19 Related Governmental Shut Down Order Triggers Force Majeure Provision In Restaurant Leases
Marisa L. Byram
While commercial leases and the force majeure clauses contained in such leases vary widely, a recent decision from the United States Bankruptcy Court for the Northern District of Illinois may provide guidance to parties and help them to resolve similar disputes without resorting to the courts.
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The Bankruptcy Strategist
Do COVID-19 Rent and Eviction Protections Just Delay Inevitable Bankruptcy?
Dana Delman and John Vukmanovic
In attempts to alleviate the impact of job losses and business disruption due to COVID-19, state and local governments have passed emergency orders and regulations temporarily prohibiting evictions and extending deadlines to pay rent, among other restrictions. When those restrictions are lifted, there is no guarantee that they will have done more than delay the inevitable: eviction and bankruptcy.
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The Bankruptcy Strategist
Bankruptcy Code Section 502(d) Claim Disallowance Issues ‘Travel With’ the Claim
Rudolph J. Di Massa, Jr. and Geoffrey A. Heaton
In a recent decision, the U.S. Bankruptcy Court for the Southern District of New York held that claim disallowance issues under Section 502(d) of the Bankruptcy Code “travel with” the claim, and not with the claimant.
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The Bankruptcy Strategist
10th Circuit Looks At Nuances of Challenging Fraudulent Conveyance
Francis J. Lawall and Marcy J. McLaughlin Smith
Under the Bankruptcy Code, not only can the initial recipient of a fraudulent conveyance be held liable, but so too can a subsequent transferee. However, there can be important nuances in the challenged transaction that may provide a subsequent transferee with a substantial defense.
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The Bankruptcy Strategist
Bankruptcy ‘Plunderers’ Can Be Sued by Creditors, Third Circuit Rules
P.J. D’Annunzio
The U.S. Court of Appeals for the Third Circuit has ruled in a precedential decision that in cases where a trustee has abandoned a bankrupt entity, a creditor can nevertheless sue those who “plunder” a near-insolvent company of its remaining assets.
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The Bankruptcy Strategist
Bankruptcy Sales: Finding a Diamond In the Rough
Matthew I. Kramer
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
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The Bankruptcy Strategist
J.Crew Allowed to Shutter Under Terms of Mall Lease
Danielle C. Lesser
Malls across America, long suffering even before the rise of COVID-19, are now forced to confront a wave of store closures that will inevitably result from current factors. Troubled retailers will, without doubt, seek to close their failing mall locations. To stem these efforts, landlords have applied to courts for injunctive relief to force stores to remain open and operating through the enforcement of the “continuous operations provision” found in mall leases.
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Commercial Leasing Law & Strategy
Will Pandemic Lead to More SARE Filings?
Lidia Dinkova
Single-asset real estate bankruptcies (SAREs) are streamlined reorganizations for debt taken out by borrowers on just one property, giving them a three-month window to propose a restructuring plan.
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The Bankruptcy Strategist
The Bankruptcy Code’s Anti-Discrimination Section and COVID-19
Andrew C. Kassner and Joseph N. Argentina Jr.
The pandemic has spurred analysis of legal issues as businesses grapple with their respective relationships with both private and public entities. In this article, the authors examine Section 525 of the Bankruptcy Code — the anti-discrimination section, and its implications during COVID-19.
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The Bankruptcy Strategist
The ABCs of Assignments for the Benefit of Creditors (ABCs)
Mark S. Melickian and Hajar Jouglaf
General assignments for the benefit of creditors (ABCs) have been and continue to be a popular business liquidation device for the orderly wind down of corporations, limited liability companies, and even nonprofit corporations and general partnerships. Just as in bankruptcy, an ABC can also be used to facilitate a going-concern sale of the debtor’s assets to a third-party. Includes an interactive state-by-state map.
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The Bankruptcy Strategist
Small Business Reorganization Act and Subchapter V
Robert W. Dremluk
The general purpose of Subchapter V was to streamline the Chapter 11 bankruptcy process for small businesses and individuals engaged in business to administer their bankruptcy estate in an efficient and less costly manner.
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The Bankruptcy Strategist
Update on Corporate Bankruptcy Tax Refund Litigation
Michael L. Cook
The bankruptcy trustee of a bank holding company was not entitled to a consolidated corporate tax refund when a bank subsidiary had incurred losses generating the refund, Tenth Circuit held.
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The Bankruptcy Strategist
Estate Professionals Can Be Compensated for Services Performed Before Entry of a Retention Order, Even Without Nunc Pro Tunc Orders
Sheryl P. Giugliano
Bankruptcy professionals should be relieved by a recent decision holding that although nunc pro tunc orders approving a professional’s retention are now considered “inappropriate” in light of the Supreme Court’s decision in Roman Catholic Archdiocese of San Juan, there is nothing in the Bankruptcy Code, Bankruptcy Rules, or applicable case law preventing an award of compensation before a retention order is entered.
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The Bankruptcy Strategist
Corporate Resiliency: How to Ensure Financial Health Ahead of an Economic Downturn
Derek F. Meek and Hanna Lahr
Proper planning is key to ensuring a company’s financial health when facing an economic downturn. Although companies will come into such planning with different levels of financial health, the same considerations can be helpful in determining the best path forward.
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The Bankruptcy Strategist
The Shutdown of the Restaurant Industry: The Widespread Impact
Gerald D. Davis and Amy L. Drushal
Restaurants are already fragile businesses, not known for lucrative revenue, but instead known for surviving on tight margins. When the industry reopens to the “new normal,” what will the restaurant industry look like?
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The Bankruptcy Strategist
Advertising Section 363 Sales in the Digital Age
Mark S. Melickian and David M. Madden
this article provides an overview of the legal landscape governing §363 sales and the types of Internet-based resources available to potential asset sellers.
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The Bankruptcy Strategist
Open Questions Regarding Disallowance Under Section 502(d)
Paul A. Rubin and Hanh V. Huynh
The intra-district divide in the Southern District of New York continued to deepen on the issue of whether claims disallowance under section 502(d) of the Bankruptcy Code applies to the claim or to the claimant.
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Cybersecurity Law & Strategy
Legal Tech: As Bankruptcies Grow, E-Discovery Counsels’ Work May Become More Challenging
Victoria Hudgins
Businesses reeling after multiple international stay-at-home mandates are finding themselves out of options and filing for bankruptcy. The situation has led some law firms to cash in on bankruptcy service, and made many cautiously optimistic that the bankruptcy practice will be in high-demand during the current recession.
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The Bankruptcy Strategist
Preparing for State Bankruptcies
Samantha Stokes
It’s no secret that major law firm bankruptcy practices are ramping up for a historic rise in Chapter 11 filings as industries are battered by the COVID-19 pandemic. Controversial comments by Senate majority leader Mitch McConnell in April raised the possibility that restructuring lawyers could also gain a new clientele: state governments.
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The Bankruptcy Strategist
Bankruptcy Asset Sales During COVID-19 Crisis
Hugh McDonald and Deborah Kovsky-Apap
The COVID-19 pandemic is already leaving its mark on the bankruptcy asset sale landscape. Despite the uncertainty — or even because of it — bankruptcy should still be viewed as a useful tool to effectuate the acquisition of assets. The current situation and anticipated distress across many industries presents opportunities for purchasers to acquire assets on favorable terms.
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The Bankruptcy Strategist
COVID-19: A Massive Impediment to Bankruptcy Relief
Joseph H. Lemkin
With Uncertainty As to When the Pandemic Will Ease, Bankruptcy Courts Do Not Seem to Be a Panacea Leading to Successful Reorganizations or Orderly Liquidations for Troubled Companies
The impact of COVID-19 on efforts of businesses to reorganize or even orderly liquidate in bankruptcy has been swift and devastating
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The Bankruptcy Strategist
COVID-19: As Coronavirus Ravages the Economy, Bankruptcy Attorneys Prepare for the Flood
Samantha Stokes
Law firms have always counted on bankruptcy as a countercyclical practice in hard times. Now, those that prepared when the economy was booming may be about to get their reward.
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The Bankruptcy Strategist
Parent of Secured Creditor Does Not Automatically Gain Secured Status
Rudolph J. Di Massa Jr. and Drew S. McGehrin
The ruling in In re Jarvis that the grant of a security interest to a corporate lender will not necessarily “spread” that security interest to the lender’s affiliates underscores the need for precision and care in the drafting of loan documents, particularly with respect to the granting language contained in security agreements.
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Commercial Leasing Law & Strategy
Personal Guaranty of Commercial Lease Held Discharged in Guarantor’s Bankruptcy
Andrew C. Kassner and Joseph N. Argentina Jr.
As we prepare for the anticipated increase in bankruptcy filings caused by the COVID-19 pandemic's impact on the economy, many practitioners are trying to compare this to the savings and loan crisis of the late 1980s. One of the issues that keeps coming up cycle after cycle is whether a personal guaranty of a commercial lease is discharged in the bankruptcy of the individual guarantor. Court decisions have split on this issue for years.
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The Bankruptcy Strategist
Supreme Court Defers to State Law on Ownership of Tax Refund
Michael L. Cook
High Court Rejects Application of Bob Roberts Rule
Federal courts should “turn to state law to resolve” a “fight over a tax refund,” held a unanimous U.S. Supreme Court in Rodriquez v. FDIC (In re United W Bancorp., Inc.)
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The Bankruptcy Strategist
Expect Flurry of Bankruptcy Filings With Coronavirus Slowdown
Lidia Dinkova
Potential Clients Are Reaching Out to Bankruptcy Attorneys to Assess the Need for Business Filings
Bankruptcy attorneys expected to get calls as the coronavirus pandemic swiftly slowed the economy — and they were right.
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Accounting And Financial Planning For Law Firms
Venue Reform in Corporate Bankruptcies
A bipartisan group of House lawmakers has introduced a bill that aims to limit where distressed companies can file bankruptcy, making it harder for companies to file outside of the jurisdiction where they are headquartered or have most of their assets. The Bankruptcy Strategist asked Robert J. Gayda, a partner in Seward & Kissel’s Bankruptcy and Corporate Reorganization Group who represents a clients in all aspects of restructuring, about his thoughts on proposed venue reform in corporate bankruptcies.
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The Bankruptcy Strategist
Asset Protection, Pre-Bankruptcy Planning and Code §727(a)(2)(A)
Carlos J. Cuevas
This article examines asset protection and pre-bankruptcy planning and its impact on a debtor’s discharge through Bankruptcy Code §727(a)(2)(A).
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The Bankruptcy Strategist
A New Regime in Preference Litigation
Steve Werth
One of the provisions of the Small Business Reorganization Act amends the language of Bankruptcy Code Section 547 —
which gives trustees and debtors in possession the right to seek to recover a payment to a third party in the 90-day period prior to the commencement of a bankruptcy case as a “preference” — to add a due diligence requirement. Though the intent behind the added language seems clear, it may not have its intended effect.
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The Bankruptcy Strategist
Bankruptcy Court Preliminary Injunction Held Not Appealable
Michael L. Cook
A bankruptcy court’s preliminary injunction was “not a final and immediately appealable order,” held the U.S. District Court for the District of Delaware in In re Alcor Energy, LLC.
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The Bankruptcy Strategist
Discharge of Student Loan Debt OK’d Under Brunner Standard
Rudolph J. Di Massa, Jr. and Keri L. Wintle
In January, a Southern District of New York U.S. Bankruptcy Chief Judge entered a decision granting summary judgment to a pro se debtor, finding that he debtor had satisfied the “undue hardship” standard set forth in Section 523(a)(8) of the Bankruptcy Code, and ordering the discharge of the student loan debt of more than $220,000.
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The Bankruptcy Strategist
Lessor Repossession of Property on Eve of Lessee Bankruptcy
Theresa A. Driscoll
Voluntary Turnover or Face Contempt
Lessors who repossess property immediately prior to a lessee bankruptcy filing may be required to return such property or face sanctions by the bankruptcy court. Federal courts are currently split on the issue of whether the lessor must voluntary surrender property seized petition or may hold such property until such time as the debtor seeks, and obtains, an order of turnover.
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The Bankruptcy Strategist
Tips to Minimize Landlord’s Exposure When a Commercial Tenant Files Bankruptcy
Carmen Contreras-Martinez
Landlords often have clues that a tenant is going to be filing for bankruptcy, rental payments are consistently late several months in a row and the tenant falls more than a month behind on the rent. But, it can still be shocking when a landlord receives a legal notice in the mail, instead of a rent check.
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The Bankruptcy Strategist
Recent Developments in Third Circuit Bankruptcy Law
Rachel Ehrlich Albanese and Gregory Martin Juell
Bankruptcy and corporate restructurings continue to be active despite generally strong U.S. financial markets and broader macroeconomic conditions. Here is a brief overview of three recent and noteworthy bankruptcy decisions within the Third Circuit.
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The Bankruptcy Strategist
Move Quickly: Supreme Court Holds that Bankruptcy Court’s Denial of Motion for Relief from the Automatic Stay Is a Final Appealable Order
Louis F. Solimine, James J. Henderson and Andrew L. Turscak, Jr.
In a recent, unanimous opinion authored by Justice Ginsburg, the U.S. Supreme Court affirmed lower court decisions holding that a bankruptcy court order denying a motion for relief from the automatic stay constitutes a final order that must be appealed within the time provided under Federal Rule of Bankruptcy Procedure 8002.
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Commercial Leasing Law & Strategy
Tips to Minimize Landlord’s Exposure When a Commercial Tenant Files Bankruptcy
Carmen Contreras-Martinez
Because bankruptcy can add significant expenses and increase the time it takes to remove a delinquent tenant, landlords should not allow tenants to fall far behind on rental payments. Here are some tips on how to address the issues raised by a bankrupt tenant.
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The Bankruptcy Strategist
Bankruptcy Court Denies Motion for Fee Enhancement Under ‘Common Fund Doctrine’
Rudolph J. Di Massa, Jr. and Geoffrey A. Heaton
The U.S. Bankruptcy Court for the Western District of Virginia recently denied creditors’ counsel’s motion for a fee enhancement under the “common fund doctrine,” finding it could not award the requested fees absent statutory authority.
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The Bankruptcy Strategist
Examining the Interplay Between Exculpation Clause and Fiduciary Duty
Lawrence J. Kotler
In the case of In re Solutions Liquidation, the U.S. Bankruptcy Court for the District of Delaware adjudicated a motion to dismiss filed by the debtors’ former managers and officers in connection with the breach of fiduciary duty complaint filed against them by the trustee of the debtors’ liquidating trust.
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