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The Bankruptcy Strategist
Can a Debtor That Has No Ongoing Business Operations Reorganize Under Chapter 11 In Good Faith?
Lawrence J. Kotler and Roxanne J. Indelicato
In a recent decision, the U.S. Bankruptcy Court for the Southern District of Texas (the court) addressed whether a debtor that has no independent assets or ongoing business operations can reorganize under Chapter 11 in good faith.
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The Bankruptcy Strategist
J&J Gets Stay In Talc Chapter 11 Dismissal
Amanda Bronstad
Johnson & Johnson’s talc bankruptcy may be on its last legs, but it’s still standing — at least for a while. On February 13, Johnson & Johnson subsidiary LTL Management petitioned the U.S. Court of Appeals for the Third Circuit to rehear its Jan. 30 decision dismissing its Chapter 11 case
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The Bankruptcy Strategist
Fifth Circuit Adds Color to Abstention Issue
Francis J. Lawall and Brenden Dahrouge
Rules Bankruptcy Court Lacked Jurisdiction to Decide State-Governed Question
Jurisdictional boundaries within the federal system as between bankruptcy and district courts as well as various federal agencies can be a maze that is at times nearly impossible to navigate. Further complicating matters are those cases involving state-regulated issues that add abstention to the mix.
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The Bankruptcy Strategist
Rights of Tenant to Security Deposit When Landlord Files for Bankruptcy
Andrew C. Kassner and Joseph N. Argentina Jr.
As we debate whether there will be a “soft” or “hard” landing of the economy and the resulting effect of different landings on the volume of bankruptcy filings, it is helpful to review how a bankruptcy filing affects not only rights between a creditor and the debtor, but also the respective rights of creditors against property held by the debtor.
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The Bankruptcy Strategist
Bankruptcy Veterans See Surge In Corporate Filings
Everett Catts
Corporate bankruptcies have been a hot topic lately, with several businesses or their parent companies declaring bankruptcy, announcing they plan to do so or saying they may to do so soon. Two veteran bankruptcy attorneys in Georgia give their take on this and other bankruptcy topics.
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Cybersecurity Law & Strategy
Live Webinar: The Crypto Landscape Post-FTX
CLS Staff
On Feb. 15 at 4 p.m. ET, Cybersecurity Law & Strategy will present a complimentary live webinar titled “The Crypto Landscape Post-FTX.” The presentation will cover the current status and near-future outlook for the blockchain (crypto) sector.
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Commercial Leasing Law & Strategy
New Bankruptcy Code May Provide Way Out of Commercial Leases
Eric Snyder
In major metropolitan areas, commercial office vacancies have skyrocketed and rents have plummeted. Tenants, required to examine their space needs post-pandemic, are eager to take advantage of the lower rents. A recent addition to the Bankruptcy Code provides these lessees with an opportunity to walk away from above-market leases.
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The Bankruptcy Strategist
Eleventh Circuit Stops Plan Confirmation Stampede
Michael L. Cook
In a recent ruling, the Eleventh Circuit upended a hastily confirmed reorganization plan. Its holding should stop the stampede known as the “confirmation express.”
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The Bankruptcy Strategist
Treating Student Loan Debt Relief By Standardizing 'Undue Hardship' In Bankruptcy Code
Rudolph J. Di Massa and Diane J. Kim
On Aug. 24, 2022, President Joe Biden announced the plan to forgive up to $10,000 in federal student debt for qualifying borrowers. This relief, however, was challenged in the courts and is now pending before the U.S. Supreme Court.
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The Bankruptcy Strategist
Duties of and Risks to Directors and Officers of Insolvent Enterprises
Marshall S. Huebner and Amber Leary
Traditionally, the bankruptcy risk for D&Os has been fairly low. Several recent developments have, however, shifted the landscape somewhat and altered the risk profile.
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The Bankruptcy Strategist
Online Extra: In 'Landmark' Win for Talc Plaintiffs, Third Circuit Dismisses Johnson & Johnson Unit's Bankruptcy
Amanda Bronstad
On Jan. 30, the U.S. Court of Appeals for the Third Circuit reversed a bankruptcy judge's decision, concluding that Johnson & Johnson subsidiary LTL Management was not in financial distress at the time it filed its Chapter 11 case in 2021.
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The Bankruptcy Strategist
U.S. Bankruptcy Court Denies Chapter 15 Recognition to a Case on the Isle of Man
Daniel A. Lowenthal
Cases interpreting Chapter 15 of the Bankruptcy Code after it was enacted in 2005 often addressed basic issues, such as whether a foreign debtor must have property in the U.S to file a case there. But even when there’s no property in the U.S., there’s an easy remedy: the foreign administrator can deposit a retainer payment with its U.S. law firm.
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Entertainment Law & Finance
The NFT Market and Fallout from the FTX Scandal
Mark Cianci, Charles Humphreville, Kelley Chandler and Ty Owen
The FTX bankruptcy scandal that has shaken the largely unregulated cryptocurrency world has slowed but isn’t likely to end the roll-out of celebrity-related, non-fungible digital token (NFT) offerings. But how might the FTX story impact a push for federal regulation of the NFT market?
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The Bankruptcy Strategist
Appellate Review of a Bankruptcy Court’s Preliminary Injunction
Michael L. Cook
A bankruptcy court preliminary injunction should be reviewable as of right because of Supreme Court precedent, the rulings of other courts and common sense.
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The Bankruptcy Strategist
Second Circuit Orders Refund of Unconstitutional Quarterly Fee Overpayment
Francis J. Lawall and Marcy J. McLaughlin Smith
Many practitioners have been speculating as to how courts will address the potential remedy for the unconstitutional U.S. trustee fees imposed against Chapter 11 debtors pending in U.S. trustee districts under the 2017 amendment to 28 U.S.C. Section 1930.
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The Bankruptcy Strategist
What’s In Store for Bankruptcy In 2023?
Dan Roe
Practitioners Weigh In
If anyone was holding out hope for a tidal wave of corporate bankruptcies in 2022, it’s time to abandon ship. If that was part of your 2023 budget, don’t get on the ship altogether.
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The Bankruptcy Strategist
Another Appellate Court Vacates A Bankruptcy Court Contempt Judgment
Michael L. Cook
The Southern District of New York vacated a bankruptcy court’s judgment holding a debtor’s business competitor “in contempt for violation of the [Bankruptcy Code’s] automatic stay … and assessing sanctions” of $19.2 million.
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The Bankruptcy Strategist
What Can We Learn from the FTX Bankruptcy?
Steven Salkin
The sudden and spectacular crash of crypto-exchange FTX will send long-lasting tremors through both the nation’s financial regulatory and bankruptcy landscapes.
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The Bankruptcy Strategist
Successor Liability Claims Constitute a ‘Property Interest’ for Purposes of a 363 Sale In Bankruptcy
Rudolph J. Di Massa Jr. and Malcolm Bates
In In re Norrenberns Foods, the U.S. Bankruptcy Court for the Southern District of Illinois had occasion to rule on a creditor’s objection to the sale of a debtor’s assets.
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The Bankruptcy Strategist
District Court Provides Guidance on ‘Psychedelic Confusion’
John J. Rapisardi and Matthew Kremer
The U.S. District Court for the Southern District of New York recently provided critical guidance on what the court observed as the “psychedelic confusion” surrounding the intersection of Bankruptcy Code §365, governing the assumption and rejection of executory contracts, and Bankruptcy Code §503, governing administrative priority.
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The Bankruptcy Strategist
Inflation, Interest Rates, and Already-Increasing Commercial Bankruptcy Filings
Erich N. Durlacher
What Should Financial Institutions Do Now In
Anticipation of a Potential (and Long-Awaited)
Downturn
What should a prudent lender be doing right now to “brace” itself for the coming financial uncertainty? Adopt a five-point “CAPER” strategy: Communicate, Analyze, Preserve, Execute, and Resolve.
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The Bankruptcy Strategist
Fifth Circuit Follows Ninth Circuit, Allows Post-Bankruptcy Contract Rate Interest In Solvent Debtor Case
Michael L. Cook
“… [B]ecause Congress has not clearly abrogated the solvent-debtor exception,” the U.S. Court of Appeals for the Fifth Circuit held that a reorganized solvent debtor had to “pay what it promised now that it is financially capable.”
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The Bankruptcy Strategist
Cybercrime and Bankruptcy: The Crypto Winter
Sean J. Coughlin and Vivian B. Isaboke
It comes as no surprise that the crypto winter has reinforced the perception of critics that digital currencies are “risky, flawed and unproven digital financial instruments.” This article analyzes the state of the cryptocurrency market and examines the impact of cybercrimes and crypto bankruptcies on the current market.
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The Bankruptcy Strategist
Sixth Circuit Adds Results-Based Contingency to Fee Payment Approval
Charles M. Tatelbaum and Corey D. Cohen
A recent decision from the U.S. Court of Appeals for the Sixth Circuit may be creating a tsunami of concern to those that represent bankruptcy trustees. The decision, in essence, takes an hourly fee arrangement between the trustee and the trustee’s attorneys and adds a results-based contingency to the approval of any fee payment authorization by the bankruptcy court.
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The Bankruptcy Strategist
Upcoming Webinar: Reorganization Ethics and Fees
Michael Cook
A discussion on the ethical restraints on professionals imposed by the Bankruptcy Code, Bankruptcy Rules, and the ABA Code of Professional Conduct. Also, how the rules work and can affect your case.
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The Bankruptcy Strategist
The Benefits of Subchapter V — But Are You Guaranteed to Stay?
Sean C. Kulka
Although Subchapter V may create a clearer path to confirmation, debtors must be aware of, and (absent an extension by the court) comply with, the more stringent timing requirements, such as the requirement of filing a plan within 90 days after filing bankruptcy.
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The Bankruptcy Strategist
Third Circuit Holds Ethical Screen Insulates Side-Switching Lawyer’s New Firm
Michael L. Cook
The Third Circuit recently affirmed a bankruptcy court’s denial of a defendant’s motion to disqualify the plaintiff’s law firm in a large adversary proceeding, holding that it had not abused its discretion because the plaintiff law firm had “complied with” ABA Model Rule of Professional Conduct 1.10(a)(2).
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Commercial Leasing Law & Strategy
How to Avoid the Claim Cap Becoming a ‘Claim Trap’
Sherry Millman and Genna Grossman
Commercial landlords should consider the steps they can take when drafting and negotiating their commercial leases to minimize the adverse impact of the claim cap in the event of a tenant bankruptcy and ensuing lease rejection.
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The Bankruptcy Strategist
Fifth Circuit Weighs In on Scope of Releases and Exculpation
Francis J. Lawall and Nathaniel T. DeLoatch
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.
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The Bankruptcy Strategist
Are Voting Rights Provisions In Subordination Agreements Enforceable?
James H. Millar
Subordination agreements often contain an agreement by the subordinated creditor that, if the issuer is a debtor in a bankruptcy case, the senior creditor can vote the claim of the junior creditor on any proposed Chapter 11 plan. If given effect, such a voting provision can give a senior creditor significant power, relative to both the subordinated creditor and other creditors, to support or oppose confirmation of a plan.
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The Bankruptcy Strategist
The Duty and Benefits of Technology Competence
Tinamarie Feil
We all have experienced technology’s dramatic effect on bankruptcy practice, particularly in the electronic filing of documents and in the electronic communication and sharing of information among parties.
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The Bankruptcy Strategist
Update On Preference and Fraudulent Transfer Litigation
Michael L. Cook
The appellate courts have been busy explaining or clarifying preference and fraudulent transfer law. Although novices may think the Bankruptcy Code (Code) is clear on its face, imaginative counsel have found gaps in the statute and generated rafts of litigation since the Code’s enactment in 1979. Recent appellate decisions, summarized below, show that courts are still making new law or refining prior case law.
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The Bankruptcy Strategist
Protecting a Trademark Licensor’s Rights In a Bankruptcy Case
Alfred S. Lurey
A recent bankruptcy case from the District of Delaware underscores the need for a trademark licensor to be alert to filings made in its licensee’s bankruptcy case that may require prompt action by the licensor to protect its valuable rights under a license agreement.
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Commercial Leasing Law & Strategy
Commercial Lease Assumption Under Chapter 11 Bankruptcy
Paul A. Rubin and Hanh V. Huynh
Given the potentially harsh consequence of failing to timely assume a vital lease, a Chapter 11 debtor must be vigilant to avoid a forfeiture. It is important to know, however, that all might not be lost even if the debtor misses this deadline.
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The Bankruptcy Strategist
Supreme Court Finds 2017 Bankruptcy Fee Increases Unconstitutional But Leaves Remedy Unclear
Theresa A. Driscoll
The Supreme Court concluded that because the 2017 amendments exempted debtors located in two States, it was not “uniform” as it did not apply equally to all debtors regardless of where they were situated and, therefore, the statute was unconstitutional.
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The Bankruptcy Strategist
It May Not Be Too Late to Assume That Lease
Paul A. Rubin and Hanh V. Huynh
Given the potentially harsh consequence of failing to timely assume a vital lease, a Chapter 11 debtor must be vigilant to avoid a forfeiture. It is important to know, however, that all might not be lost even if the debtor misses this deadline.
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The Bankruptcy Strategist
Second Circuit Insulates Innocent Friend from Corporate Debtor’s Fraudulent Transfer Liability
Michael L. Cook
The defendant “was a ‘mere conduit’ of [a] fraudulent transfer and cannot be liable to the bankruptcy estate for funds she never knew about,” held the U.S. Court of Appeals for the Second Circuit in In re BICOM N.Y., LLC.
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The Bankruptcy Strategist
Court-Based Student Loan Management Programs Can Facilitate Repayment of Debt Under Chapter 13
Igor Roitburg and Scott F. Waterman
While bankruptcy traditionally has been seen as a challenging pathway for debtors with student loans, court-based student loan management programs have been adopted to facilitate the repayment and resolution of student loan debt within the Chapter 13 bankruptcy process.
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The Bankruptcy Strategist
Third Circuit Rejects Side-Switching Disqualification Claim
Michael L. Cook
Conflicts of interest among clients are a chronic problem for law firms with many clients. How law firms address the problem — and they must — is what the Boy Scouts of America decision shows.
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The Bankruptcy Strategist
Stipulation That Resolves Entire Amount Must Reflect Intent of Parties
Francis J. Lawall and Kenneth A. Listwak
The Ninth Circuit recently affirmed a lower courts’ rulings that a stipulation between the IRS and a bankruptcy trustee, which allowed the IRS’s priority tax claim, did not prevent the IRS from collecting nondischargeable tax debt above the agreed amount in that stipulation.
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The Bankruptcy Strategist
Increased Bankruptcy M&A Activity Should Provide Attractive Opportunities for Lenders
Joel H. Levitin and Richard A. Stieglitz Jr.
It seems clear that bankruptcy filings inevitably will increase in the near future, because of rising interest rates, pandemic-related micro-economic forces, global strife, and other macro-economic factors and their continuing strain on the global economy and individual businesses. Consequently, strategic buyers and private equity sponsors should find expanding opportunities to purchase distressed businesses out of bankruptcy.
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The Bankruptcy Strategist
The Interplay Between Vendor Finance Agreements and Bankruptcy
Ann Pille, Richard Tannenbaum, Alexis Leventhal and Emily Costantinou
While regularly used among lenders, manufacturers, and dealers, treatment of Inventory financing program agreements in bankruptcy is not uniform, and uncertainty exists with respect to how such agreements may be treated in the context of a manufacturer’s Chapter 11.
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The Bankruptcy Strategist
Preferred Equity In Peril?
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.
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The Bankruptcy Strategist
Seventh Circuit Bars Bad Faith Asset Buyer Protection
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.
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The Bankruptcy Strategist
With Federal Bankruptcy Courts Unavailable, Marijuana Businesses Turn to State Options
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.
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The Bankruptcy Strategist
Why Subchapter V Is More Appealing Than Chapter 11 for Small Businesses
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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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.
Read More ›
