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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.
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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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