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LJN Quarterly Update: 2024 Q2
Steve Salkin
The LJN Quarterly Update highlights some of the articles from the nine LJN Newsletters titles over the quarter. Articles include in-depth analysis and insights from lawyers and other practice area experts.
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The Bankruptcy Strategist
Appellate Courts Skeptical About Bankruptcy Court Sanctions
Michael L. Cook
Recent appellate decisions reflect a distaste for appeals from bankruptcy court sanction orders. A split Fourth Circuit even refused to hear such an appeal. Other courts tend to limit sanctions or, alternatively, accept a bankruptcy judge’s findings under a stringent “abuse of discretion” standard.
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The Bankruptcy Strategist
Supreme Court’s Rejection of Purdue Pharma Settlement Redefines Releases In Chapter 11
Angelo Castaldi
The U.S. Supreme Court has issued its most anticipated bankruptcy decision in recent memory. In a 5-4 decision entered June 27, the Supreme Court struck down the nonconsensual third-party releases. Writing for the Court, Justice Neil Gorsuch ruled that nothing in the Bankruptcy Code authorized the nonconsensual release or discharge of claims of opioid victims against the Sacklers, who were not debtors themselves.
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The Bankruptcy Strategist
Ninth Circuit: Debt In Asset Case Is Nondischargeable If Debtor Fails to Properly Schedule the Debt
Lawrence J. Kotler and Geoffrey A. Heaton
In a recent published decision, the U.S. Court of Appeals for the Ninth Circuit addressed a previously unresolved question in that circuit: whether a debtor’s failure to properly schedule a debt in an “asset case” renders the debt nondischargeable.
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Commercial Leasing Law & Strategy
A Prepackaged Bankruptcy Could Be the Answer to a Mortgage Default
Timothy Little, Scott Vetri, Julie Lee and Peter Siddiqui
This article discusses the value of prepackaged bankruptcy as an alternative route for addressing commercial mortgage defaults in high tax jurisdictions.
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The Bankruptcy Strategist
Is the Rule Preventing Bankruptcy Judges from Appointing Special Masters Outdated?
Mark B. Conlan and Noel L. Hillman
Rule 9031 of the Federal Rules of Bankruptcy Procedure prevents all bankruptcy judges, and, if broadly interpreted, any federal judge hearing bankruptcy cases and proceedings, from appointing special masters. The rule has not been amended since its adoption in 1983. It is outdated and should be repealed or amended to accord with the reality of today’s complex Chapter 11 cases.
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The Bankruptcy Strategist
Fourth Circuit Could Decide Fate of the ‘Texas Two-Step’
Amanda Bronstad
An influential appellate court has agreed to take up a bankruptcy involving the controversial “Texas two-step,” potentially deciding the merger tactic’s fate in future Chapter 11 cases. The Fourth Circuit agreed to hear a petition to dismiss the bankruptcy of Bestwall, a subsidiary of Koch Industries-owned Georgia-Pacific, created through a “Texas two-step” to resolve 60,000 lawsuits over asbestos exposure.
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The Bankruptcy Strategist
Supreme Court: Prospective Parity Is Answer to Past Trustee Fee Disparity
Steve Lash
The appropriate remedy for the past disparity in bankruptcy fees between federal Bankruptcy Trustee and Administrator districts is simply to ensure all the courts are charging the same going forward, the Supreme Court ruled on June 14.
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LJN Quarterly Update: 2024 Q1
LJN Editorial Staff
Highlights some of the in-depth analysis and insights from lawyers and other practice area experts from the nine LJN Newsletters titles over the first quarter of 2024.
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The Bankruptcy Strategist
Courts Split Over Requirement for Chapter 15 Jurisdiction In the U.S.
Daniel A. Lowenthal
If a foreign debtor doesn’t reside in, have a domicile or place of business in, or have property in the U.S., can the foreign representative of the debtor utilize Chapter 15 to obtain discovery to use in the foreign proceeding?
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The Bankruptcy Strategist
Guidance on the Enforceability of Lockup Provisions
Paul A. Rubin and Hanh V. Huynh
A recent decision from Chief Judge Glenn of the Southern District of New York Bankruptcy Court provides clarity to creditors and debtors alike in cases where the parties’ settlement negotiations include an agreement requiring a creditor to support the debtor’s Chapter 11 plan.
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Commercial Leasing Law & Strategy
NY Appellate Court Provides Practical Guide to Commercial Landlord’s Bankruptcy Damage Claims
Michael L. Cook
The Southern District of New York affirmed a bankruptcy court’s holding that the statutory cap on a landlord’s damage claim “applies to [its] claim against a [Chapter 11] debtor-guarantor.”
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The Bankruptcy Strategist
Appellate Court Provides Practical Guide to Commercial Landlord’s Bankruptcy Damage Claims
Michael L. Cook
The court’s decision, supported by a well-reasoned bankruptcy court decision, provides a helpful overview of the most recent law governing landlords’ damage claims in bankruptcy cases.
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The Bankruptcy Strategist
Determining the Indubitable Equivalent of A Bankruptcy Claim
Peter Gampel
One aspect of the dispute in interpreting clauses in an agreement from a financial point of view, and one with significant consequences, centered around the term indubitable equivalent value for a Class 5 creditor in the context of a debtor’s fifth amended Chapter 11 plan and objection to confirmation filed by creditor. The U.S. Bankruptcy Court, Middle District of Florida, Jacksonville Division opined on that issue.
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The Bankruptcy Strategist
What Happens When Nondischargeable Student Loan Is Later Determined to Be Dischargeable?
Lawrence J. Kotler and Drew S. McGehrin
The U.S. Bankruptcy appellate panel for the Ninth Circuit addressed a matter of first impression: what happens when a debt that may be considered nondischargeable is later determined to be dischargeable, and more importantly, whether efforts to collect such a debt be exempt from penalties for violating the discharge injunction?
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The Bankruptcy Strategist
Delaware Bankruptcy Judge Orders Fee Examiners for ‘Larger Chapter 11 Cases’
Dan Roe
A rise in bankruptcies involving fraud and mass tort litigation is causing more bankruptcy lawyers to face scrutiny over their billing practices.
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The Bankruptcy Strategist
Delaware District Court Could Guide Supreme Court Purdue Pharma Decision
Michael L. Cook
A bankruptcy court properly held that derivative claims based on “piercing the corporate veil theory of liability [were] released under” a confirmed reorganization plan, but that direct “claims for negligent undertaking” were not released and “could be asserted” in state court against the debtors’ equity sponsors.
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The Bankruptcy Strategist
Court Caps Landlord's Bankruptcy Claim Against Lease Guarantor
Andrew C. Kassner and Joseph N. Argentina Jr.
A big issue in real estate and retail bankruptcies, among others, involves the disposition of commercial real estate leases, given the potential magnitude of landlord damage claims under state law resulting from a tenant’s default under a long-term lease.
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The Bankruptcy Strategist
Delaware Bankruptcy Court Rejects Equity Holder's Challenge to Revoke Confirmation Order
Lawrence J. Kotler
The equity owner asserted that the confirmation order previously entered by the court should be revoked based on the equity owner’s claim that value was lost due to improper sale and marketing efforts by the debtors and its professionals both pre- and post-bankruptcy and, as such, they should have been “in the money” and entitled to a distribution under the confirmed plan.
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The Bankruptcy Strategist
Is the ‘Crypto Winter’ Over?
George Williams
One of the major catalysts of the “Crypto Winter” that began in 2022 was the collapse of Terraform Labs’s native token LUNA in May 2022. Now two years and a dozen crypto-related bankruptcies later, Terraform Labs has filed for Chapter 11 protection.
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The Bankruptcy Strategist
Overview of New UAE Bankruptcy Law
Dario Sabaghi
With the establishment of a specialized Bankruptcy Court and a dedicated Bankruptcy Unit, the introduction of preventive settlements, more flexible restructuring proceedings, and the expansion of potential liability, among other things, the new legislation is set to reshape the approach of law firms.
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The Bankruptcy Strategist
Closing 'Unacceptable Loopholes': How Sex Abuse Claimants Could Gain Power In Chapter 11 Bankruptcies
Ellen Bardash
New federal legislation proposes sweeping changes to how bankruptcy courts handle child sexual abuse claims in Chapter 11 proceedings, with supporters claiming the process has become a way for debtors to silence victims and avoid liability.
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The Bankruptcy Strategist
Seventh Circuit Applies Safe Harbor to Private Securities Transaction
Michael L. Cook
“… [T]he term ‘securities contract’ as used in [Bankruptcy Code] §546(e) unambiguously includes contracts involving privately held securities,” The Seventh Circuit held in Petr v. BMO Harris Bank, N.A.
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The Bankruptcy Strategist
Ninth Circuit Bankruptcy Appellate Panel: 523(a) Discharge Exceptions Don’t Apply to Corporate Debtors Under Subchapter V
Lawrence J. Kotler and Elisa Hyder
In Lafferty v. Off-Spec Solutions, the U.S. Bankruptcy Appellate Panel of the Ninth Circuit held that the discharge exceptions under Section 523(a) do not apply to corporate debtors under Subchapter V of Chapter 11 of the Bankruptcy Code.
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The Bankruptcy Strategist
Merchant Cash Advances Could Be More Trouble Than They’re Worth
Joseph Pack and Jessey Krehl
As small-business owners have continued to struggle in an uncertain economy, a growing number have begun the dangerous practice of relying on merchant cash advances — essentially seeking financial shelter in a lion’s den.
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The Bankruptcy Strategist
Biotech Industry Bankruptcy Case Update: ‘Zymergen’ and ‘Humanigen’
Edward E. Neiger, Marianna Udem and Joo Hee Park
This Bankruptcy Case Update focuses on the recent biotech industry bankruptcy cases of Zymergen and Humanigen.
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The Bankruptcy Strategist
So Far In 2024, Law Firms Are Using Bankruptcy As a Springboard for Profit
Andrew Maloney
With broad hopes for countercyclical consistency and a nearly 120% uptick in Chapter 11 filings in February specifically, law firms seem ready to use restructuring work as a significant plank in a profitable 2024.
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The Bankruptcy Strategist
Landmines In Bankruptcy Appellate Practice, Part III
Michael L. Cook
When courts have made important exceptions in the past year, they have either added a gloss on the Judicial Code, corrected lawyers’ errors, filled in statutory gaps, or clarified the relevant statutory language.
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Commercial Leasing Law & Strategy
Exploring Debt Restructuring Options for CRE Owners
Michael Criscito
In the dynamic landscape of real estate, commercial real estate owners often find themselves facing financial challenges that necessitate a strategic approach to debt management. In such cases, exploring debt restructuring options becomes a crucial consideration.
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The Bankruptcy Strategist
A Strategic Guide for Lenders to Navigate Anticipated Distressed Loan Fallout
Jay Steinman and Karina Leiter
The steps outlined in this article offer a strategic guide for lenders, empowering them to navigate the complexities of loan workouts and enforcement actions with resilience and foresight.
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The Bankruptcy Strategist
Third Circuit: Bankruptcy Code Mandates Appointment of Examiner In Chapter 11 Cases
Francis J. Lawall and Brenden S. Dahrouge
The Third Circuit recently held in 'In re FTX Trading' that the plain text of Section 1104(c)(2) mandates the appointment of an examiner under the specified conditions set forth. As a result, the FTX decision will carry significant implications for large and medium-sized bankruptcy cases.
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The Bankruptcy Strategist
Bankruptcy Court Ruling of Cannabis-Related Claims Not Violation of Controlled Substance Act, California District Court Rules
Lawrence J. Kotler and Ryan Spengler
The Central District of California court held that a bankruptcy court’s administration of cannabis-related state court claims against a debtor’s estate is not a violation of the Controlled Substances Act.
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The Bankruptcy Strategist
Analysis of Recent Real Estate Sector Bankruptcy Rulings
Andrew C. Kassner and Joseph N. Argentina Jr.
Analysis on distressed real estate cases that present different issues. One involves the debtor’s sale of real estate over the objection of the secured lender. The other involves a debtor’s attempt to enjoin a construction bond company from continuing to pay claims by subcontractors after the filing of the bankruptcy case.
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The Bankruptcy Strategist
Landmines In Bankruptcy Practice, Part II
Michael L. Cook
By enforcing deadlines strictly, refusing to hear appeals from interlocutory orders, and rarely bypassing the district court for direct appeals, appellate courts have generally avoided what they view as unnecessary work and delay. But a few courts have made important exceptions in the past year.
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The Bankruptcy Strategist
DE Bankruptcy Court Decision Provides Reminder of Potential Consequences of Violating the Automatic Stay
Mark E. Felger and Simon E. Fraser
An opinion from the U.S. Bankruptcy Court for the District of Delaware provides a reminder of the potentially severe punishment that a party can suffer as a result of its violation of the automatic stay of Section 362 of the Bankruptcy Code, even if the debtor does not suffer any actual damages as a result of the violation.
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The Bankruptcy Strategist
Could Mass Tort Bankruptcies Fall Apart in 2024?
Amanda Bronstad
Mass tort bankruptcies took some big hits in 2023, with two of them dismissed outright, and two more potentially hanging in the balance.
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The Bankruptcy Strategist
SCOTUS Looks for Remedy to Its Bankruptcy Fee Congressional Overstep Ruling
Jimmy Hoover
The U.S. Supreme Court on January 9 debated the proper remedy for its 2022 ruling that Congress violated the Constitution when it imposed steep bankruptcy fee hikes on large debtors in some districts but not others.
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The Bankruptcy Strategist
Top Bankruptcy Partners Rates Are Climbing
Dan Roe
The trend of above-average rate increases began during the pandemic.
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The Bankruptcy Strategist
Three Things Trustees Should Know About Due Diligence in Preference Litigation
Brad Jones
Courts have struggled with the interpretation of the 2019 amendment to Section 547, specifically whether the due diligence requirement is an element of a preference claim that must be adequately pleaded in the plaintiff’s complaint. While the law is still developing, there are three important takeaways for trustees to consider.
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The Bankruptcy Strategist
Split Second Circuit Narrows Bankruptcy Code’s Settlement Payment Safe Harbor
Michael L. Cook
The majority was sensibly concerned with the possible structuring of leveraged buyouts by artful counsel who would use a financial institution as a “mere conduit” to exploit the Code’s safe harbor.
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The Bankruptcy Strategist
Distressed Real Estate Bankruptcies Continue, Despite Interest Rate Peak
Andrew C. Kassner and Joseph N. Argentina Jr.
Although interest rates may have peaked, we continue to expect a large volume of distressed real estate debtors to utilize the bankruptcy system over the next couple of years. This article analyzes two recent decisions regarding distressed real estate bankruptcies, both of which involve rights of real estate lenders against proceeds of collateral other than the real estate itself.
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The Bankruptcy Strategist
To What Extent Does a Bankruptcy Court Have Jurisdiction Over a Post-Confirmation Lawsuit?
Lawrence J. Kotler
In the recent decision of Tew v. ED&F Man Capital Markets, the U.S. Bankruptcy Court for the Eastern District of Kentucky addressed a thorny decision for all bankruptcy courts, namely to what extent a bankruptcy court has jurisdiction over a post-confirmation lawsuit.
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The Bankruptcy Strategist
Following Uptick In 2023, Bankruptcy Lawyers Are Expecting a Busy 2024
Alexander Lugo
Predictions of an uptick in bankruptcy filings came true this year, and bankruptcy lawyers are expecting a steady continuation into 2024, with the use of alternative approaches continuing to increase.
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The Bankruptcy Strategist
The Bankruptcy Strategist Is Going Digital Only. Here’s What You Need to Know.
Steve Salkin
The final print edition of The Bankruptcy Strategist will be our January issue.
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The Bankruptcy Strategist
Litigation Finance Offers Significant Benefits for Restructuring Matters
Jeffery Lula
In today’s volatile economic climate, companies need to be more creative to find ways to mitigate risk. Litigation finance is one of those out-of-the-box solutions that can provide benefits.
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The Bankruptcy Strategist
Key Win Likely for Commercial Shopping Center Lessor In Second Circuit
Michael L. Cook
The Second Circuit, on remand from the U.S. Supreme Court, further remanded to the district court the key issue of whether the Chapter 11 debtor gave “adequate assurance of future performance of” a commercial real property shopping center lease “as required by [Bankruptcy Code] §365(b)(3)(A),” after the debtor’s assignment of its lease.
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The Bankruptcy Strategist
CA Bankruptcy Court Throws Regulatory Concerns Aside and Sides With Cannabis Business’ Chapter 11 Plan
Lawrence J. Kotler and Ryan Spengler
While this case does not fully open the courthouse doors to cannabis-related businesses and seemingly grants the bankruptcy courts a great deal of discretion when ruling on similar cases in the future, cannabis-related businesses may now have a roadmap to pursue reorganization.
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The Bankruptcy Strategist
Fifth Circuit: Pre-petition Payout of Insurance Proceeds Should Be Classified As a ‘Transfer of An Interest’
Francis J. Lawall and Brenden S. Dahrouge
In upholding the bankruptcy court’s determination that the payment of insurance proceeds could be such a transfer, the Fifth Circuit underscored the complex interplay between state law, bankruptcy law and the rights of creditors in bankruptcy proceedings.
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The Bankruptcy Strategist
A Look Inside the Rulings for Sandy Hook Families In Alex Jones Bankruptcy
Ross Todd
A Q&A with the team working on the Alex Jones/Sandy Hook case in bankruptcy court in Texas, who provides an inside look at the case, their strategy, and some takeaways.
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The Bankruptcy Strategist
Online Extra: WeWork Creditors Likely to Attempt to Pierce Corporate Veil In Bankruptcy Court
Emily Saul
WeWork’s Chapter 11 bankruptcy has stayed a Manhattan Commercial Division decision allowing plaintiffs to dig around in 11 years of the tanked company’s finances — but observers say it’s likely creditors will now try to pierce the corporate veil in the bankruptcy proceeding.
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