Chapter 11 Plan Exclusivity under the Revised Code
The filing of a case under Chapter 11 of the Bankruptcy Code bestows certain "inalienable" rights upon a debtor. In addition to the hallmarks of a bankruptcy case, such as the automatic stay's "breathing space" and the "fresh start" of a discharge, debtors have traditionally enjoyed rather protracted periods of "plan exclusivity." Plan exclusivity, as it is commonly referred, is that period in a Chapter 11 case in which the debtor has the "exclusive" right to file a plan of reorganization. With the passage of the amendment to Bankruptcy Code section 1121, Congress has encroached upon this particular "inalienable" right.
Chapter 15 Ancillary and Other Cross-Border Cases
After many years of delayed efforts, the Act finally adds a new Chapter 15 to the Bankruptcy Code, which incorporates the provisions of the UNCITRAL Model Law on Cross-Border Insolvency (adopted in May, 1997). Since 1997, strong support has existed in the United States to amend the Bankruptcy Code to modify and apply the Model Law here. However, this non-controversial cross-border amendment was held up by the "all or nothing" approach taken by Congress to the bankruptcy amendments. Eight years later, the United States adapts and adopts the Model Law, which has the goal of harmonizing procedural rules for recognition of foreign insolvency proceedings so that the various countries that enact the Model Law will have generally consistent approaches.
Revisions to Bankruptcy Code Sections 365 and 366
Lessors of commercial property and providers of utility services should benefit from several key changes to the Code. Revisions to Sections 365 and 366 will provide lessors and utilities, respectively, with protections not found in the prior version of the Code.
The Metamorphosis of Assignment Clauses in Bankruptcy
Last month, we discussed "The Debtor's Nightmare," explaining how the Fourth Circuit joined the Ninth, Third and Eleventh Circuits in adopting the "hypothetical test" in denying a debtor in possession's assumption of an executory contract under section 365 (c) of the Bankruptcy Code despite an express assignability provision in the contract. <i>RCI Tech. v. Sunterra Corp.</i> (<i>In re Sunterra Corp</i>), 361 F.3d 257 (4th Cir. 2004). This month, we continue with "the debtor's paradox."
Settlement Payments Exempted from Avoidance
Under ' 546(e) of the Bankruptcy Code (the so-called "stockbroker defense" to select voidance actions), Congress has exempted from avoidance any "settlement payment" that is made "by or to a commodity broker, forward contract merchant, stockbroker, financial institution, or securities clearing agency, that is made before the commencement of the case," except where the transfer is fraudulent under ' 548(a)(1)(A) of the Bankruptcy Code. 11 U.S.C. ' 546(e). So what exactly is a "settlement payment"? Prior to the BAP decision in <i>In re Grafton Partners</i>, the answer to this question was surprisingly unclear.
No Time for Bankruptcy Venue Hypocrisy
Senator John Cornyn of Texas introduced the "Fairness in Bankruptcy Litigation Act of 2005" (S. 314) on Feb. 8, calling it the "end to judge shopping ..." According to the Senator, "[F]orum shopping is wrong. It distorts and corrupts our justice system." Bankruptcy Reform: Hearing on S. 256 and S. 314 Before Sen. Judiciary Comm., 2005 Legis. (Feb. 10, 2005). There may be merit to Sen. Cornyn's bill, but not in his rhetoric, driven, as the facts show, by a desire to increase his home state's market share in the competition for big bankruptcy reorganizations.
The New Code's Effect on Taxes
There are many sections of the new Bankruptcy Act that address various tax issues; some of the most important and relevant corporate changes are explored in this article.
The Debtor's 'Insolvency' for Avoidance Actions
This article focuses on the uses of the term "insolvency" in the avoidance context, including the impact of the 2004 case, <i>Heilig-Meyers Co. v. Wachovia Bank N.A. (In re Heilig-Meyers Co.)</i>, 319 B.R. 447 (Bankr. E.D. Va. 2004), which, while limiting its analysis to a preference context, sheds some light on judicial gloss on the term "insolvency" as it is used both explicitly and implicitly throughout the Code. In addition, it examines definitions of "insolvent" and the presumption of insolvency in preference actions, discusses fair valuation and going-concern valuation methodology, and looks at the standard of proof and types of evidence to establish insolvency (including retrojection and projection).
