Reaching an outcome in line with two other circuit courts, on February 16, 2022, the Fifth Circuit Court of Appeals permitted a Chapter 11 trustee to sell a debtor’s real property free and clear of the leasehold estates held by certain non-debtor lessees. See In re Royal Street Bistro, L.L.C., 2022 WL 499938 (5th Cir. February 16, 2022)(the “Ruling”)
The initial wave of post-COVID Chapter 11 business bankruptcies has revealed an increasing tendency for senior executives of financially distressed companies to award themselves substantial bonuses and similar forms of compensation immediately before placing their companies into bankruptcy. If this trend continues, it may largely nullify the efforts of Congress and the courts to rein in and strictly regulate such forms of compensation.
On December 27, 2020, the Consolidated Appropriation Act ("CAA") was signed into law. The nearly 5,600-page bill is reportedly the longest bill ever passed by Congress. In addition to funding the federal government in 2021 and providing COVID-related relief to individuals and businesses, the new law amends the Bankruptcy Code in at least nine respects. Most of the amendments sunset in either one or two years. One of the amendments will become effective only if the Small Business Administration signs off on it.
A brief description of the amendments follows.
Breaking from the overwhelming majority of prior case law, two bankruptcy courts recently held that Medicare and Medicaid provider agreements can be assigned as part of a Section 363 bankruptcy sale free and clear of the assignor’s liabilities under the provider agreements.
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Webinar
Join Energy and Bankruptcy Law professionals from Thompson Coburn LLP for a one-hour webinar as they address recent developments in the Chapter 11 bankruptcies of PG&E, First Energy and other related cases highlighting the emerging clash between federal energy law and federal bankruptcy law.
A recent Delaware bankruptcy court decision may leave bankruptcy-claim traders somewhat confused as to how to properly navigate the anti-assignment “override provisions” set forth in Revised Article 9 of the Uniform Commercial Code.