It is already relatively settled that an insider who has personally guaranteed the debt of his or her company may face preference exposure to the extent the guaranteed debt is paid down during the one-year preference period applicable to insiders. Without doubt, such payments directly benefit the guarantor, whose obligation to the primary creditor is reduced dollar for dollar.

On December 19, 2014, the Governor of the State of Ohio signed into law legislation that clarifies and expands the scope of powers given to a receiver under Ohio’s receivership statutes (chapter 2735 of the Ohio Revised Code (“ORC”)).  Most significantly, effective March 23, 2015 (the effective date for all of the amendments), an Ohio receiver will have express statutory power to sell real and personal property free and clear of liens and will

In 2007, the Delaware Supreme Court issued an important ruling for creditors of insolvent corporations. It held that such creditors had standing to assert derivative claims for breaches of fiduciary duties against directors of an insolvent corporation.1 But, as the Delaware Court of Chancery recently made clear, there is a big difference between Delaware limited liability companies (LLCs) and their corporate cousins.

On December 1, 2009, numerous changes to the time periods applicable in bankruptcy cases took effect. These changes, which will impact creditors and debtors alike, are relatively straightforward but must be carefully reviewed and thoroughly understood. Time plays a critical role in the administration of bankruptcy cases, affecting the degree of notice a party is required to give before certain actions can be taken or approved by the bankruptcy court as well as deadlines for filing various documents, asserting various rights and satisfying certain statutory obligations.

The US government’s foray into restructuring the ailing US automotive industry has been widely reported in the media and represents the most substantial federal intervention in the private business sector since the Great Depression. In Chrysler’s case, the government took the unprecedented step of orchestrating a “surgical” Chapter 11 bankruptcy filing with the primary goal of utilizing the provisions of Section 363 of the US Bankruptcy Code to sell substantially all of Chrysler’s assets to “New Chrysler” in less than 30 days.

On May 31, 2009, approximately 30 days after Chrysler Group LLC and affiliated debtors filed for bankruptcy relief, the United States Bankruptcy Court for the Southern District of New York authorized the sale of substantially all of Chrysler’s assets to “New Chrysler” – an entity formed by Chrysler and Fiat Automobiles SpA and initially majority-owned by Chrysler’s Voluntary Employees’ Beneficiary Association (VEBA) – free and clear of liens, claims and encumbrances under section 363 of the United States Bankruptcy Code (the Fiat Transaction).

On August 4, 2017, the Third Circuit Court of Appeals issued its ruling in Varela v. AE Liquidation, Inc. (In re AE Liquidation, Inc.), 2017 U.S. App. LEXIS 14359 (3d Cir.

In Metropolitan Government of Nashville & Davidson County v. Hildebrand, the Sixth Circuit Court of Appeals explains how to read the phrase “applicable nonbankruptcy law” as it is used in the United States Bankruptcy Code. The case – a chapter 13 individual bankruptcy case – discussed the phrase in the context of section 511(a) of the Bankruptcy Code, which deals with the appropriate rate of interest applicable to tax claims.

In Metropolitan Government of Nashville & Davidson County v. Hildebrand, the Sixth Circuit explains how to read the phrase “applicable nonbankruptcy law” as used in the Bankruptcy Code. The chapter 13 individual bankruptcy case discussed the phrase in the context of 11 U.S.C. § 511(a), which provides that the appropriate interest rate for tax claims is whatever “applicable nonbankruptcy law” provides.

The decision

Among other strategic considerations a financially troubled company must grapple with as it prepares for a potential bankruptcy filing is how best to effectively implement necessary workforce reductions as part of its overall reorganization efforts. A workforce reduction could potentially give rise to severance and other employee obligations, and, under certain circumstances, could also give rise to significant WARN Act claims.