When a business files for bankruptcy, it can be a confusing and frustrating time for the debtor’s creditors. If an investment firm reaches out with an offer to purchase a creditor’s claim against the debtor, it may appear to be a great opportunity to be paid at least some cash now. The sale of a bankruptcy claim may also be attractive because it allows the creditor to avoid the time and expense involved in protecting its rights in the bankruptcy case.
On March 2, 2016, Sports Authority Holdings, Inc. and six of its affiliates filed chapter 11 petitions before the United States Bankruptcy Court for the District of Delaware (lead case 16-10527). The cases have been assigned to the Honorable Mary F.
A recent decision of the United States District Court for the Southern District of New York (the “District Court”), affirming a decision of the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”), further enforces the application of the in pari delicto doctrine in cases decided under New York law and confirms that exceptions to its application remain extremely limited.
Sundevil Power Holdings, LLC and SPH Holdco LLC have each filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code before the United States Bankruptcy Court for the District of Delaware (lead case no. 16-10369). The debtors are merchant power generators and own two 550 megawatt natural gas-fired power blocks of the Gila River Power Station, located in Gila Bend, Arizona. The cases have been assigned to the Honorable Kevin J.
On June 15, 2015, the U.S. Supreme Court issued its opinion in the case of Baker Botts L.L.P. v. ASARCO LLC, 135 S. Ct. 2158 (2015), denying compensation to two law firms for the fees they incurred in defending objections to their fee applications. Subsequent to confirmation of ASARCO’s plan of reorganization, the law firms of Baker Botts L.L.P. and Jordan, Hyden, Womble, Culbreth & Holczer, P.C.
Recent changes to the Federal Rules of Civil Procedure will significantly alter the discovery proceedings in bankruptcy proceedings, particularly in adversary proceedings. See Fed. R. Bankr. P. Part VII (applying FRCP to adversary proceedings) and Rule 9014(c) (applying FRCP to most contested matters). While not intended to be a comprehensive analysis, below are some key considerations for bankruptcy practitioners navigating the amended rules.
Lenders and secured creditors often require that debtor-customers direct all receivable collections into a lockbox, hoping to wrangle any available proceeds to apply to their debtors’ outstanding debt. In requiring a debtor or its customer to remit payments to a lockbox, however, creditors may be overlooking a potential source of significant liability. A creditor using a lockbox may unwittingly expose itself to greater risk and liability than just a debtor’s default if it receives funds that were collected as sales tax on a debtor’s goods or services.
Chapter 11 of the Bankruptcy Code trusts a debtor in possession to operate its business. In general, a debtor in possession “is free to use, sell[,] or lease property of the . . . estate in the operation of the debtor’s business.”1 This discretion is “at the heart” of the powers of a debtor in possession, 2 and courts are reluctant “to interfere, or to permit other parties in interest to interfere, in the making of routine, day-to-day business decisions.” 3 Therefore, a court will not disturb