On January 30, 2023, the Third Circuit Court of Appeals dismissed the bankruptcy filing by Johnson & Johnson’s subsidiary, LTL Management, LLC (“LTL”). The Circuit Court reversed the New Jersey Bankruptcy Court and held that LTL did not file the bankruptcy case in good faith and therefore was ineligible to petition the bankruptcy court for relief.

On January 14, 2021, the Supreme Court held in City of Chicago v. Fulton that a creditor does not violate the automatic stay by merely retaining possession of the debtor’s property after a bankruptcy filing. The City of Chicago routinely impounded vehicles owned by drivers with outstanding parking tickets and other fines. The City refused to release the impounded vehicles after the owner of the vehicle filed bankruptcy. The Court of Appeals for the Seventh Circuit held that the City’s retention of the vehicles violated the automatic stay.

Since our March 2020 blog post, the Federal banking and credit union regulators (FRB, FDIC, NCUA, OCC and CFPB) (collectively, the “Agencies”) published revised guidance clarifying the relationship between the March 22, 2020 Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (“March Guid

A Chicago bankruptcy court recently ruled in In re Hitz Restaurant Group that a debtor’s obligation to pay rent during its bankruptcy case may be temporarily reduced because of a force majeure clause in the lease and the governor’s COVID-19 stay-at-home order. Both landlords and tenants should be aware that this rent reduction was carefully crafted and was not unlimited by the court.

Businesses that were already struggling before the COVID-19 pandemic hit the United States are now facing the consequences of having to close their doors during the public health crisis.

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.

Congress just made it easier and less expensive for small businesses to reorganize under Chapter 11. Small businesses continue to struggle under the current social isolation measures in place in most states. Even with the recent financial relief package passed by Congress, many small businesses will not have sufficient resources to meet their most basic obligations such as rent, utilities and other operational necessities.

A version of this article previously appeared in the December 2019 issue of the Receiver, a publication of the National Association of Federal Equity Receivers.

The work of a receiver can be a difficult balancing act. With various creditors and debts that need to be paid, there can be a long and meticulous resolution process. In order for receivers to protect themselves from the risk of personal liability for claims made by the government, it is imperative that receivers understand the Federal Priority Act (“FPA”).

On November 12, 2019, the First Circuit Court of Appeals ruled that bankruptcy trustees may sue colleges and universities to recover pre-bankruptcy tuition payments received from parents of adult children. This is the first case decided by a court of appeals on an issue that has divided the lower courts for several years.