On April 25, 2016, Judge Glenn of the Bankruptcy Court for the Southern District of New York issued a memorandum in an adversary proceeding in which neither of the two non-debtor parties apparently wanted to be in the Southern District of New York.

In some good news for commercial vendors, the Supreme Court of Texas recently ruled that payments for ordinary services provided to an insolvent customer are not recoverable as fraudulent transfers, even if the customer turns out to be a “Ponzi scheme” instead of a legitimate business.

CentsAbility: Creditors' Rights Law Update

The Fourth Circuit has held that in a case where the rate of interest on a residential mortgage loan had been increased upon default, a Chapter 13 Plan proposing to “cure” default under 11 U.S.C. §1322(b) is an impermissible modification barred by §1322(b)(2).

As we discussed in a prior alert, in September 2015 the Teamsters’ Central States Pension Fund submitted a proposed “rescue plan” to the U.S. Department of Treasury (Treasury). The Central States Pension Fund is severely underfunded and the rescue plan would have allowed the fund to reduce participant benefits in order to avoid insolvency.

Preference actions are, for the most part, insanity. We won’t go on a tirade here. But recently, a ruling brings common sense to the “new value” defense.

Until recently, In re Atari, Inc. was a closed case, but, in a recent decision, the bankruptcy court for the Southern District of New York found that “other cause” existed to reopen the bankruptcy cases. 

Background

A recent unpublished decision, Strunck v. Figueroa, serves as a not-so-gentle reminder that sometimes an enforcement application can be “too little, too late,” and that it is imperative to be proactive to protect your rights under a divorce decree or agreement, especially when your adversary acts in bad faith. In Strunck, a 2011 divorce decree awarded the plaintiff $23,369, which was to be transferred from the defendant’s retirement account. Before the plaintiff could act to collect the $23,369, however, the defendant withdrew the money from the retirement account.

On May 3, 2016, Judge Shelley Chapman issued a final ruling in the Sabine Oil and Gas bankruptcy proceedings permitting the debtor to reject gas-gathering and related agreements with two midstream companies.

It is estimated that roughly 300 upstream companies will file for bankruptcy in 2016, and many management teams are curious about hedging alternatives during the restructuring and bankruptcy process. There are various alternatives management teams can take with their hedging programs, ranging from full liquidation to actually increasing hedge coverage. The following discusses the purpose of an effective risk management program, what typically happens to hedges during the bankruptcy process, and the hedging alternatives for a distressed company.

Adding to the unsettled body of case law on the enforceability of prepetition waivers of the automatic stay, on April 27, 2016, the U.S.