Background
As noted in our prior Alerts, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), which became law March 27, 2020, included various COVID-19 pandemic-related bankruptcy relief provisions which sunsetted on Saturday, March 27, 2021, but were extended by the “COVID-19 Bankruptcy Relief Extension Act of 2021” (“2021 Extension Act”) through March 27, 2022. By the President’s June 21, 2022, signature of the Bankruptcy Threshold Adjustment and Technical Corrections Act (the “BTATC Act”), Pub. L. No. 117-151, ___ Stat.
In a decision rendered on June 6, 2022, Justice Sotomayor authored the Supreme Court’s unanimous decision in the case Siegel v. Fitzgerald, holding that a statutory increase in United States Trustee’s fees violated the “uniformity” requirement of the Bankruptcy Clause set forth in Article I, § 7, cl. 4 of the United States Constitution, which empowers Congress to establish “uniform Laws on the subject of Bankruptcies throughout the United States.”1
Overview
A foreign (non-U.S.) company can be dragged unwillingly into a U.S. bankruptcy case if the bankruptcy court has “personal jurisdiction” over the company.
A foreign (non-U.S.) company can be dragged unwillingly into a U.S. bankruptcy case if the bankruptcy court has “personal jurisdiction” over the company.
The Bankruptcy Protector
As inflation and interest rates rise, a recession is likely coming. A recession means more bankruptcy filings. Providers of goods and services often unknowingly find themselves embroiled in bankruptcy litigation if the provider received payment within 90 days of the customer’s bankruptcy filing. Such payments, called a preferential transfer, may later be challenged by the debtor customer or trustee. If successful, the provider of goods and services may be forced to return such payments to the bankruptcy estate.
As the venture capital sector slows down, valuations and deal sizes are pulling back from the recent record highs. Seemingly, “investor friendly” deal terms are once again making an appearance in term sheets.
In large, complex bankruptcy cases:
- The mediator must have a plan;
- Otherwise, the mediator is going to get run over;
- These are tough cases with very experienced lawyers who often have significant resources to put into the fight; and
- The mediator has to be just as resourceful, just as strong, just as ready to engage as the lawyers.
That’s the view expressed by Judge Gerald Rosen (Chief Judicial Mediator in City of Detroit bankruptcy) [fn.1] in a May 2021 interview on the mediation process in the Detroit bankruptcy [fn. 2].