Business people value their reputations because they take pride in their good names, and “not for some nebulous financial gain.” They:

What options does a creditor have when they are frustrated with how a debtor is conducting its chapter 11 bankruptcy case? In In re PWM Property Management LLC, the Delaware bankruptcy court denied a motion by creditors and interest holders to file a proposed plan of reorganization as an exhibit to their opposition to the debtors’ motion to extend the exclusivity period. The PWM Property Management decision serves as an important reminder of the strict limits on who can file and solicit a plan of reorganization and when filing of a plan is appropriate.

Here are a couple long-standing and foundational policies for the entire bankruptcy system:

• Bankruptcy laws protect the honest but unfortunate debtor; and
• Discharge exceptions are to be strictly construed against the objecting creditor and liberally construed in favor of debtor.

So, for all my decades of practice under the Bankruptcy Code, this idea has held sway: an honest debtor is entitled to a bankruptcy discharge.

As we previously reported, certain temporary bankruptcy code amendments that U.S.

On April 28, 2022, HONX, Inc. of Houston, TX filed a petition for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the Southern District of Texas (Case No. 22-90035). Hess Corp owns 100% of the debtor’s equity. The petition includes a written consent by the independent directors of Honx providing for entry into a funding agreement among the debtor and Hess Corp.

The U.S. Court of Appeals for the Fourth Circuit recently held that the “no fair ground of doubt” standard established by the Supreme Court of the United States in Taggart v. Lorenzen, a case involving alleged violation of a Chapter 7 discharge order, governed civil contempt proceedings for violation of a confirmed reorganization plan under Chapter 11.

Click here to watch the video.

Hon. Gerald E. Rosen (Ret.) serves as mediator, arbitrator and neutral evaluator in high-level business cases for the JAMS office in Detroit.

¹ The Third Circuit also affirmed a judgment that awarded the senior creditor damages for the misapplication of such collateral proceeds in violation of the intercreditor agreement’s turnover provision.

A bankruptcy court gave "unnecessary and likely incorrect" reasoning to support its "excessively broad proposition that sales free and clear under [Bankruptcy Code ("Code")] Section 363 override, and essentially render nugatory, the critical lessee protections against a debtor-lessor under [Code] 365(h)," said the U.S. Court of Appeals for the Fifth Circuit on Feb. 16, 2022. In re Royal Bistro, LLC, 2022 WL 499938, *1-*2 (5th Cir. Feb. 16, 2022).

Here’s an important rule for mediators:

• When the parties try to present you with a binary equation—“either this or that”—reject it; instead
• Get the parties involved in the process with you—try to help think your way out of the binary box they are trying to put you in.

–From Judge Gerald E. Rosen [fn. 1] in a May 2021 interview on mediation in the City of Detroit bankruptcy [fn. 2].

And here’s an illustration of how Judge Rosen faced a binary equation of huge proportions in the City of Detroit bankruptcy—from that interview.