The filing of a bankruptcy petition under any chapter of the Bankruptcy Code creates the ‘automatic stay,’ which prevents creditors from taking any further action against either the debtor or the debtor’s assets during the bankruptcy. Seasoned bankruptcy attorneys know that a violation of the automatic stay is a serious matter and, because of this, appropriately advise their clients on complying with, or enforcing, the stay. However, stay violations can inadvertently occur even when all reasonable and necessary precautions are taken.

The opinion is Wells Fargo Bank, Indenture Trustee v. The Hertz Corp. (In re The Hertz Corp)

The question is whether (and at what rate) post-petition interest can be recovered on pre-petition unsecured claims, when debtor is solvent, under the “solvent debtor exception.” The answers pit equitable arguments against statutory provisions and even looks back to caselaw under the Bankruptcy Act of 1898.

On February 3, 2022, as part of a series of recent decisions addressing third-party releases, Bankruptcy Judge John T.

The Second Circuit Court of Appeals recently issued an opinion that potentially broadens the proximate cause element of claims brought under the Racketeer Influenced and Corrupt Organizations Act (RICO). RICO’s proximate cause element requires a plaintiff to allege facts plausibly establishing that there is a “direct relationship” between the claimed injury and the defendant’s conduct in violation of RICO.

The Ninth Circuit Bankruptcy Appellate Panel (BAP) recently held that merely freezing a debtor’s bank account holding funds that had been garnished by a judgment creditor did not violate the automatic stay. This decision was based on the United States Supreme Court’s ruling last year in City of Chicago v. Fulton, holding that retention of repossessed vehicles that were possessed before a bankruptcy was filed did not violate the automatic stay.

“[E]nsnared between his involvement in a business that is legal under the laws of Arizona but illegal under federal law,” one debtor’s chapter 13 petition was recently dismissed due to his undisputed violations of the Controlled Substances Act.

In the First, Sixth (in some districts within the circuit), Eighth, Ninth and Tenth Circuits an appeal from a bankruptcy court order may go either to the district court, as elsewhere in the country, or, uniquely to those five circuits, to a Bankruptcy Appellate Panel (BAP). The BAP is a three-judge panel selected from bankruptcy judges in the circuit but not the same district. Under the statute, presumptively the appeal goes to the BAP but the appellant may elect to go to the district court.

For the second time in four weeks, a U.S. district court questioned the authority of bankruptcy courts to issue nonconsensual third-party releases as part of a plan of reorganization.

1. The Launch

Court watchers have kept a close eye on the In re: Purdue Pharma LP chapter 11 bankruptcy case, and for good reason. It is one of the largest cases to test a question that has divided the Circuit Courts of Appeals: can a debtor in its chapter 11 plan include releases from liability for non-debtor third parties over the objection of creditors? Although the debate over the answer has been stewing for some time now, a December 2021 decision from the Southern District of New York may finally cause the pot to boil over.