Under federal law, a debtor may be criminally prosecuted for various kinds of misconduct in connection with a bankruptcy case, including concealing assets, falsifying information, embezzlement, or bribery. See 18 U.S.C. §§ 152, 157. The U.S. Trustee, which serves as a watchdog over the bankruptcy process, will refer such cases to the U.S. Attorney’s Office for investigation and prosecution.
In MaIlinckrodt PLC v. Sanofi-Aventis U.S. LLC, No. 23-1111, the U.S. Court of Appeals for the Third Circuit affirmed a Delaware bankruptcy court decision finding a debtor’s obligation to pay a perpetual royalty was an unsecured claim that was dischargeable in bankruptcy. The decision is a cautionary tale for contract counterparties that negotiate future payment rights.
Background
An assignment for the benefit of creditors (ABC) is a process by which a financially distressed company (referred to as the assignor) transfers its assets to a third-party fiduciary (referred to as the assignee). The assignee is responsible for liquidating those assets and distributing the proceeds to the assignor's creditors, pursuant to the priorities established under applicable law. From the perspective of a creditor, there are many important distinctions between an ABC and a bankruptcy case.
Key Issues
Question: Can a retirement fund organized under Canadian law qualify for a state law exemption requiring that it “qualify as a retirement plan” under the Internal Revenue Code?
This question gets all the way to the U.S. Seventh Circuit Court of appeals, which issues a “No” answer, in Green v. Leibowitz, Case No. 23-2841 (decided 7/16/2024).
After years of hard-fought litigation, most claimants are thrilled to obtain a final and enforceable judgment or arbitration award. However, more often than one thinks, this excitement is followed by the disappointing realization that the defendant has little interest in voluntarily satisfying the award.
One of the most important aspects in arranging any fund finance transaction is structuring the security package. As anyone that has ever looked at a complete structure chart for a fund financing transaction knows, even a “simple” private fund structure typically involves a number of different entity types (limited partnerships, limited liability companies, etc.) organized in several jurisdictions (Delaware, the Cayman Islands, Luxembourg, etc.).
In In re New Dragon Toy Wholesale, Inc., Chief Bankruptcy Judge Martin Glenn denied a debtor/tenant’s motion for a temporary restraining order to enjoin a landlord and the New York City marshal from evicting the debtor from a commercial property, holding that the eviction was excepted from the automatic stay since the commercial lease terminated pre-bankruptcy.
Background
B&D is pleased to present the next installment of our 2024 Litigation Look Ahead series. (Read part four covering Fifth Amendment takings cases here).
Over the years, I’ve heard lots of people say, “Bankruptcy abuse is a huge problem,” as a self-evident and undeniable proposition.
But here’s the thing. Debtors who try to abuse the bankruptcy system rarely get away with it. That’s because there are too many gatekeepers—and no debtor can fool them all!
The gatekeepers are debtor’s counsel, creditors and their attorneys, U.S. Trustees, bankruptcy courts, and appellate courts.
This is the first of a multi-part series of articles on how the gatekeepers prevent abuse. This article focuses on debtor’s attorney.
Over the years, I’ve heard lots of people say, “Bankruptcy abuse is a huge problem,” as a self-evident and undeniable proposition.
But here’s the thing. Debtors who try to abuse the bankruptcy system rarely get away with it. That’s because there are too many gatekeepers—and no debtor can fool them all!
The gatekeepers are debtor’s counsel, creditors and their attorneys, U.S. Trustees, bankruptcy courts, and appellate courts.
This is the second of a multi-part series of articles on how gatekeepers prevent abuse. This article focuses on creditors and their attorneys.